Performance Shipping Inc (PSHG) 2014 Q4 法說會逐字稿

Greetings and welcome to the Diana Containerships Inc. 2014 fourth quarter and year-end earnings conference call. 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, Ed Nebb, Investor Relations. Thank you, sir. You may begin.

Very good, thank you and greetings to everyone and thank you as well for joining the Diana Containerships Inc. 2014 fourth quarter and year-end conference call. The members of the management team who are with us today include Mr. Symeon Palios, Chairman and CEO; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary; and Ms. Eleni Leontari, Chief Accounting Officer.

Before management's remarks, let me briefly remind you of the Safe Harbor notice, which is attached to today's news release. Certain statements made during the conference call which are not statements of historical fact are forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act. Forward-looking statements are based on assumptions, expectations 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 make those future results to differ 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.

Thank you, Ed. Good morning and thank you for joining us to review the performance of Diana Containerships Inc. for the fourth quarter and full year 2014.

I am pleased to report that Diana Containerships made solid progress during the year, both in our improved financial performance and investments in our fleet to position the Company for future profitable growth.

In terms of our financial progress, we delivered net income of $0.9 million for the 2014 fourth quarter. This was a significant turnaround compared with the net loss of $19.8 million for the fourth quarter of 2013, which was mainly the result of impairment charges and direct sale and other charges for two vessels.

For the full year 2014, our net income was $3.2 million. This improved very substantially over the net loss of 2013 of $57.3 million, which again was mainly the result of impairment charges and direct sale and other charges for five vessels.

Time charter revenues, net of prepaid charter revenues amortization were $15 million for the 2014 fourth quarter and $54.1 million for the full year, both relatively unchanged from the respective 2013 periods.

Our balance sheet remains a source of strength, with approximately $92 million of available and restricted cash and over [$2056] million in stockholders' equity. As a result, we continue to be well positioned to take advantage of opportunities to expand our fleet presence in the current marketplace.

The Board of Directors today declared a cash dividend on the Company's common stock of $0.0025 per share, with respect to the fourth quarter of 2014. The cash dividend will be payable on or around March 26, 2015 to all shareholders of record as at March 11, 2015.

As I mentioned earlier, we made investments in our fleet to position the Company to benefit from the long term opportunities we see in the containership market.

In this regard, we acquired three container vessels during 2014. We took delivery in November of the motor vessel, Santa Pamina, a 2005-built Panamax container vessel of approximately 5000 TEU capacity. The motor vessel, YM Great, a 2004-built Post-Panamax container vessel of 5576 TEU capacity was delivered in October. In September, we took delivery of the motor vessel, YM March, a 2004-built Post-Panamax of 5576 TEU capacity.

As a result of these vessels purchases, as well as the sale of the 1995-built vessel, Sardonyx in February 2014, we have completed a significant fleet modernization program. We now have a fleet of 11 container vessels. Our fleet is time chartered to some of the industry's leading container lines with coverage for approximately 56% of the days in 2015, providing a stable revenue stream.

The contracted gross revenue of the fleet for 2015 onwards is approximately $37.7 million. In summary, the performance of Diana Containerships for 2014 reflected improved profitability, a solid balance sheet and a fleet that is well positioned for opportunities in the next phase of the industry cycle. We remain dedicated to delivering profitable growth and high shareholder value over the long term.

Now, I will now turn the call over to our President, Stasi 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 welcome to all who have joined us in this fourth quarter 2014 conference call of Diana Containerships Inc.

As we have mentioned in past conference call, the containership market will most likely start showing signs of recovery sooner than the bulk carrier markets. We can finally say and hopefully explain our reason later on in this call that the first signs of recovery seem to be manifesting themselves in the container trade, particularly in the medium-sized sectors in which we had been focusing our investment strategy.

Starting with macroeconomic considerations, the IMF revised its global GDP growth forecast to 2.5% this year, down from 3.8% and 3.7% for 2016, down from the previous forecast of 4%. World Bank is as usual slightly more conservative and anticipate the global GDP will grow by only 3% this year and 3.3% in 2016.

According to Maersk Broker, in the United States consumer confidence is at its highest level since 2004 with plunging oil prices giving a boost to household budget. IMF expects the US economy to expand 3.6% in 2015 and 3.3% in 2016. In China, a [flash] estimate of the Purchasing Managers Index for January improved slightly from 49.6% in December to 49.8%. This is the first improvement that this index has shown since last October.

However, according to Maersk Broker, the Chinese government plans to cut its growth target to 7% for 2015 as policymakers try to manage slower growth, job creation and pursuing reforms intended to make the economy more driven by market force.

According to Braemar Seascope, the Institute of Supply Management reported that the index of China's Purchasing Managers fell to 53.5% in January from a reading of 55.5% in December. Analysts have expected the manufacturing PMI to decline to 54.5% in January.

In the Eurozone, the European Central Bank announced that it will inject up to EUR1 trillion into the ailing euro economy. Lowering the cost of borrowing should encourage banks to lend in Eurozone businesses and consumers to spend more. This is a strategy which appears to have worked in the United States between 2008 and 2014. The IMF is expecting Eurozone growth to come in at 1.2% this year and 1.4% in 2016.

Turning to the freight market now, according to figures presented by Clarksons, freight rates across global trade routes have in general seem limited overall upside in 2014, which is naturally a sign of continuing oversupply.

The overall Shanghai Containerized Freight Index ended 2014 at 1049 points compared to its opening reading of 2014 at 1113 points. However, based on the Shanghai Containerized Freight Index, freight rates of boxes shipped from Shanghai to Europe averaged $1,238 per TEU in the first three quarters of 2014, which was 14% higher than the full year 2013 average.

Unfortunately on an overall basis, non-main lane freight rate prospects going into 2015 will continue to depend largely on the rates of the by-now famous cascade. According to Clarksons, carriers look likely to be able to cascade enough capacity to keep the main lane supply demand balance steady in 2015. However, at the same time, they may also be taking up to a long-term structural downward trend in freight cycles per box caused by the continued upsizing of the main lane vessels.

As we have mentioned before, in the longer term slowing cascade along with the thin order book in the small and medium sizes and rapid demolition to tighten supply in certain subsectors. Small and medium charter market sizes may eventually see a supply deficit as demolition continues to outstrip delivery and the availability of flexible cascading opportunities gradually decline, which may bring with it the potential time charter market upside.

As for time charter rates, according to Alphaliner, despite the reduction in idle tonnage during 2014, time charter rates stayed to strengthen and charter periods remained relatively short in what turns out to be a jittery market. The Alphaliner Charter Index ended the year at 67.7 points, up a marginal 3.7% compared to December 2013. As mentioned by Alphaliner, the container charter market has got off to a good start though this year, with a substantial volume of fixtures and further progress on charter rates especially for Panamax tonnage.

In the Panamax sector, rates are showing further progress this year on the back of dwindling availability of some ships. Given recent developments in the Asia to West Africa routes where further Panamax tonnage will be needed in the next two months to replace smaller ships of the 2,500 TEU size, rates are likely to gain further momentum according to Alphaliner. In the 5,500 TEU segment, a vessel was chartered for a short 50-day period at $16,500 per day, for another vessel of similar size back in November had its employment extended for a similar period at only $14,750 per day. An over Panamax vessel of 4,620 TEU was chartered to Maersk line for two to four months at $16,750 per day. This is significantly higher than the average of $15,000 per day that these tonnages were typically fixing in 2014.

Let's look at idle tonnage now. The reduction in the idle fleet probably signals a tighter marketplace. According to Alphaliner, the idle capacity of the containership fleet stood at just over 200,000 TEU at the end of January this year. This was just around 1.1% of the fleet capacity. Five ships of about 7,500 TEU are currently unemployed out of a total of 116 ships of over 500 TEU that were reported to be idle according to Alphaliner on the 12th of January, 2015. The idle fleet in January remained at the lowest recorded level for the month of January since 2009.

Let's look at the global container trade now. According to Clarksons, the global container trade grew by approximately 6% in 2014 and is expected to grow by 6.7% in 2015, following an increase of only 4.9% in 2013. In 2016, global containers rate is projected to grow by 6.8%. In 2014, main lane rates grew by approximately 4.7% and non-main lane rates by 6.5%.

When the final figures are in, volumes on the Far East to Europe main lane are expected by Clarksons to grow by an impressive 8.1% in 2014. Meanwhile, eastbound transpacific volume growth is expected to reach 5% in 2014.

Volumes on the intra-Asian network are expected to continue expanding robustly at 7.8% in 2015, as developing Asian economies grow strongly.

According to Maersk Broker, in 2015, the Panamax segment continued to be busy fuelled by demand for ships to the US West Coast and rates for short period employment have now climbed up in the $13,000 per day bracket. According to Clarksons, there will be continued strength this year on the North-South trade with Africa which are projected to grow by 8.2% this year. This is expected to help the total North-South trade volumes grow by 6.1% in 2015.

Let's turn to the supply of containerships. According to Clarksons, the estimated container capability grew by 5% in 2014 and will probably grow by further 5.6% in 2015. For 2016, an early projection is growth of around 3.7% of container capable tonnage.

In 2015, about 1.85 million TEU capacity is scheduled for delivery and due to anticipated figures, Clarksons estimate that around 1.6 million TEU will actually be delivered. On these vessels, about 1.37 million TEU will be 8,000 TEU vessels and larger. In addition, there are 910 million TEU scheduled for delivery in 2016, which includes 65 vessels larger than 8,000 TEU.

According to Banchero Costa, in 2014, 2,000 TEU to 5,000 TEU sector shrank by 2% and a similar tonnage reduction is expected to take place in 2015. At present, according to Maersk Broker, there was a balance between supply and demand for such ships and they anticipate that the markets during the first quarter will show marginal rate of improvement.

During the same year, the fleet in service of the 5,100 TEU to 7,499 TEU grew by 2.6% in terms of TEU capacity, while the 7,500 TEU to 10,000 TEU sector grew in 2014 by 11.5% in terms of TEU. As expected, the 10,000 TEU plus sector increased in capacity by a massive 31.4%.

There are some times that even West Africa will require more yield tonnage even for local coastal [figuring]. Consequently Maersk Broker anticipate a recovery in time charter rates for such ships throughout both the second and third quarters of this year.

Let's look at the newbuilding order book. According to Alphaliner, at the beginning of February this year, there were 3.7 million TEU on order, representing about 18.3% of the existing fleet. As a percentage of the existing fleet by size range, Clarksons report that the 3,000 TEU plus Panamax vessels have an order book representing a mere 0.4% of the existing fleet. The 4,000 TEU to 8,000 TEU Post-Panamax order book is about 5.9% of the existing fleet and from 8,000 TEU to 12,000 TEU vessels, the order book is 28.7% of the existing fleet. The numbers on order from that size range upward are over 50% as there are only 192 vessels trading and 99 ships on order.

As for anticipated delivery by size, Alphaliner reported in the 5,100 TEU to 7,500 TEU size brackets, there are only 11 ships scheduled for delivery in 2015 and none thereafter. In the size range from 4,000 TEU to 5,099 TEU, there are a mere eight ships scheduled for delivery in 2015, and just one in 2016.

In the next size down, the 3,000 TEU to 3,999 TEU bracket, there are 17 ships coming in 2015 and one in 2016. The smaller sizes have a few more vessels scheduled for delivery during this year and next, but as a percentage of the existing fleet of ships, these are fairly insignificant.

Let's look at the newbuilding orders in 2015. According to Clarkson, earlier this year, Evergreen announced the time chartering to Shoei Kisen Kaisha of 11 18,000 TEU ships scheduled for delivery during 2018 to 2019. Clarksons believes that this contract is linked to 11 units of 18,000 TEU scheduled to be built by Imabari Shipyard.

In the meantime, Costamare reportedly ordered four vessels of 20,500 TEU each and Sinotrans four high class units for 4,000 TEU each. These are scheduled for delivery at the end of 2015 and during 2017.

Unfortunately, Clarksons believe that further orders are expected for very large containerships of 20,000 TEU or larger in the coming months. Hopefully, the delivery of these units will not be before the end of 2018.

Let's turn quickly to look at operator alliances. According to Clarksons, major operators are at long last trying to rationalize their fleet expansion and stabilize market share through the formation of alliances and the expansion of service cooperation.

After the market started rejection of the P3 network, there is two M, which is Maersk line and MFB and the Ocean 3 which is TMA CGM, United Arab Shipping Corporation and the CSCL Grouping means that almost all major operators are now involved in existing or proposed alliance.

The top 10 operator owners now control according to Clarkson 11.8 million TEU, which is 59% of the total container capable fleet capacity. This trend if it continues will hopefully put a break on the continued market share oriented ordering of very large ships, which have been flooding the markets with container slots over the past four years and which will continue doing this through 2015.

A quick look at slow steaming now. Since 2009, running capacity growth has been limited by the widespread adoption of containerships slow steaming. For the record, it has been estimated that this has absorbed around 2.6 million TEU of nominal capacity since the end of 2008.

Let's look at demolition now. According to Clarksons, total demolition is expected to reach 420,000 TEU in 2014 and remain at an elevated level in 2015 when a similar amount of TEU capacity is expected to be scrapped. However, so far this year, we have only around 15 container vessels reported scrap, which if concerned would be down 38% on last year. I will repeat it is still early days to draw any conclusion from this number.

During the first nine months of 2014, the average age of ships in scrap was 21.8 years, while 26 ships from those scrapped during that period had been less than 18 years old. The scrapped tonnage includes 50 Panamaxes and five Post-Panamax vessels. Most of these units have been previously idle.

According to [Doctor] Transport, the lower price of oil calls for regular recalculation by liner companies over whether slow steaming still makes sense. So far, there have been very few occasional changes to particular service. We need to watch that space for further news going forward due to the potential effect of increased speed will have on available supply.

Slippage now, according to RS Platou, slippage in newbuildings delivered during 2013 came to about 28% of the order book, while in 2014 the slippage will probably come in at 16% of the 1.8 million of scheduled deliveries. Slippage during 2015 is expected to be minimal by most of the analysts such as Braemar Seascope and Clarkson.

Congestion now; according to Braemar Seascope, port congestion has provided the containership charter market with a significant boost in rates in recent weeks, while also helping to keep the idle box ship fleet at low level. These we have mentioned earlier on in this presentation. A major congestion in the United States West Coast was mostly concentrated in the Los Angeles Long Beach area due to labor dispute between the unions and the terminal operators and carriers of these ports.

The congested tonnage comes to approximately 215,000 TEU which is about the same amount of tonnage recently reported as being idle. So far this year, port congestion has forced carriers to inject some 36 extra ships with a combined capacity of 253,000 TEU into the Far East US West Coast trade. Further to this, Alphaliner reported that the diversion of cargos to ports on the US East Coast has boosted demand in the Far East US East Coast trades with port rates on that route strengthening significantly.

During 2014 and before the labor unrest concentrated, the port of Los Angeles have reported throughput bracket of 8.3 million TEU, representing a growth rate at the time of 6% on a year-on-year basis.

From the base I presented above, it would not be unreasonable to conclude that we have at long last seen the bottom in the containership market. From here onwards, there should be a gradual improvement of rates across the size ranges, particularly the middle sizes, which are acquiring a scarcity value for the reasons mentioned earlier on.

So this environment make this more or less imperative for the management team to source good tonnage in the middle size ranges before the kind of recovery become more obvious and general sentiment changes for the best. This will as usual lead to strengthening of second hand prices and will reduce investment opportunities available.

We will endeavor to purchase tonnage which we will try and finance conservatively, thus creating a good sized fleet ready to take advantage of what we believe will be better rates and values over the next few quarters.

I will now pass you to our CFO, Andreas Michalopoulos, who will provide you with the financial highlights of the last quarter of 2014 and of the year as a whole. Thank you.

Good morning, and thank you. I am pleased to be discussing today with you Diana Containerships Inc. operational results for the fourth quarter of 2014 and the year ended December 31, 2014.

Fourth quarter 2014; net income of Diana Containerships Inc. amounted to $0.9 million and the earnings per share amounted to $0.01.

Time charter revenues net of prepaid charter revenue amortization amounted to $15 million compared to $15.5 million in 2013. The decrease in time charter revenues was mainly due to decreased average time charter rates, despite increasing ownership days in the fourth quarter of 2014 compared to the same period of 2013.

Ownership days were 944 days for the quarter compared to 908 days in the same period of 2013. Fleet utilization was 99.9% for the quarter compared to 99.6% for 2013 and the daily time charter equivalent rate was $16,826 compared to $15,878 in 2013.

Voyage expenses were $0.1 million for the quarter. Operating expenses amounted to $7.8 million in the fourth quarter of 2014 compared to $7.3 million for the same quarter of 2013, an increase of 7%.

The increase was attributable to the 4% increase in the ownership days and also the increased average repairs, maintenance cost and taxes, partly offset by decreased average crew cost.

Daily operating expenses were $8,229 for the fourth quarter of 2014 compared to $8,064 in 2013. Depreciation amounted to $2.9 million for the quarter.

General and administrative expenses were $1.8 million compared to $1.2 million in the fourth quarter of 2013. The increase was mainly attributable to increased salaries of the office personnel and increased compensation cost on restricted stock awards.

Interest and finance costs for the fourth quarter of 2014 amounted to $1.7 million, same with the respective quarter of 2013.

Turning now to the year ended December 31, 2014, net income of Diana Containerships Inc. amounted to $3.2 million, and the earnings per share amounted to $0.06. Time charter revenues, net of prepaid charter revenue amortization, amounted to $54.1 million compared to $54 million in 2013.

The net time charter revenues slightly increased despite the decrease in the ownership days in 2014 compared to those of 2013, mainly as a result of the decrease of the prepaid charter revenue amortization. Ownership days were 3,198 days in 2014 compared to 3,515 days in 2013.

Fleet utilization was 99.7% compared to 97.9% in 2013, and the daily time charter equivalent rate was $16,803 for the period compared to $15,152 for the same period of 2013.

Voyage expenses were $0.3 million. Operating expenses for the year ended December 31, 2014 amounted to $26.6 million compared to $30.9 million for the same period of 2013.

The decrease in operating expenses was due to the decrease in the ownership days, and also due to the decreased average crew costs, stores and spares expenses.

Daily operating expenses were $8,205 for 2014 compared to $8,780 in the prior period.

Depreciation amounted to $10.3 million. General and administrative expenses amounted to $6.3 million compared to $5.1 million for the same period in 2013. The increase was mainly attributable to the full operation of Unitized Ocean Transport Limited, our fleet manager in 2014, compared to the previous year when the Company started its operations in March, and also due to increased salary.

The increase in general and administrative expenses was partly offset by decreased legal expenses and then for these retirement (inaudible).

Loss on vessels' sales amounted to $0.7 million and relates to the sale of the vessel Sardonyx in the first quarter of 2014. Interest and finance costs were $6.7 million for 2014, compared to $4.6 million for 2013. In 2014, we had increased average debt outstanding compared to 2013 as well as increased average interest rates.

Turning to dividend policy, for the fourth quarter of 2014, the Board of Directors has decided to declare a dividend of $0.0025 per share.

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

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions). Ari Rosa, Bank of America/Merrill Lynch.

Just wanted to ask about the outlook for future vessel acquisitions; what does the pipeline currently look like? And I know you mentioned you're expecting to add capacity over the course of the year, I just wanted to get a little more color on that.

As we speak, we are inspecting vessels. They are out there vessels to be purchased along the lines that we have explained in the past, medium-sized vessels of course. And we are currently inspecting two 5,000 TEU vessels, two Panamax vessels, and there are others around. And we feel very confident that we will be buying something soon.

Okay, great. That's helpful. And then just one other question I wanted to ask was on the West Coast port shutdown, what impact that had on your business, and you know, if you guys felt there was some impact on rates there?

Yes, as I mentioned earlier, there has been an impact on rates, particularly for ships going from the Far East to the US East Coast. Obviously, our ships are on time charter, so we don't feel any great rate fluctuation due to this stoppage. But generally, there have been ships which are tied up there, capacity has been reduced by around 25 to 40 ships, primarily larger vessels I would say, not the size that we are focusing our attention on. But everything helps, if you can allow me to use this phrase loosely, because if main line ships are busy transporting boxes from the Far East to the US East Coast, they are less busy in exercising their cascade effect on the immediately smaller sizes of the 8,000 TEU and they in turn to the Panamax size.

I would like while we are at this to mention also an error which possibly went unnoticed. I mentioned that in 2016, there are about 910 million TEUs scheduled for delivery. Unfortunately, that is not the case. And as you may have gathered, I made a mistake, if you've not then the scheduled delivery size is 910,000 TEU for 2016 thus far.

And just one follow-up question there. So, on the higher rates, do you think there is any chance that those endure for a longer period or now that the West Coast port shutdown has been resolved, do you think that those rates could go back to where they were previously?

There will be possibly an effect on the larger sizes, which will be main lane trade from the Far East to the US East and West Coast. But on the Panamax sizes, we feel that what we are seeing now is particularly encouraging because we are seeing it at the low season of containership trade, and hopefully we are going to see even better rates, but we are not as certain of it.

When spring and summer come, and the peak season (inaudible), of course we can never be certain of such facts and events and we cannot predict with any degree of accuracy, but if times are good in the sense that whether this issue with labor tensions in the US West Coast is resolved or not, the Panamax ships will remain in relatively short supply, because sometimes many delay the tonnage and we can't see many coming up for fixing over the next couple of months.

Okay, terrific. Thank you for the time.

You are welcome.

Kevin Sterling with BB&T.

Good afternoon gentlemen. It's actually William Horner on for Kevin.

Hello William.

Thanks for taking my call. Real quick on -- I appreciate the color you gave around the charter market and obviously it's been improving in recent months and the signs of recovery seem to be, as you noted, manifesting. So, I was hoping you could provide some more color around your recent decisions of fixing your vessels on the shorter term charters. Is it the jitteriness of the market that you mentioned in your prepared remarks or is it more of a strategic decision on your part to stagger your renewals for a potential upswing?

Hi, this is Ioannis Zafirakis again. Yes, this is correct. Our model bets on the market recovering and this -- we want to take advantage of this happening and this is why we have gone from the beginning on a short term employment. We want to create value for our shareholders by having vessels to fix while the market is picking up and we will take advantage of that revenue-wise and also asset appreciation. We understand that if you fix long term employment on the vessel, then you are decreasing the effect of asset appreciation if the vessel is fixed for a long period.

Okay. That makes sense. I appreciate that. And just sticking with the charter markets for a second, you've got two vessels, the Puelo and the Pucon, and they are first coming up on their earliest redelivery dates. And have you gotten any indication from the charterer on those vessels as to whether they will continue to employ them through their max redelivery date because I believe if I am correct, there is a penalty that they have to pay associated with if they deliver before that period?

Yes, you can call it a penalty, it's a penalty of $6,000 and as we have no indication at the moment what they intend to do. The fact that they have not redelivered the vessel yet back, or they do not -- we have no indication for that. (inaudible) that the market is picking up.

Correct. And one last, I will turn it over, it's just a housekeeping item on the prepaid charter assumption. If I am correct, looking at the balance, that balance should be fully drawn down this year, correct?

Yes, come again with your question what you want to know on the prepaid.

Yes, on the prepaid charter revenue, I forget what the balance was, I think you have got around $6 million last on the balance sheet. Should that balance be completely worked through this year based on your charters?

Yes, this year, and there is a very, very small portion for I think the first quarter 2016, namely $680,000 for the first quarter of 2016.

Okay, great. Thank you. That's very helpful. Appreciate the time, gentlemen.

Welcome, thank you.

We have reached the end of the question-and-answer session. I would now like to turn the floor back over to management for closing comments.

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

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.