Performance Shipping Inc (PSHG) 2013 Q1 法說會逐字稿

Greetings. Welcome to the Diana Containerships Inc. first-quarter 2013 conference call and webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions).

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Edward Nebb, IR advisor for Diana Containerships Inc.

Thank you, Mr. Nebb. You may now begin.

Thank you, Rob, and thanks to all of you for joining us today, and welcome to the Diana Containerships Inc. 2013 first-quarter conference call. The members of the Diana Containerships management team who are with us today are Mr. Symeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; and Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary.

Before management begins their remarks, let me briefly summarize the Safe Harbor notice.

Certain statements made during this conference call which are not statements of historical fact are forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections, intentions, and beliefs as to future events that may or may not prove to be accurate. For a description of the risks, uncertainties, and other factors that may cause future results to differ materially from the forward-looking statements, please refer to the Company's filings with the Securities and Exchange Commission.

And now with that, let me turn the call over to Mr. Symeon Palios, Chairman and Chief Executive Officer of Diana Containerships.

Thank you, Ed. Good morning and thank you for joining us.

I'm pleased to report to you on the performance of Diana Containerships Inc. for the first quarter of 2013. Our results for the recent quarter reflect certain strategic actions taken by Diana Containerships' management team to realign our fleet in response to prevailing industry conditions. We believe these actions demonstrate the Company's operational and financial flexibility and its capacity to respond in an agile manner to opportunities and challenges in our marketplace.

Specifically, we executed agreements to sell for demolition three of the older vessels in our fleet -- the Madrid, the Malacca, and the Merlion. The same prices for these vessels amounted to a total of approximately $29 million before acquisitions. Given the limited ability to employ such order tonnage on a profitable basis in the current market, these sales were strategically timed.

Today we also announced that we have entered into an unsecured loan agreement of up to $50 million with Diana Shipping Inc. to be used for general corporate purposes and working capital requirements, including funding additional vessel acquisitions.

In addition, we are also announcing that we expect to file for at the market equity offering in an amount up to $40 million to be sold within 12 months of commencement of the offering, pursuant to its effective shelf registration statement.

The profits from the vessels' sale and the new loan from Diana Shipping Inc., together with the amount that could be raised within the next 12 months through the ATM offering, will strengthen our financial position and will enable the Company to invest in more vessels, thus improving the sustainability and visibility of revenues in support of our dividend policy.

With respect to vessel acquisitions, we also took delivery earlier in the quarter of the motor vessel, Hanjin Malta, which is time chartered to Hanjin Shipping Co. Limited at a gross rate of $25,550 per day. This vessel's acquisition, along with the sales that I have just discussed, reflects our determination to manage the fleet in a dynamic and responsible manner.

After completing these transactions, Diana Containerships' fleet currently consists of eight Panamax container vessels. Our fleet is time chartered to some of the industry's leading container lines for 89% of the days in 2013, including the first quarter and approximately 50% of the days in 2014, providing a stable revenue stream.

The contracted gross revenue of the fleet is approximately $118.4 million.

Now let me review Diana Containerships' financial performance during the past quarter.

Time charter revenues for the 2013 first quarter were $15.1 million. This compared to $12.4 million for the same period of 2012. The Company recorded a net loss of $31.8 million for the 2013 first quarter as a result of a noncash impairment loss for the vessels Madrid, Malacca and Merlion. Excluding the noncash impairment loss, the results for the first quarter of 2013 would have been a profit of $0.8 million, while the earnings per share would have been $0.03 for the quarter.

Turning to our strong balance sheet, at March 31, 2013, the Company had $7.2 million available cash on the balance sheet. However, in the second quarter of 2013, our liquidity was substantially increased by the proceeds from the sale of the three vessels, as well as from the proceeds of the loan of up to $50 million under our loan agreement with Diana Shipping Inc. Shareholders' equity at March 31 was $197.5 million.

The Company continues to reward our shareholders with an attractive dividend policy. Today we have announced that the Board of Directors has declared a dividend of $0.30 payable on or around June 12, 2013 to all shareholders of record as at June 4, 2013.

In summary, we believe the performance of Diana Containerships for the first quarter of 2013 reflected our strategic actions to manage our fleet and our business overall to optimize financial flexibility, adding capacity and long-term shareholder value.

Now, I will turn the call over to our President, Stacey Margaronis, for a perspective on industry conditions. He will then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide a more detailed financial overview. Thank you.

Thank you, Symeon, and a very warm welcome to all who have joined us in this first quarter of 2013 conference call.

Starting as usual with our macroeconomic news, our source container ship industry presentation here is going to look at the world's economy and its leading term growth prospects. The World Trade Organization has published the global trade forecast for 2013 to 3.3% as a result of risks emanating primarily from the Eurozone and fears over increased protectionism. The organization expects no economic growth from the European Union this year with global economic growth once again relying on the continued strength of the Chinese economy. Next year the World Trade Organization predicts that growth could rebound to about 5% to 10%.

The International Monetary Fund predicts activity in advanced economies is expected to gradually accelerate from the second half of 2013. Their overall forecast for advanced economies is a modest 1.23% growth this year as they predict that this will improve as the year progresses.

According to RS Platou, in the United States, Purchasing Managers Index shows that new orders slowed sharply in March, a month after rising demand boosted the index to its highest level since mid-2011.

Canada's official manufacturing Purchasing Managers' Indexes, the PMI, rose to an 11-month high to 60.9 in March 2013. In March, retail sales in China increased 12.5% year on year, up from 12.2% increase in February. As a result, despite some exports, imports also surged in the first quarter, resulting in the first trade deficit in more than a year.

In the January to March quarter, annual Chinese growth was 7.7% compared to 7.9% in the previous quarter. Industrial output rose 8.9% in March from the year earlier, much lower than the consensus forecast of 10%. A representative of Societe Generale regarded these figures as an indication that the Chinese economy is in a state of a weak recovery.

For the euro region as a whole, the PMI remains unchanged at 46.5 in March compared to a month ago, indicating that activity continues to contract at the same rate. The manufacturing gauge fell from 46.8 to 46.5.

Let's look at trade volume. The containership industry has not changed much since our last conference call back in March this year. According to Clarkson, global container trade is currently projected to grow by 6.1% in 2013, which is faster than the 3.4% volume growth reported in 2012. The combined main lane trade should see a moderate rate of increase after having contracted by an estimated 1.1% in 2012.

Again, according to Clarkson, the main drivers of container trade growth in 2013 are likely to be the non-main lane routes. The fast growing consumer demand in emerging economies to support the expansion of the North-South trades, which are projected to grow by 6.6% this year after having grown by only 3.8% last year.

Containerized exports from the Far East to the southern hemisphere regions like Latin America, Africa and (inaudible) have proved a strong area of trade growth over the last decade with the average size of ships deployed on these routes increasing significantly. With consumer demand in developing economies expected to expand rapidly over the next few years, Clarkson's predict that these trades look likely to remain key drivers of global container trade growth over the next decade.

Meanwhile, according to Clarkson, inter-regional trade is expected to grow by 7.6% in 2013 as intra-Asian trade growth remains strong, currently projected to expand by 8.7% in full-year 2013. The peak leg from specific trade is projected to grow by 4.5% this year.

Trades associated with strong growth in developing nations will do considerably better, but it should be remembered that these are often trades with short sea legs and, therefore, have according to Howe Robinson a very small Panama effect. Howe Robinson predicts an increase in overall demand for container transportation to be only 4.5% in 2013 and 7% in 2014, excluding the Panama effect. We consider this forecast rather conservative.

According to Alphaliner, all the container port volumes have grown by between 3 and 4 times global gross domestic product and materials up to 2005. The GDP multiplier has been reduced to only 2 times since then.

In 2012 the multiplier dropped further to only 1.5 times. The global throughput container growth reaching an estimated 4.6% compared to GDP growth of 3.2%.

According to [Bramer Cisco], global GDP in 2013 is expected to increase by 3.5%, and as such, they estimate that global container demand may increase by approximately 5% to 5.5% based on 2012's 1.5 multiplier and by about 7% if the multiplier rises to 2.0 from 1.5. We consider the latter as the most realistic scenario.

Let's turn to the freight market now. According to Alphaliner, a total of 20 new ships of between 8,500 and 16,000 TEU will be introduced into the Far East and Northern Europe trade in the second quarter, in addition to seven new units that were added in March alone. This rapid capacity influx has triggered a renewed rate war on this route that has sent freight rates crashing by $600 per TEU since the beginning of the year. Spot rate rates from China to Europe are currently offered at $700 to $800 per TEU compared to $1,300 to $1,400 per TEU at the beginning of the year. Based on Alphaliner's survey of the operating results of 21 of the top 30 carriers that have published their financial results, these carriers' combined operating losses from their container shipping operations reached $239 million in 2012 with only seven out of the 21 carriers reporting positive results.

Moody's adding their commentary on the liner company sector says while there are significant profit gains to be had through cost cutting, liner companies who lose their pricing discipline and enter into a new trade war for market share, heavy losses will undoubtedly follow.

We all hope that the lessons learned from the last rate war will prevent such a development from coming to pass as in the long run neither the liner companies nor independent owners gain from such actions. Even shippers and their clients who might gain in the short term from low freight rates would suffer in the medium term from the ensuing disruption in the (technical difficulty) schedule.

Scrapping. According to Clarkson, the high level of scrapping during 2012 has helped to slow active capacity growth. During 2012, the 179 containerships were sold for scrap, which were capable of carrying 330,000 TEU.

During the first quarter (technical difficulty) of this year, 63 ships capable of carrying 135,000 TEU have been scrapped. According to [Bramer Cisco], about 400,000 to 440,000 TEU are expected to be sold to demolition during 2013. If this happens, it represents about 2.5% of the trading fleet as of January 1, 2013.

Let's now turn to the order book. At the beginning of 2013, the Fully Cellular containership order book numbers 476 ships of a combined 3.42 million TEU capacity. This order book is the smallest in terms of capacity since 2004. The overall order book declined by 21% in terms of capacity over the course of 2012.

Again in capacity terms, the current total containership order book represents 20.2% of the existing fleet. As has been mentioned repeatedly in the past, the order book is heavily biased toward the larger units. About 53% of the existing fleet of 8000 trapped TEU vessels had a motor, and 17.8% of the entire fleet of vessels between 3000 and 8000 TEU have been built.

The Panamax order book is equivalent to just 2.6% of the Panamax fleet in terms of capacity. The order book for the smaller ships is insignificant.

According to Maersk Broker, in 2013 the container fleet is expected to increase by 7.8% in terms of capacity, while in 2014 it may increase by a further 6.4%. On an overall basis, Clarkson predicts that while supply growth may accelerate slightly this year, the order book schedule for 2014 and beyond delivery still looks relatively thin.

Let's look at the deliveries though, now. Deliveries in the opening months of the year have been slower than originally scheduled. According to Clarkson, if deliveries continue at the current pace, additions will amount to 1.4 million TEU, which will be 400,000 TEU short of the order book at the start of the year. In 2014 Clarkson's found 1.17 million TEU capacity to be added to the world's containership fleet. The order book schedule declined sharply from the start of 2015 with just 550,000 TEU scheduled to be delivered from the end of 2014 onward.

Now the supply. According to Clarkson's, as of March 1, 2013, the containership fleet numbered 5102 vessels or 16.3 billion TEU, up 6% approximately since the start of 2012. Surplus capacity from the downturn in 2009 is still being absorbed, although slow steaming of a large number of services is now accounting for much of the surplus, along with the approximately 900,000 TEUs still idle. And this much of projected supply growth identified by Clarkson, which is dominated by very small ships, the demand expansion dominated by non-main lane trades where medium and small commerce is generally deployed is being managed through the cascade, which continues to top the impact of surplus capacity down to regional trade and the charter markets. This is not a trend that can last forever, though. What is unfortunate is that nobody can accurately predict when it will start weakening due to market restrictions of size and logistics.

As a result of the supply/demand predictions referred to above, Clarkson's expects demand and supply growth to be roughly balanced through 2013.

A quick word on idle tonnage, according to Alphaliner, idle containership tonnage has increased to 5.3% of the global fleet from under 3% in July 2012 in response to the weak operating environment. They note that nearly a third of the vessels currently in layup are in the 3000 to 5100 TEU range, and unemployment levels remain at their highest since February 2010.

Let's turn to the outlook, finally. The general prediction of analysts with which we agree is that the short-term upside to the containership sector appears to be limited. Although according to Clarkson the predicted gradual improvement of bulk freight rates will provide a better base for calculating demand, carriers will still have to focus their attention to capacity management in the face of ongoing deliveries to keep rates at reasonable levels. Clear risks on the demand side still remain, and then improvement is likely to be very gradual.

According to Howe Robinson, the coming months are not going to be easy, and there is some way to go before demand is expected to be able to support the order book. They see, however, signs of an uplift in charter rates, and new building delays will help to offset some of the oversupply. This, according to Howe Robinson, should signal the floor for second-hand prices, and they believe that it will only take a small increase to push up prices for older ships.

These developments have not influenced significantly management's strategy of expanding the Company's fleet. We still intend to focus on acquisitions of high-quality tonnage with a healthy cash flow which will support the dividend policy going forward. The only fine tuning which could take place in the Company's expansion plan is to shift the focus towards the acquisition for slightly larger tonnage, which in spite of the overbuilding, maintains attractive trading features for liner operators.

Therefore, even though we have not changed our view that eventually the medium-size tonnage will be in short supply leading to significantly higher time charter rates, in the meantime larger tonnage will offer considerably higher cash flow at attractive acquisition prices. So we, therefore, shift our acquisition vessel size criteria towards the 6000 to 8000 TEU range so as to have a diversification of ship sizes in the Company's fleet, enabling us to take advantage of short-, medium-, and longer-term trends in the containership market.

I will now pass the call to our CFO, Andreas Michalopoulos, who will provide us with the financial highlights of the first quarter of this year.

Thank you, Stacey, and good morning. I am pleased to be discussing today with you Diana Containerships Inc.'s operational results for the first quarter of 2013.

First-quarter 2013 net loss from Diana Containerships Inc. amounted to $31.8 million, and the loss per share amounted to $0.99 as a result of the noncash impairment loss of $32.6 million recorded during the quarter for the vessels Maersk Madrid, Maersk Malacca and Maersk Merlion without which the results of the first quarter of 2013 would be a profit of $0.8 million, while the earnings per share would be $0.03 for the quarter.

Time charter revenues, net of prepaid charter revenue amortization, amounted to $15.1 million compared to $12.4 million in 2012. The increase in time charter revenues was due to the enlargement of the fleet after the addition of the Cap Domingo, Cap Doukato, APL Sardonyx, APL Spinel and APL Garnet in February, March and November 2012 and of the Hanjin Malta in March 2013. This increase was partially offset by decreased average time charter rates achieved during the quarter compared with the same period last year.

Ownership days were 916 for the quarter compared to 638 in the same period of 2012.

Fleet utilization was 100% both in the first quarter of 2013 and 2012, and the daily time charter equivalent rate was $16,203 compared to $19,066 in 2012.

Voyage expenses were $0.3 million for the quarter. Operating expenses amounted to $8.2 million compared to $5.7 million for the same period of 2012. Operating expenses in the first quarter of 2013 increased due to the enlargement of the fleet compared to the same quarter of 2012. On average, operating expenses remained the same, and the daily operating expenses were $8987 for the first quarter of 2013 compared to $8936 in 2012.

Depreciation amounted to $3.4 million for the quarter. Management fees amounted to $0.3 million and represented fees paid to Diana Shipping Services S.A. up to February 28, 2013. Effective March 1, 2013, United Ocean Transport Limited, or UOT, our wholly-owned subsidiary, provides us with management services similar to those previously provided by Diana Shipping Services S.A. The fees payable to UOT do not constitute part of our expenses and are illuminated upon consolidation of inter-Company transactions.

General and administrative expenses were $1.3 million compared to $0.9 million in the first quarter of 2012. The increase was mainly attributable to the establishment of UOT to act as the fleet manager effective March 1, 2013 and was partly offset by decreased legal and NASDAQ fees.

Impairment losses for the first quarter of 2013 amounted to $32.6 million and represent noncash impairment charges recorded during the quarter for the vessels Maersk Madrid, Maersk Malacca, and Maersk Merlion.

As of March 31, 2013, the Company has individually assessed for recoverability the carrying values of each of the three vessels. In performing its assessment for the vessels Maersk Madrid, Maersk Merlion and Maersk Malacca and taking into account the vessel's age and the current market conditions, the Company calculated weighted undiscounted future cash flows under different scenarios, including that the vessels would be sold immediately after the termination of their employment in May 2013. The assessments included that the carrying values were not recoverable, and the Company has recognized as of March 31, 2013 an impairment loss for each one of the three vessels, being the differences between the carrying impaired values as per required by US GAAP.

Interest and finance costs for the first quarter of 2013 amounted to $0.8 million compared to $0.7 million for the same quarter of 2012 and include the interest and loan fees relating to our $100 million credit facility with RBS.

Turning to dividend policy now, for the first quarter of 2013, the Board of Directors has decided to declare a dividend of $0.30 per share.

Thank you for your attention. We would be now pleased to respond to your questions. I will turn the call to the operator who will instruct you as to the procedure for asking questions.

(Operator Instructions). Michael Webber, Wells Fargo.

Obviously a pretty busy quarter for you guys. A lot to get into. I wanted first to talk about how you think the sale proceeds, the loans, and the raise impact your thought process on the dividend? Before we kind of jump into each of those individual items, how do you think about that in terms of it impacting your ability to keep paying out $1.20 a year? And do you exhaust those loan proceeds and sale proceeds before you start looking at an ATM, which might be a bit dilutive to the dividend?

Mike, this is Ioannis. First of all, let's go back and look at the Company before this announcement. The problem with that Company it was perceived by analysts and shareholders the lack of sustainability of revenues, visibility of revenues, and dividend capacity of the Company.

Yes.

So basically what we are saying to you now is that during the next 12 months, we will have more or less another $120 million to spend, which will clearly enhance the sustainability, the visibility, and also the dividend potential of this Company.

This is something that you have also talked about in your analysis in the past, seeing something like this happening. And we feel that by doing that, we clearly give to this Company a period where revenues are going to be sustainable, and the Company will have the ability to pay meaningful dividend, and at the same time, the market is going to be working towards recovery and much, much better rate environments.

As regards to the ATM questions, we feel that this is much, much better than doing an offering at a point. What we clearly say to our shareholders is that slowly without -- and we will be very careful not to influence the daily trading a lot, slowly to raise this $40 million instead of what everybody was afraid of that one day we will say to all of our supporters right away, yesterday we have raised $40 million at a discount of 10%.

Right. That is very helpful. Thank you, Ioannis.

Stacey, I wanted to jump to you real quick in terms of the use of proceeds here. You talked about moving away from the Panamax class and moving a bit higher because the near-term employment prospects are better, despite the steeper order book. What are you seeing right now in terms of -- how many $6000, $8000 fees you're actually seeing right now that actually have protos attached to them, and is there any kind of change from when you guys are looking at employed versus nonemployed assets? I mean that's --.

In the larger size range that we have been looking at as of the last few months, there isn't a class of ships which are being offered for sale. There is a trickle, let's call it.

Now, we are looking at every single ship which is coming out for sale and at its employment prospects. The important point here is that for as long as the cascade is in place, these ships are so attractive for liner operators that they are being paid healthy time charter hires compared to their values, and they are placed in services, at the same time displacing smaller ships.

So for as long as the cascade prevails, these ships are going to be making proportionately better earnings than the smaller ships are. When the cascade starts weakening and eventually disappears because nothing lasts forever, then we are going to see the medium-sized ships catching up in earnings compared to their prices when we look at the different price ranges.

That makes sense. So can I go back to one of your first comments, though not a lot --

Sorry. But in addition to what Stacey said, adding one or two work courses in the Company is the right time to do something like this. You continually see what we mean by work courses. We can go to these higher types of vessels and have one or two of those vessels much more modern than our existing vessels in the fleet. This is the right time to do it in order to enhance with sustainability and visibility of the revenues.

That definitely makes sense. I just wanted to jump back to something Stacey said originally in terms of not being a flood of ships on the market that have charters attached to them right now. In terms of maybe in the context of putting proceeds to work, what sort of timeframe do you think you will be looking at? And then without maybe specifics, how does that compare to others periods? I mean if there is not demand for some in the water right now that have charters that are available for sale, how do you think about that impacting your ability to put it to work?

Well, we have to try our best and we cannot predict with any degree of accuracy, but we are hoping that within the third quarter of this year we are going to have ships operating in this size range.

Now, how many and at what time charter hires remains to be seen. But it will be, of course, significantly, I would say, higher than anything earned today on the spot market by the smaller ships, but not so much higher than what these ships would earn today. So we will be buying ships here at or above their market time charter employment rates. And, therefore, their prices are not going to be significantly at all inflated compared to their charter fee revaluation.

Sure, okay. That's helpful. One more for me, and I'll turn it over. Just around the facility from Diana, it's very funny you guys landed on $50 million. I mean Diana has got -- DSX has got a lot more cash. You are raising $40 million, you've got sale proceeds, and you could certainly lever that up more. I'm just curious at how you landed on $50 million?

The $50 million is we officially requested (inaudible) Diana Shipping Inc. for this amount. We feel that the debt level of Diana Containerships Inc. of $50 million, together with the obvious facility of $190 million at the moment, the $150 million is more than enough as we are today. If we had more capital and more equity in our books, then extra debt may be possible. But at the moment and for the new year to medium future, we do not think attaching more debt is going to help.

As you remember, Mike, this is always what we had announced, that we were looking to have a debt level of $158 million. And in the previous quarter, we were always saying that we were discussing the additional $50 million, so this is the number we had in mind from the beginning.

Okay. Great. That's really helpful. Thank you, guys. I appreciate the time.

Kevin Sterling, BB&T Capital Markets.

Andreas, let me start with you. Now that you sold some of the older vessels, how should we think about a good quarterly run rate for the daily operating expenses going forward?

I think that the daily operating expenses for the next quarter you should have them on or about the same levels because of the vessels going to the scrap yard, the three that result. But going forward, the rate you should take into account is slightly lower at around $8000 to $8500 per $100 per day per vessel. Of course, you would have to bear in mind that we intend to increase the tonnage, so this rate will be adjusted accordingly, depending on what we purchase. But at the moment with the current fleet, $8000 to $8500 per $100 per day going forward is a good number to have.

Got you. Okay. Thank you, Andreas. That is very helpful.

And now for the timebeing, are you done with the vessel sales? Do you have your fleet kind of where you want it in terms of age?

Kevin, the reason why we have sold the three vessels, it is very simple. We have been now around $30 million worth of profit. In other words, supposed to be losing for the next two years, let's say, something like $5000 per day, each one of those. And what we can do today is transform this $30 million into something that is going to be earning $10,000 above operating expenses, above breakeven per day for the next two years.

If you look at the existing charters and the existing vessels that we have, we don't have any other vessels in that position.

Got it. That makes a lot of sense. Thank you.

And just kind of following up on Mike's question, you talked about your possible shift into some of the larger tonnage. What is really driving the improved charter rates in the larger tonnage versus the medium tonnage that you mentioned earlier?

It is primarily efficiency and economies of scale, the cost per box in the transportation of these longer-legged voyages. The fact remains that they are so attractive and they are the tools that liner operators want to use to gain market share. They think, and rightly so because they know their business better than we do, that Panamax size ships or smaller ships have not the right hardware to use in order to gain market share. You need the economies of scale, and that's why they are paying good rates and good money for large ships, in spite of the fact that for the last two years or so these are the ships that are being overbid.

And as I mentioned earlier, this apparent anomaly is explained by the cascade. Because if there were no cascades and these ships did not displace any other vessels, we are going to face a collapse in the time charter hires over large ships as opposed to those which are not being built.

But the market, as far as employment is concerned, is not rigid. And we see this displacement of smaller tonnage from the immediately larger tonnage, the niche size range, maintaining the strength in the earnings of the larger units.

Okay. Great. Thank you for that color. It was very helpful.

And if I could sum up, it sounds like what you're saying, as you think about the larger tonnage, vessel prices are attractive in your opinion, but you combine that with improved charter rates, it makes sense for you guys to look at this strategy. Is that a fair summation?

Yes, it is, indeed. And if you look and do some paper calculations for returns on equity, you can see even with reasonable assumptions on residual values that the returns are still, after all this tonnage delivery in the larger size, is more attractive there than they are in the medium-sized vessels. And that is because the medium-size ships, even though their supply has been very low as far as new buildings is concerned, they are getting a lot of tonnage from the higher and larger size ranges, taking up their trade. So their returns on any investment made today are pretty dismal.

Right. Okay. Thank you so much for your time today, gentlemen. I really appreciate it. Best of luck to you.

You are welcome. Thank you.

Jeff Rudner, UBS.

Actually, two questions. One, on the balance sheet, you show the vessel's net book value at $238 million. Could you comment on how that compares to the current market value of the eight vessels?

Actually, we do not give this type of guidance. We have the luxury of being analyzed by many analysts that you can find on our website and choose from, and they usually get a very good color of what the market values of those vessels are and our net asset value, as well.

Okay. Then the next question is, over the coming eight months remaining in 2013, would you anticipate vessel values remaining the same or possibly going up at all?

Based on the analysis of Mr. Margaronis given earlier, we are not very optimistic regarding the near future, but as regards the medium-term, we are optimistic. So if that is after the eighth month or at the eight months that you referred to, it's something that we certainly don't know.

Okay. Thank you very much.

Thank you. We've come to the end of our question-and-answer session for today. I will turn the floor back to management for closing comments.

Thank you, again, for your interest in and support of Diana Containerships. We look forward to speaking with you in the months ahead. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.