Call Start: 09:30
Call End: 10:15
Euroseas, Ltd. (NASDAQ:ESEA)
Q1 2014 Results Earnings Conference Call
May 21, 2014 9:30 AM ET
Aristides Pittas - Chairman and CEO
Tasios Aslidis - Chief Financial Officer
Michael Webber - Wells Fargo
Harsha Gowda - Blue Shore
Thank you for standing by, ladies and gentlemen. And welcome to the Euroseas’ Conference Call on the First Quarter 2014 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Tasios Aslidis, Chief Financial Officer of the company.
At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise you that the conference is being recorded today, Wednesday, May 21, 2014.
Please be reminded that the company announced their results after the market closed yesterday with a press release that has been publicly distributed.
Before passing the floor to Mr. Pittas, I would like to remind everyone that in today’s presentation and conference call, Euroseas will be making forward-looking statements. These statements are within the meaning of the Federal Securities Laws.
Matters discussed may be forward-looking statements which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized.
I kindly draw your attention to slide #2 of the webcast presentation, which has the full forward-looking statement and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it.
And I would now like to pass the floor to Mr. Aristides Pittas, Chairman and Chief Executive Officer of Euroseas. Please go ahead, sir.
Good morning and thank you for joining Euroseas for our conference call today. Together with me is Tasios Aslidis, our CFO. The purpose of today's call is to discuss our financial results for the three months period ended March 31, 2014.
Let's turn to slide three for our financial results overview. The results of the first quarter of 2014 reflect the continued depressed state of the markets. For the first quarter of 2014, we reported total net revenues of $9.5 million. The net loss for the period was $2.2 million or $0.05 loss per share basic and diluted. Adjusted net loss for the period was the same.
As a result, for the first quarter of 2014, include a $0.2 million unrealized gain on derivatives and a $0.2 million realized loss on derivatives. Adjusted EBITDA for the first quarter of 2014 was $1 million, a reversal from the negative EBITDA during the previous few quarters.
As of March 31, 2014, our outstanding debt was about $52.5 million versus restricted and unrestricted cash of about $62.3 million, indicating the strength of our balance sheet. Our CFO, Tasios Aslidis, will go over our balance sheet in more detail later on during this conference call.
Turning to slide four, we highlight our recent developments. We recently concluded the signing of a previously announced agreement to acquire the contracts for the construction of two Kamsarmax fuel efficient drybulk carriers of 82,000 deadweight each to be built at Jiangsu Yangzijiang Shipbuilding Company and are scheduled to be delivered in the fourth quarter of 2015 and in the fourth quarter of 2016. The total consideration for these two newbuilding contracts is a bit below $60 million.
Simultaneously, we have purchased -- we've chartered back to the sellers the vessel to be delivered in the fourth quarter of 2015 for four years with an additional year at charterer's option. The contract is expected to generate approximately $20 million of revenue over the four years.
To help fund these acquisitions, during the first quarter of 2014, we raised $14.4 in net proceeds through the sale of 11.2 million shares of our stock to an institutional investor at the market price of our stock. We believe that this investment is another vote of confidence in our strategy and in the prospects of Euroseas.
Over the last six months, we have embarked on an investment program for the drybulk part of our fleet by ordering or acquiring the contracts of four newbuilding vessels and agreeing to acquire a secondhand Panamax vessel for a total of $138 million, thus positioning Euroseas to take advantage of the recovery of the drybulk market.
We focused mainly on newbuilding contracts as newbuilding prices have moved only modestly up as compared to secondhand prices and that current prices are in better investment proportion.
Over 30% of the program will be financed with more than $43 million in net proceeds we raised through a preferred offering and aforementioned common share offering. The remainder 70% will be raised within the next two years as it becomes necessary through debt, then perhaps also further equity raises if this proves more attractive and/or operational profits.
Turning to slide five, we highlight our operational highlights that include employment extensions on up to 12-month charters for six of our 10 containership vessels. The four of these vessels at improved rates from previous contracts and the other two at same rates as previously which confirm the slight market improvement we have seen to date.
On the bottom of slide five, we list the recent employment contracts with two of our drybulk vessels, which are index-linked charters, as we still believe the second half of the year will be better than to date.
As per (indiscernible) the secondhand vessel we acquired earlier this year we will be taking delivery of that at the end of this week or beginning next week and we will perceive directly to a shipyard to pass the special survey. We are already seeking employment for that but told that the next couple of weeks will present better opportunities.
Our current fleet is shown on slide six, including the four newbuilding drybulk vessels on the 10-year old Panamax drybulk carrier, our performance fleet is 19 vessels, including nine drybulk vessels and 10 container carriers.
On slide seven, you will find the Euromar fleet, our joint venture with Eton Park and Rhône Capital. Euromar has a fleet of 10 intermediate and handysize containerships and the Post Panamax ship which we recently acquired with another of age of 9.9 years and the total carrying capacity of almost 30,000 teus.
The M/V Akinada Bridge that we recently acquire is a gearless containership of 5,600 teu and 71,000-deadweight built in 2001 in South Korea. The vessel comes within above market time charter attached to one of the biggest Japanese charterers and its expected to improve the company’s cash flow significantly for the next two and half years of its duration by generating over $20 million of revenues.
The full amount of $175 million committed equity, of which $25 million was from Euroseas has been injected into the company. Euromar’s current cash position is about $27 million.
Euroseas has made the commitment to invest an additional $5 million in the containership joint venture and has already contributed $1 million of that money during the acquisition of Akinada Bridge. Currently with the cash on hand, we estimate that we’ll be able to purchase one or two additional vessels.
Let’s move to slide nine for brief overview of the world economy. The recovery in the U.S. economy has once again made it the growth engine we know to be, while the Eurozone is seemingly also turning the corner. However, political and economic uncertainties there and globally of course, remain and should be factored in while assessing the market.
From the positive side, despite the recent slowdown in the U.S. housing market, prospects remain bullish as the employment numbers continue to improve. For the Eurozone, the IMF increased its 2014 growth estimate to 1.2% fuelled by stronger GDP growth in Northern Europe while stronger Eurozone bank balance sheets could help the region further.
From the opposite side of looking at the world economy with the glass half full, there remains a need for further funding of emerging markets since it’s becoming costlier, we’ll grow still safely. We must remember that two-thirds of world’s GDP growth comes from emerging markets and global trade is greatly correlated with that.
Even if China slowdown is much smoother than anticipated by the most various estimates, it still would affect world trade. And this is something that shipping industry is paying well close attention to. Other risks to the world economy include the Eurozone concern the risk of deflation, outcome of European Parliamentary elections that could result in slower European integration of growth and the Ukranian situation and other trouble spots mainly in Near and Middle East area. All the sources of geopolitical and economic uncertainty may affect growth negatively.
Slide 10 shows our expectations of world’s GDP according to the IMF and shipping demand growth are evolving. Projected GDP growth in 2014 is now expected to be slightly less than what it was three months ago, mainly due to Russia but also Japan, Brazil and the other emerging economies. China is still expected to grow by 7.5% which rolled over than previous years, remains quite healthy and supports the drybulk sector.
The 3.6% annual growth in the global projection is higher than the 2013 growth of 3%. Further out in 2015 and ’16, the global economies projected by the IMF to grow at even healthier rate of 3.9% each year. These are levels not seen since 2011.
As can be seen on bottom of slide 10, Clarksons’ projections point to drybulk growth of 4% in 2014, up from earlier projections of 3%. Containerized Trade has remained unchanged from earlier projections by Clarksons of 6% in 2014.
Again, this demand background, we have to also look at ship supply. Let’s turn to slide 11. The delivery schedule for drybulk vessels in the beginning of 2014 stood at a significant 10.4% of the fleet. This does not take into account cancellations, slippages and scrapping.
As in the past years, it is generally difficult to quantify how much of the orderbook will get delivered this year. There will be a reasonably good year expected but not yet seeing. It should be less than the 30% to 40% we have been seeing during the last few years, maybe around 20%.
Let’s turn to slide 12. The Containership delivery schedule in 2014 stood at 9.5%. [Technical Difficulty] witnessed last year, approx around half of that. Please note that the existing orderbook is heavily skewed towards the larger ships. However, the cascading is happening and happening fast, which implies trades of all sizes that affected.
We have seen the Panamax ships within 3,000 to 5,000 TEUs, are being displaced by the new bigger ships. At the same time, some of these ships are available to cascade down with some of the routes currently served by our size of ships between 1,000 and 3,000 TEUs.
Factors like the large size, high consumption and lack of gear are restricting their possible uses. But nevertheless, the Panamaxes are penetrating our markets and we believe that in order to see a sustained recovery, we will need to see all extra capacity absorb regardless of vessel sizes.
Let's turn to slide 13 to summarize our view of the markets beginning with drybulk. We anticipate that newbuilding deliveries will soften up in the second half 2014 and rates will firm up from the extremely low current spot levels.
Our own fundamental analysis suggest a balanced demand and supply for 2014, which will result in the average time charter being similar to last year's. This averaged around $10,100 per day for Panamax one year time charter rates and closed the year at $14,375 per day. The FFA market currently suggests one year rates in the range of $11,000 a day.
In 2015, we expect rates to strengthen a bit more. The FFA market currently shows $1,000 per day increase for Panamax one year rates. However, fundamentals for 2016 onwards look very uncertain.
The 2016 orderbook is causing worries that the market will soften up again. We would need only minimal incremental deliveries in 2016, to keep rates at the 2015 level. Risk of over ordering, driven primarily by price of equity funds remains.
As for containerships, we expect demand prospects to improve in 2014 and 2015, growing 6% to 7%, but are still shaky in view of the fragile economic environment. With no new incremental deliveries expected for ‘14 and ‘15, we expect a supply/demand balance in favor of demand and therefore an improvement of rates over the next two years.
With new incremental deliveries in 2016 are not considerable, we would expect charter rates to continue improving in 2016. Again, though, new heavy ordering will balance that situation.
Let's turn to slide 15, which shows our drybulk employment schedule. Our drybulk covenants for 2014 currently stands at around 62% based on maximum durations and ships on index charters. As said previously, we are continuing the practice of employing our vessels and short-term contracts in the anticipation of a market improvement.
Let's turn to slide 16 for our containership employment schedule. We currently have about 50% covenants for 2014 based on minimum durations. As we view for the drybulk vessels, our strategy for our container vessels it is also to employ them on certain charters between six to 12 months -- on certain short-term charters between six to 12 months in anticipation of a market improvement.
Please turn to slide 17. Through Eurobulk our manager we have been able to continue to keep our costs very low. The graph on this page compares our daily costs excluding drydock expenses since 2008. Overall our cost remains amongst the lowest of the public shipping companies.
We are very proud of this performance, especially as it is in conjunction with fleet utilization in excess of 98.5% over the last five years, a level which is similar to that of our peers, despite the fact that the average age of our fleet is higher than most of the other listed companies.
For the first quarter of 2014, our operational fleet utilization was 99.8% and our commercial fleet utilization was 100%. In 2013, our operational fleet utilization was 98.9% and our commercial fleet utilization was 96.8%. Our daily cost per vessel for Q1 2014 is in line with our budget under in the previous year.
Let's now turn to slide 18. The left side of the slide shows the evolution of time charter rates of Panamax drybulk ships and containers of 1,700 teu since 2001. After seven years when drybulk ships earning more than containerships, both segments were earning similar rates again in the beginning of 2013. The surge in drybulk imports over the second half of 2013, pushed drybulk rates higher again, but they are now back to the same levels as those for containerships.
The right hand side of slide 18 shows current value in the relation to historical prices. Panamax prices are just below the average of 2000 to 2013. Containership values are still very weak and hovering around their all time lows. We would expect prices to revert closer to historical levels if the global economy improves as per our index predicts. We believe that both markets will present new opportunities and are evaluating their resources to continue growing the company.
With that, I will pass the floor over to Tasios to take you through our financials in more detail.
Thank you very much Aristides. Good morning ladies and gentlemen. I will now provide you with a brief overview of our financial results for the three month period ended March 31, 2013.
For that, let’s move to slide 20. Let’s take a look at our results for the first quarter in comparison to the same period of 2013. I will go over here some of the same figure that Aristides gave you in the beginning of the presentation.
For the first quarter of 2014, we reported total net revenues of $9.5 million, representing a 12.9% decrease for the total net revenues of $10.9 million during the first quarter of 2013. We reported net loss for the period of $2.2 million, as compared to a net loss of $4.6 million for the first quarter of last year.
The results for the first of 2014 also include a $0.2 million unrealized gain on derivatives as compared to $0.5 million unrealized gain on derivatives for the same period of last year and a $0.2 million realized loss on derivatives compared to a $0.4 million realized loss for the same period of 2013.
Basic and diluted loss per common share for the first quarter of 2014 was $0.05, compared to basic and diluted loss per common share of $0.10 for the first quarter of 2013. The loss per common share calculation takes into account and increases the net loss of the preferred dividend we paid for the first time in the first quarter of 2014.
Excluding the effect on the loss for the quarter of the unrealized gain and realized loss on derivatives, the adjusted loss per share for the quarter ended March 31, 2014, which has remained the same at $0.05 basic and diluted, compared to the loss of $0.10 basic and diluted for the same period of 2013. Our adjusted EBITDA for the first quarter of this year was $1 million up from the negative $0.1 million achieved during the first quarter of last year.
Let’s go now to slide 21. In this slide we provide you with our fleet performance for the three months period ended March 31, 2014, again in comparison with the same period of last year.
As usual, we have broken down our presentation of fleet utilization rate into commercial and operational. Thus in the first quarter of 2014, we reported 100% commercial utilization rate, a 99.8% operational utilization rate, as compared to 99.3% commercial and 98.7% operational utilization rate for the same period of 2013. Our utilization rate calculation does not include vessels and drydock or in scheduled repairs during the reporting periods.
In the first quarter of 2014, we operated 14 vessels with the time charter equivalent of about $7,817 per vessel per day, which represents a decrease of about 11.5%, compared to the time charter equivalent of $8,718 per vessel per day that we achieved during the same period of last year during which we operated 15 vessels.
Total operating expenses including management fees, G&A expenses, but excluding drydocking cost were $6,348 per vessel per day during the first quarter of this year, as compared to $6,269 per vessel per day for the same period of 2013.
Overall, we believe we have continued to maintain one of the lowest cost structures among the public shipping companies and we think this is one of our main competitive advantages in the business.
Let’s now look at the bottom of this table to our daily cash flow breakeven levels presented here on a dollar per vessel per day basis. For the first quarter of 2014, we reported an operating breakeven level including loan repayments of $7,736 per vessel per day as compared to approximately $9,536 for the same period of 2013.
Let’s move now to slide 22. This slide shows on the right part the expectation for our cash flow breakeven levels over the next 12 months and from the left side, we show our scheduled debt repayments including scheduled balloon repayments.
As we can see from the chart on the left, in 2013 we made $11 million of loan repayment and an additional $4.9 million of balloon repayments. In 2014, we are scheduled to make $9.4 million in loan repayments and paying an additional balloon of $4.5 million which we have already actually made in April of this year.
The green portion of the bars in the chart shows loan and balloon repayments for loans either under negotiation like in the case of financing our (indiscernible) or represent repayments of loans we expect to take to finance our newbuidling program.
This loan and balloon repayments over the next 12 months reduced $2,900 per vessel per day contribution to our daily cash flow breakeven level, the number that we see on the last line of the table in the right part of the slide.
After making assumptions for the other elements of our cash flow breakeven level, such as operating expenses, administrative costs, interest and drydocking expense, which come to an estimated cash flow breakeven for the next 12 months of about $10,650 per vessel per day which includes loan and balloon repayments.
Let’s now move to slide 23, and as usual let me give you some highlights from our balance sheet. As of March 31, 2014, our total cash was about $62.3 million comprised of $53.2 million of unrestricted cash and $9.1 million of restricted funds and retention accounts. Our outstanding debt was about $52.5 million as of March 31, 2014.
The ratio for our debt to the market value of our fleet was 52% and our net debt as you can see was less than zero. We are happy to report that as of March 31, 2014, we were compliance with all of our loan covenants.
Finally, let me make a word of our commitments. As mentioned earlier in the presentation, our drybulk investment problem required about $138 million of funds over the period of 2014 to 2016. We plan to finance this commitment with equity, most of which that is about $43.5 million net we raised via preferred common offerings during the first quarter of this year and debt of $85 million to $95 million which translates to a leverage of between $16 million and $17 million of the acquisition price.
And with this brief remark, let met pass the floor back to Aristides.
Yes, hello. We are ready to hear any questions that floor may have.
Perfect. Thank you very much indeed. (Operator Instructions) From Wells Fargo, you have a question from the line of Michael Webber and your line is now open.
Michael Webber - Wells Fargo
Hey good morning guys. How are you?
Good morning Mike.
Michael Webber - Wells Fargo
Hey just a quick question on the space and then obviously you guys are making a push towards newbuilds and are furnishing the fleet. And one of the things we noticed that leads them to the drybulk space and certainly within some related tankers and product tankers and tankers. Have you seen newbuild prices get better on a speculative basis with long-term charter rates that have lag and they have necessarily supported that increase in newbuild values?
When you guys are looking at buying newbuilds and are furnishing your fleet. To what extent, do you think that actually happens within the drybulk space and is it a scenario in which you think that you’ll see long-term rates inch up and support those values or is there a degree of speculative ordering that just gets tier inflation in this method that kind of deal where it’s going to potentially erode the return on that asset over the course of its life?
First we make -- we think that why is the newbuild prices have increased by maybe around 15% from the lows. They are still much lower than what they had been in the past. As the prices we had last year for newbuildings, it was difficult for the yards to survive when some yards were building ships at below operating profit with no profit per share but just to keep on going.
Michael Webber - Wells Fargo
So the current prices we think reflects a decent price for the ships today. And we think that prices there might go ahead just a little bit but not substantially. That’s the one side of the coin. On the secondhand prices, we felt that secondhand prices have increased much more than what they should have increased and between the newbuilding and the secondhand, today’s prices now -- now you make it a better economic proposition to buy a newbuilding make of ship as we all, I think, by now agree to derive economies of scale. Its $84 million received because of the added features of today’s ships. They are not as huge as some people were saying but they are -- they do exist, $2,000, $3,000 a day, I will say for Panamaxes and kamsarmaxes is a reasonable figure to assume.
Overall that I think that can be done on secondhand ships to improve their efficiencies from the current efficiency but from existing ships, there is a slight advantage. So overall, our models show that it’s a better proposition, if you want to be buying today to be buying a newbuild ship than secondhand ship. Always likely, I remind you, few months ago when secondhand ships were below 20% to 30% with no upgrades during the last six months, we now (indiscernible) better proposition.
Having said that, just to conclude and to hopefully answer all the sub-sectors sub-questions that you asked. We have chartered one of our ships at price for four years at the level which is a little bit over $14,000 a day. So this is a level that produces profit for us. And I think that expectations still are that we can see even higher numbers than that going forward. So we think we will have the opportunity to fix rather three new buildings that are not fixed maybe within the next year, year and half at higher levels.
Michael Webber - Wells Fargo
Got you. That makes sense. I do want to come back that for a second and you mentioned that the second half prices had inched up a bit higher than I guess maybe we thought and that the relative returns there still favor the newbuilds. I think back to Euroseas IPO and that initial model and generating an outside returns with all their tonnage. I am curious when you say secondhand assets, what age profile are you talking about? And if that’s the reason that we have seen a degree of kind of spec inflation accentuated with some of these that are at say 5-year-old assets, 6-year-old assets and/or newbuilds that maybe you haven’t seen within kind of 12 to 14-year-old assets. Does that original model I guess is the return difference and the superior returns associated with that original model even more start today than it was when you got IPO that really was 2007. I know you guys are looking at that across the age spectrum which is still the reason and that would still be the case especially if we are saying 5 and 6-year-old assets getting bigger?
Mike, while it makes sense to be buying elder vessels when the prices are generally quite high and therefore you would pay too much of a premium to buy a younger ship. When prices are on the low side and they still are -- need to be on the low side at least compared with all historical data that all of us have. Your ships can offer some upside potential in prices. We are trying to capture that as well.
Michael Webber - Wells Fargo
I got it. That makes sense. I guess the value discrepancy then quite as wide towards the back end of that age profile is going to be it was in the past. Now that makes sense. Then just one for me and I will turn it over just around the containerships. Obviously you guys have been busy in both the Euroseas and via the JV and I think we have asked this quarter at one form or another on different calls. But has there been any change in the way you think about the asset size that you guys are typically going to target as we’ve had some more time to watch, look at its effect really starts to manifest itself across the container universe has been optimal size range change for you guys and anyway share perform?
Yes. I have seen, we have decided consciously to concentrate within Euroseas on the drybulk sector. I have done our latest container acquisitions through Euromar and then we bought a bigger ship than usual. So Euromar at 5600 teu. We think that what we are seeing is that the cascading effect and the replacement of the bigger ships and the smaller ship rate is something that is happening recently and more recently than what we thought which means that we can expect that markets with all -- the container market will all move more or less in parallel.
We do have advantages of the smaller ships being able to grow to certain rate and certain forms you know that stuff. But there are quite a few places where these charters are succeeding in replacing smaller ships with Panamax ships which have been displaced by the 9000 and 13000 teu. So the cascading is happening and it’s affecting all the markets and we think that the improvement in the container market will happen when most of the ideal fleet is absorbed. Right now this is happening. The ideal fleet is very low at around 3.6% and is getting lower. Of course it’s relatively good period seasonally and right now…
Michael Webber - Wells Fargo
Mostly during peak season correct?
Yes, exactly. So seasonally, it’s not the bad point, but we have some confident that we will see a recovery in the container sector because of the improving conditions in the world. So we continue being interested in that market. We are expressing other investments there through Euromar. In Euroseas, we’re trying to become more of the drybulk company, and in fact this is what we feel that we are at this point in time. The majority of our balance sheet is drybulk. We do still have the 10 elder containers, with these we look at as being an option in an important container market.
So really we think Euroseas is drybulk company right now but it’s a very, very good option for an improving container market. Our elder vessels decrease rate is very close to scrap, so downside risk is minimal and there is the upside potential if the market recovers.
Michael Webber - Wells Fargo
Sure. Okay. Great. That’s all I’ve got. Thank you for the time, guys.
Thank you very much indeed. And your next question from Blue Shore comes from the line of Harsha Gowda. Your line is now open.
Harsha Gowda - Blue Shore
Hello gentlemen, how are you?
Harsha Gowda - Blue Shore
So I have just a question as we wait for the markets, the drybulk market to unfold into the second half of the year. There has been a -- it seems to be a big development after the recent Indian elections. The party in-charge looks to possibly accelerate infrastructure spending and possibly follow more Chinese like growth model. Considering how much disappointment has been with Indian fixed asset investment over the past few years. Has that played into your analysis at all of the next six months and the next few years because I can imagine that there should be a lot of demand that could come out of India if that plays out?
Yes. You’re very right in that. This is a very recent development and the very positive development we have to say, which has not impacted our decisions up to now because it hasn’t happened and we have anticipated that it would. I think it is difficult for India because of the two democratic governments and way of government that they have to proceed as fast as the necessary changes to grow at a very fast, much faster pace and reach China. But definitely, it’s a very positive development and we do hope that Mr. Modi successful in growing that country at a much faster pace. And indeed as you very rightly say, there’s a lot of trade happening. We’ve been yet both on the drybulk sector that also on the container sector. So it’s a wild card that we hope will help us.
Harsha Gowda - Blue Shore
It just seems something I have noticed from the comments made, especially considering that they want plurality of the legislature that they said specifically they’re going to accelerate infrastructure projects in the very near term. So I thought that could be something that could surprise on the upside. Also my last question, little bit more to side point. Do you have any thoughts on the pretty decent pickup in scrap prices, scrap steel prices and just returns on that side? Do you have any comments on what’s going on there and do you think that will incentivize a lot more scraping, especially if the near term rates look that they look less promising than they did, maybe three months ago?
That is possible. All those scrap prices have movements, have moved considerably. The main driver ship owner deciding to scrap in ship is rightly as we say the charter market. If the charter market is low than we can expect to see increased scraping buoyed also by the improvement on the scrap prices but the main consideration is the charter market. And we do expect actually in the container sector that this year will be a record year in scraping more than 0.5 teu will probably be scrapped.
On the drybulk sector, we were up to now less optimistic that we will see a lot of scraping because we had thought that the market would be stronger or that will be a little bit stronger. We now see that it’s not finding up out like that. Up to now what we still believe that the second half should be stronger therefore scraping will be kept at slightly lower level.
Strong scrap prices can only be based on exogenous factors because there is a lot more ships we need to scrap this year due to the low market share. Indication of strength of the demand of scraps teams which is positive and also this higher price could induce more ship owners as Aristides mentioned, even marginally to concentrate and they would help, I think, the rates.
Harsha Gowda – Blue Shore
Okay. Great. I think, there might be a linkage between Narendra Modi and also scrap steel prices going forward. But thank you very much for your time today.
Thank you for your comment and the questions. Bye.
Thank you very much indeed sir (Operator Instructions) Gentlemen, there appear to be no further questions at this time. So I should pass the call back to you for closing remarks.
So, yes, thank you very much for being with us today. And we talk to you again in three months time to discuss the results of the second quarter.
Thank you everybody again.
Thank you very much to our speakers today. That does conclude our conference. Thank you for participating, you may now all disconnect. Thank you, gentlemen.
Thank you. Bye, bye.
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