Navios Maritime Partners LP (NMM) 2014 Q4 法說會逐字稿

Thank you for joining us for this morning's Navios Maritime Partners fourth-quarter and full-year 2014 earnings conference call. With us today from the Company are Chairman and CEO, Miss Angeliki Frangou; EVP of Business Development, Mr. George Achniotis; and Chief Financial Officer, Mr. Efstratios Desypris.

As a reminder this conference call is also being webcast. To access the webcast, please go to the Investors section of Navios Maritime Partners' website at www.Navios-MLP.com. You will see the webcast link in the middle of the page and a copy of the presentation reference in today's earnings conference call.

Now let me read the Safe Harbor statement. The conference call can contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical fact.

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

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

The agenda for today's call is as follows. First, Miss Frangou will offer opening remarks. Next Mr. Desypris will review Navios Partners' financial results. Finally, Mr. Achniotis will provide an operational update and an industry overview. And lastly, we'll open the call to take your questions. Now I would like to turn the call over to Navios Partners' Chairman and CEO, Miss Angeliki Frangou. Angeliki.

Thank you, Laura, and good morning to all of you joining us on today's call. I am pleased with the results for the quarter as we recorded EBITDA of $39.3 million and net income of $13.5 million. We also announced a quarterly distribution of $0.4425 and [presenting] an annual distribution of $1.77 per unit.

This annual distribution provides a guarantee of about 15%, about 2.5 times the Alerian MLP index yield. We take the opportunity not only to reaffirm Navios Partners' existing distribution through the end of 2015, but we extend this commitment to the end of 2016. We are also prepared to increase the distribution in the future when the shipping market stabilizes and the markets recognize the sustainability of our yield.

We have repositioned Navios Partners as a container focused MLP after entering the container market in December 2013. Since then we have acquired eight container vessels generating about $1 billion in revenue, representing 68% of our expected contracted revenue and 44% of our expected 2015 EBITDA.

Today our container fleet represents about 41% of Navios Partners' total tangible assets. The average charter length of our container sector is about eight years while the average charter duration of our entire fleet is about 3.5 years.

Recently there have been large declines in commodity prices that have created tremendous uncertainty about continuous growth for companies in the MLP space. We, at Navios, see the oil price decline as an opportunity to (inaudible) in all our diversified sectors.

For example, the container trade has held a strong positive correlation of 0.88% with US personal consumption over the past 10 years. We believe this cycle relation is largely attributable to increases in consumer spending supporting greater volumes for consumer groups, a large portion of which are typically transported via containers.

By positioning NMM as a container focused MLP we will benefit from the economic growth that we'll enjoy when consumers spend their additional disposable income generated through lower oil prices. Translating what I just said into numbers, we are below consumer spend about $4.5 billion a day less today than last year. This amounts to a nine-month spending reduction of more than $1.6 trillion.

These savings provide consumers with [additional] disposable income and over time a significant boost to our global economy. NMM stands to benefit from the resulting increased container trade.

As you can see from slide 2, Navios Holding owns 20% of Navios Partners and has helped Navios Partners to become a key player in the dry bulk and container industries. Navios Holdings has been a strong partner and most recently agreed to take over two chartering vessels from Navios Partners because these vessels were not accretive to our cash flow. Today NMM has a market capitalization of about $1 billion and an enterprise value of about $1.5 billion.

Slide 3 provides some of the Company highlights. We are a container focused MLP with eight container vessels. These vessels are generating about $1 billion in revenue representing 68% of our expected contracted revenue. In total we own 31 vessels representing about 3.3 million deadweight tons. The average charter duration of our entire fleet is about 3.5 years.

Overall NMM has a secure revenue stream with 95.2% of the companies contracted revenue earned through charters longer than three years. NMM has maintained a solid distribution through the cycle evidenced by a 26.4% increase in distributions since inception.

Slide 4 displays our focus on the container sector. We entered the container sector in December 2013 to diversify outside the dry bulk sector. The container acquisitions that are under long-term charters contracts not only extend our overall contract duration, but also mitigate market risk and provide solid cash flow to the Company.

We bought eight attractively valued vessels for a total acquisition price of $540 million that had about 8.8 years in average charter duration at the time of acquisition. The containers are expected to generate $78.1 million of annual EBITDA and were completed at an attractive average EBITDA multiple of 6.9 times.

Slide 5 provides an update to our recent container vessel acquisition. The container vessel was acquired at an acquisition price of $147.7 million. The vessel is chartered out for 12 years at $60,275 net per day to a strong counterparty. NMM has an option to terminate the charter after year seven, which of course allows to participate in the rising market.

The vessel is expected to generate $18.4 million of annual EBITDA and $217.8 million of aggregate EBITDA over the duration of the contract. In addition, the profitability of this acquisition is such that we will have no residual [value] exposure on the completion of the (inaudible) charter.

Upon the expiration of the charter the vessel will have 10 years of additional life remaining. The container acquisition we defined as using about $81 million in debt and the remainder will be [cut] from the balance sheet. The debt financing comes with attractive terms with an amortization profile of 13.4 years, interest rate of LIBOR 2.75 and a maturity into 2022.

Slide 6 details our strong track record of success in the distribution security we have provided to our unit holders. We have worked diligently over the past year to take advantage of any market weakness to renew our dry bulk fleet and enter into the container industry.

Since 2011 we have generated strong double-digit attractive growth in EBITDA and operating surplus. Our operational fleet increased by 373% (sic -- see slide 6, 343%) with 25 vessel acquisitions both a dropdown from our sponsor and from third-party acquisitions.

We did so while consistently financing acquisitions in advance so we did not face any great financing issues. In this effort we collected about $900 million through [very good] capital markets and $400 million through the Term Loan B market.

I believe (inaudible) management of the Company and is established as a consistent distribution payer with about $630 million distribution paid since the inception representing a 26.4% increase in annual distribution per unit since (inaudible).

Slide 7 shows our liquidity at the end of the quarter. The fourth quarter we had total cash of about $100 million and total debt of $583.3 million. We have a low net debt to book a capitalization ratio of 36.2% and no significant maturities until 2018.

Slide 8 shows the multiple ways we have been able to grow fleet and distributions. Since our IPO in late 2007 we grew distributions by 26.4% and our operational fleet capacity by 420%. We did this with the assistance of our sponsor through values drop-down. More recently we have been active in the S&P market and we have been able to find attractive opportunities in the container sector.

At this point I would like to turn the call over to Mr. Efstratios Desypris, Navios Partners' CFO, who will take you through the results of the fourth quarter of 2014. [Stratos].

Thank you, Angeliki, and good morning all. I will briefly review our (inaudible) financial results for the fourth quarter and year ended December 31, 2014. The financial information is included in the press release and is summarized in the slide presentation on the Company's website.

We had another quarter of strong financial and operational performance. We continue to expand our customer generation through the acquisition of container vessels with long-term [service]. The containers now represent [about] 40% of our expected EBITDA for 2015.

The constant accretive expansion of our cash flow has allowed us to extend our commitment for a minimum annual distribution of $1.77 per common unit through the end of 2016. As Angeliki mentioned, we hope the market begins to give us credit for the durability of this distribution.

Moving to the financial results, as shown on slide 9, our revenue for the fourth quarter of 2014 increased by 13.9% to $59.4 million compared to $52.1 million over the respective quarter of last year. The increase was mainly due to the increase in available days by 28.8% and was partially mitigated by the 10.1% decrease in the time charter equivalent rate achieved in the quarter of $20,388 per day compared to $22,682 per day for the same quarter of 2013.

EBITDA for the fourth quarter of 2014 increased by $3.7 million mainly due to the increase in our fleet. Net income for the fourth quarter was $13.5 million, $3.3 million higher than the same period last year. Operating surplus for the fourth quarter of 2014 amounted to $26.4 million. Replacement and maintenance CapEx [reserve] was $6.3 million.

Moving to the 12 months operations, time charter revenue for 2014 increased by $29.2 million to $227.4 million. The increase was mainly due to the increase of available days by 27.4% which was partially mitigated by the decrease of the time charter (inaudible) in the period by 16.4%.

EBITDA for 2014 has been positively affected by the $47.6 million accounting effect of the insurance settlement that occurred in the second quarter. Furthermore, 2014 EBITDA was positively affected by the $13.3 million payment received in advance on one of our vessels.

EBITDA increased by $46.6 million to $200 million mainly due to the increase in our other income items discussed above as well as the increase in revenues. This increase was mitigated mainly by the higher management fees of $14.2 million due to our larger fleet and the increase in G&A expenses by $1.5 million.

Net income for 2014 amounted to $74.9 million compared to $59 million for 2013. Net income for 2014 was positively affected by the (technical difficulty) accounting affect of an insurance agreement and was negatively affected by the $22 million non-cash write-off of intangible assets relating to the Navios Pollux.

Net income for 2014 has been positively affected by the $13.3 million payment of effective EBITDA and has been negatively affected by a $2.4 million non-cash write-off of deferred financing fees associated with the prepayment and refinancing of our credit facility and the $3.2 million non-cash right of favorable lease relating to the management (inaudible).

Operating surplus for 2014 was $150.2 million which is 19.7% higher than the corresponding year in 2013. Fleet utilization for 2014 was 99.8%.

Turning to slide 10. I will briefly discuss our key balance sheet data as of December 31, 2014. Cash and cash equivalents was $100.4 million. Total assets grew to over $1.3 billion reflecting the increase of our fleet.

Long-term debt, including the current portion, increased by approximately $50 million mainly due to the [$56] million drawdown of the financing for the two container vessels that we acquired in Q3 and Q4 of 2014. Net debt to asset value on a charter adjusted basis at the end of the quarter was 45.4%.

As shown on slide 11, we declared a distribution for the fourth quarter of $0.4425 per common unit. Our current annual distribution of $1.77 provides for an effective yield of approximately [15.5%]. The record date for the distribution is February 11 and the payment date is February 13, 2015.

Our common unit coverage on the quarter is 0.77 times while the common unit coverage for the full year was 1.10 times. To provide a more meaningful ratio going forward, we present a pro forma coverage ratio of 1.02 times. This pro forma calculation gives effect to the full quarter and non-operating surplus of the two container vessels with which we got delivered in Q4 and Q1 of 2015, and the normalized revenues on hires of vessels (inaudible).

The increased exposure to the container segment with a long-term (inaudible) duration results in a very healthy pro forma coverage ratio going forward. The stability we have building our customer generation and our coverage ratio allowed us to extend our commitment for a minimum annualized distribution of $1.77 per common unit through the end of 2016.

I would like to remind you that for US tax purposes a portion of our distribution is treated as (inaudible). Also, we reported cumulative annual distributions to common unit holders on Form 1099.

Slide 12 shows the details of our fleet. The two South Korean vessels currently in operation, the Navios Aldebaran and the Navios Prosperity will be taken over by our sponsor, Navios Holdings. Transferring these vessels will eliminate our chartering costs and will reduce our (inaudible) days.

The dry bulk [result] excluded these vessels from our fleet. We have announced more than (inaudible) with a total capacity of [3.3] million deadweight tons. Our fleet is young with an average age of 7.6 years, way below the expected industry averages. Our fleet consists of 31 vessels, 8 Capesizes, 3 Panamaxes, 3 Ultra-Handymax and 8 container vessels.

Slide 13 demonstrates our strong relationship with key participants in our industry. Our charters have an average remaining contractor duration of 3.4 years. Approximately 83% of our contracted revenue is from charters longer than five years. Our charters are spread among a diverse group of counterparties.

On slide 14 you can see the list of our fleet with the contracted rates and respective expiration dates per vessel. Currently we have 80.1% of our available days for 2015 and we are 47.7% fixed for 2016. We do not have (inaudible) exposure to the container sector as our vessels are fixed for an average period of approximately 8 years.

On the dry bulk vessels we feel that we have positioned the Company well to take advantage of an improving market. (inaudible) and the type of duration extent to 2027 at the latest.

As shown on slide 15, we are an efficient, low-cost operator. We are benefiting from the economies of scale of our sponsor and we have fixed our operational costs at low levels. Our OpEx is now at 20% below the industry average. I now pass the call to George Achniotis, our Executive Vice President of Business Development, to discuss the industry section. George.

Thank you, Stratos, and good morning, all. Please turn to slide 17. As Angeliki has already mentioned, Navios Partners is more focused on the container segment. Where industry fundamentals are improving, they face a very strong correlation with US personal consumption expenditure growth, as shown on the chart. Low oil prices should create more US consumption, which in turn should lead to further growth in the container trade.

Moving to slide 18. Over the past 18 years container trade has expanded at a [3.5%] CAGR rate (sic -- see slide 18, 7.5%). The rate of growth has been increasing since 2012 and is expected to continue to increase over the next two years reaching 6.8% in 2016.

Turning to slide 19. At the end of 2014 the container fleet included 5,100 vessels of 18.2 million TEUs. During the year 201 vessels delivered and 171 vessels were scrapped, but the fleet as measured by TEUs expanded by 6.4% due to larger vessels joining the fleet. This is slightly above the 6% estimated growth in trade volumes but below the 6.7% estimated trade growth for 2015.

Scrapping of older, less fuel efficient vessels has continued. In 2014 381,000 TEUs were scrapped. The current rate environment should encourage additional scrapping of older vessels.

Moving to slide 20 and the dry bulk market, world economies growth continues to have a good correlation with raw material consumption worldwide as the world continues to (inaudible) and [industrialize]. The rate of growth of world GDP growth is expected to increase from 3.3% in 2014 to 3.5% in 2015 and 3.7% next year. Emerging and developing markets are expected to grow by 4.3% in 2015 and 4.7% in 2016.

Turning to slide 21. Dry bulk trade has expanded by 5.5% CAGR in the 14 years since China joined the WTO. Focus for this year for global dry bulk [sales] to grow at about 5%. But [top-line] growth should still be around 6%.

Moving to the next slide, urbanization (inaudible) developing countries has been a key variable for dry bulk trade. Currently just over 50% of the world's population resides in urban areas. That figure is expected to grow to 67% by 2015, adding approximately $2.8 billion urban residents with a large portion of urbanization occurring in the Asia-Pacific region.

The rising worldwide urbanization will drive construction of housing, commercial real estate and infrastructure. Together seaborne iron ore and coal shipments make up about 60% of all dry bulk movements.

China imports almost 70% of all seaborne iron ore. With iron ore price covering below $60 per ton range, China will continue to substitute low-grade domestic iron ore with high-quality imported ore. [Steel production growth] will also add to China's increased need for iron ore imports.

Coal is also a significant driver of dry bulk demand. India's new prime minister has [made electricity] availability to the population a priority. India's coal imports will drive global seaborne coal movements as the majority of its new power plants are coal-fired.

Please turn now to slide 23. In 2014 about 48 million deadweight tons delivered out of an expected 75 million tons. The non-delivery rate for the year was 36% continuing the [parting] of the last several years.

Scrapping rates for older less fuel efficient vessels have continued. In 2014, 16 million deadweight tons were scrapped. Through the first three weeks of this year an additional 2 million deadweight tons was scrapped including nine Capesize vessels.

The current rate environment should encourage scrapping of older vessels. About 11% of the fleet is over 20 years old providing about 82 million deadweight tons of scrapping potential. Net fleet growth in 2014 was 4.4% and projections are for similar or lower levels this year.

The dry bulk market is expected to remain low during the first half of the year and may begin to rise in the second half if the expected type of projects and scrapping [materializes] as forecasted.

This concludes my presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki.

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

(Operator Instructions). Ben Nolan, Stifel.

Hi, this is actually [Steven Fitzworth] in for Ben Nolan. Thank you for taking my call. I was wondering if you can expand a little bit on your focus with the container market. Is this just a function of current market conditions or is this more of a long-term focus for you?

This is actually a long-term -- is a new sector we entered and we started from December 2013. We saw opportunities as the market -- a natural bias for these vessels. The (inaudible) market had actually been reduced and almost disappearing. So that has provided very good deals.

We are able today to have about 45% -- 44% of our EBITDA coming from the containers -- container sector. We have almost $80 million at the dock -- and $1 billion in contracted revenue. This provides us also duration. If you see over the last [dealing] we have done it provides us -- get an average duration of almost 8.8 years.

So this deal was done at a 12-year duration with Navios' option to terminate it at seven. So it really created a very good portfolio of contracted revenue with long-duration. Also because we selected at a nice time we have been able to enter [the stock] market with an attractive multiple of EBITDA, 6.9%, below 7%, that brings us a nice position for this sector.

Okay, perfect. Thank you. Do you have a -- I guess with your focus shifting to container ships, do you have a more negative view of the dry bulk market or is it really -- has it really stayed the same?

I think the (inaudible) long durations and long contracts. And today the best deals really attractive we find is in the container segment.

Okay. And my last question is concerned with the two Panamax vessels that are being taken over by Navios Maritime Holdings. Are there any costs associated with those contracts being taken over?

No, there is not cost and that was a good deal for NMM because in essence you account for 700 days -- available days to two Panamaxes that in essence were (inaudible) to have no cost and the (inaudible) leading to have both of the sponsors.

It does not make sense for the MLP to have vessels that don't have long durations and are in the spot market. So that provided visibility, we reduced by 700 days of open days and today we are sitting at 80% of our fleet being fixed for 2015, a very comfortable position.

Okay, thank you for taking my questions.

Amit Mehrotra, Deutsche Bank.

I would like to get a sense on what the assumptions are in your commitment to keep distribution steady through 2016. Specifically is the Company assuming additional acquisitions in that commitment or even a modest reduction in coverage or maybe a use of the cash balance or any improvement in time charter rates? Or do you feel that the organic operating cash flow generation at the current rate environment will be enough to sustain the dividend through 2016?

We see that with the current market how we see it and fixing our vessels we feel comfortable that we can commit on the distribution. Our focus on new acquisitions is in the container segment which we see as a (inaudible) and more attractive entry point.

Let's not forget (inaudible) we finished 2014 with a coverage of 1.1 on a coverage of distributions. And the focus of any new acquisitions is in the container segment. We see that the market [doesn't really] progress, it will be recovering.

But let's not forget that the recent drop in the dry bulk market is very much associated also with an inactivity of (technical difficulty) [traders]. I mean they have seen oil drop, they have a ripple effect on other commodities. And you see that the market has been a little bit -- it has been inactive, I mean we are [18 points] -- a level that we have seen last in 1986, which in essence was a similar (inaudible) where you had the drop in oil of about 60%.

So in the dry bulk on the short-term we see that the market will remain there, that's why we reduced our exposure. We are more focused on acquisitions on the container vessels. And we will not increase our distribution until we see that our sales price really appreciates and (inaudible) comes to a more normalized with the kind of distribution we give.

Right. Just to follow up on that, just so I can be crystal clear so I understand is that your view is after the most recent container acquisition that you announced -- and I completely understand why the acquisition strategy is in the container [straights], that makes complete sense.

But to keep the distribution flat from 2015 to 2016 you would not have to -- the Company would not have to acquire additional revenue stream or earning stream, is that how we should think about it?

I mean I would find that very -- we will keep it. The thing is that I would find it very unlikely that we are not going to do additional deals. I mean don't forget we have modest levels and we can do additional acquisitions. I find it very unusual not (technical difficulty) to do additional acquisitions in the next two years, to be very clear. And most probably that will be in the container segment.

Right. Okay, that is very helpful. I just had one more follow-up question, which is a nice segue to what you just said. It is more strategic because clearly the Company is increasing its position as -- sort of changing its position as a container ship Company. And like I said, that makes complete sense to me.

But I believe on the last call you had mentioned that there is still an expectation that 50% of the cash flow stream would still be coming from dry bulk. And essentially creating dry bulk, in my view, more like an optionality on the Company given where rates are today.

But is that 50-50 breakdown still the expectation? Or maybe have you over, the last three or four months, decided that maybe more than 50% of the business should come from the container ship as is because of the duration that that provides.

Listen, if you do another acquisition similar to the previous one you may easily surpass the 50%. But the dry bulk will remain a part of our business. And you really have a recovery of the dry bulk on every (inaudible) a further boost to our (inaudible).

But what we'll see is that most probably in the next acquisition you may easily surpass the 50%. It will remain somewhere between 50% and 60% (technical difficulty) EBITDA.

Okay, okay, that is all I had. Thank you very much. Congrats on a good performance in a tough environment. Thank you very much.

Chris Wetherbee, Citi Research.

Good morning, guys, this is Prashant in for Chris. Thanks for taking my question. I wanted to touch back on something Stratos talked about, about improving -- near-term outlook for improving fundamentals in the dry bulk market. I am looking at the [Clarkson's] data and other sources and it looks like we have kind of flattened out sequentially month over month in the last few months on the charter rates on dry bulk.

I was wondering what kind of rate improvement or what kind of rates you were incorporating into your near-term view on the dry bulk side? And inasmuch as that relates to oil prices I guess, a read through on that view from you guys too.

I think on the -- what you see really on the dry bulk is that you have a net (inaudible) growth that is really around 4%, this year will even come below 4%, about 3.5%. And you have 3.5% to the group. And in essence what you saw is this last year from the time we had the [stocking] in July of the drop in oil we have seen a deterioration in the dry bulk.

I think that kind of a situation will stabilize. I mean somewhere it will stabilize on the oil. And as we have seen, accelerated scrapping in the dry bulk. So supply-side is not bad. I mean just in the month of January we show over 10 vessels, Capesize, being scrapped. We show 2.3 million deadweight tons being scrapped.

If you annualize this you are looking on almost 29 million tons -- deadweight tons being scrapped. This is over -- is almost 3.5 -- 3.7%, 3.5% of the fleet. So unless you grow for next year you may see about below 4%.

With the (inaudible), if we see markets stabilizing and actually see people -- trades start transacting that will have -- in a more normalized, this will bring it to a healthier environment. Today the market is at a low. I mean we are keeping the low and we are seeing back almost in mid-80s. So you are talking about a really low part of the cycle.

And let's not forget that we have in two weeks the Chinese New Year, which traditionally is a period with no activity. So to really see how market develops and activity in the dry bulk we'll have to see after Chinese New Year.

Okay, thanks. And I guess a follow-up to that, just to be clear, would you be expecting a little bit more of deterioration going into 2015 before the scrapping improvement effect on the fundamentals starts to kick in and we start seeing some rate improvement?

I think as oil balances commodities will balance and activity will start. But what is amazing and I thought that it was quite interesting to see that in the quickness on which we show scrapping accelerating, I mean it is quite remarkable to see this kind of over 2 million deadweight tons to 23 million deadweight tons to be scrapped just in the month of January.

Okay, thanks. That's helpful. And then I guess a question on the financing side. The -- for the Cristina acquisition it looks like the terms on the debt were a little bit more favorable than your last credit facility, maybe by 50 basis points over LIBOR, that sort of a difference.

I was wondering if you are seeing debt markets become a little bit more favorable either for you or in general for container ship -- for your industry or. And how should we think about that going forward in terms of debt financing?

Also incrementally it looks like there was a little bit more debt than maybe perhaps in previous acquisitions. And should we expect a slightly higher debt percentage for financing going forward?

I think it is not very different than overall; the vessel is about 60% -- 64%, below 65%. They won't issue (inaudible) it is also an indication of the duration of the contract of that particular vessel.

Okay, so it is more to do with the duration than with anything --?

Yes.

Okay, great. Thanks, that is all for me. I appreciate it, guys.

Shawn Collins, Bank of America.

On the container ship side, when I look at page 17 of your slides on container trade growth I'm just wondering with the significant decline in oil prices -- I know it is early -- but have you seen any evidence so far of a pickup in container trade growth or at least some commentary from any of your counterparties to this effect?

I mean what -- on the vessels we are getting on Navios Partners is really long durations and you have seen that we are not exposed to the spot market. But what we have seen to our smaller containers, which we have in the group, we have seen a better redeployment of the vessels.

So inevitably I think one thing that things may look bleak and people may look at a [70] with oil. But reality is that the reduction in the price of oil provides $1.6 trillion back to the consumer, which in essence is a great benefit for container vessels. Because consumption is in correlation with the container trade. So I think inevitably that will work somehow into the [real] economy.

Okay, great. That makes sense and that is helpful. Just turning to the dry bulk side, when I look at page 23 of your slides on the order book there is some talk out there of new builds being converted into -- dry bulk new builds being converted into tanker new build orders. I'm just wondering if you've seen any evidence of this dynamic or if you expect to see more of this or what your thoughts are around that?

We just (technical difficulty) also private -- I mean we have vessels in the capital markets and (inaudible) here in the capital markets and we have seen (inaudible) dry bulk has been happening also in the private sector. So it's not unique. So this is an inevitable situation.

Let's not forget that if you take the order book for 2015 is about 85 million deadweight tons to come. Dry bulk is running on the average with about 36% to 40% non-deliveries. So this can bring you down to around [55] million deadweight tons.

And if you add the scrapping that can lead up to $28 million this year you can have a very low -- quite a -- you have mid-20s to high-20s net fleet growth, that will be one of the lowest net fleet growth that we have seen. It can -- way become below 4%, it can be around 3.5%, below 4%.

That it is -- today it looks painful if you see the BDI, but I think this is a net positive for the market.

Okay, great. That's good news for the dry bulk sector. That is great. That is all for me. That is very helpful. Thank you for much and we will talk to you soon.

Thank you. I will now return the call to Angeliki Frangou for any additional or closing remarks.

Thank you. This complete our formal presentation. Thank you.

Thank you for participating in today's conference call. You may now disconnect.