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StealthGas Inc. (NASDAQ:GASS)

Q4 2011 Earnings Call

February 23, 2012 11:00 AM ET

Executives

Harry Vafias – CEO

Konstantinos Sistovaris – CFO

Analysts

Natasha Boyden – Cantor Fitzgerald

Jeff Geygan – Milwaukee Private

Operator

Thank you for standing by and welcome to the StealthGas Inc. Fourth Quarter 2011 Results Conference Call. (Operator Instructions). I must advise you that this conference is being recorded today Thursday the 23 of February 2012. I would now like to hand the conference over to your first speaker today, Harry Vafias. Please go ahead sir.

Harry Vafias

Thank you and good morning everyone. Welcome to our conference call and webcast to discuss the results for the fourth quarter and full year 2011. I’m Harry Vafias, the CEO of StealthGas, and I would like to remind you please that we will be discussing forward-looking statements in today’s call. And regarding the Safe Harbor language, I would like you to refer to slide number one of this presentation as well to our Press Release on our fourth quarter results. With me today is Konstantinos Sistovaris, our CFO, and if you need any further information on the call or the presentation, please contact Konstantinos or myself.

Before I start with the slides I would like to comment on the results we released this morning. I am pleased with the results we announced today. Not only did we post profits for the quarter and the full year but our bottom line shows an improvement quarter-on-quarter and year-on-year in operations.

We announced earnings per share of $0.22 for the quarter and $0.41 for the year. These include some non-recurring and non-cash items related to the swaps and the fair values of our swaps and foreign exchange and book losses on the sales of our vessels in the second quarter.

Excluding these our fourth quarter earnings per share was $0.17 and full year were $0.66 compared to $0.41 last year. I believe that we have started seeing the improvement in the LPG market filtering down to our earnings. This is a very difficult environment for shipping companies and few are reporting earnings at all and as a result of our focus on the LPG market we continue to operate profitably and have laid solid foundations for the company, avoiding any difficult financial position that so many other shipping companies are already in.

So let’s start with slide number two. Our midterm goal is to renew our fleet with the delivery of five new building gas ships. During the first three quarters of 2011 we took delivery of the first three ships, which we then fixed on long term time charters. We also proceeded with the sale of four older vessels.

The average age of the four vessels sold was 16 years and three of them were operating in the spot market. Last month we sold Gas Tiny the smallest vessel in our fleet also operating in the spot market and this month we agreed to sell the Gas Kalogeros, also operating in the spot market.

From the sale of Gas Kalogeros we expect to book a small profit in the second quarter, voyage deliveries due. During January of this year we took delivery from a yard of for first 7,500cbm new building, the Gas Husky, which were immediately deployed on a five year bareboat charters to a Middle Eastern state oil company.

As I have said in the past, we used to keep the average rate of our fleet low and get rid of the older ships that operate in the spot markets, so that we improve our contract coverage and operational efficiencies and that is the reason behind the sale of the five older ships.

As far as our new building program is concerned we have one more vessel to take delivery off. The vessel is being built in Japan and has already been launched in the water and delivery to us is scheduled for May.

After taking in to consideration the total fleet of 37 vessels at the end of the fourth quarter ‘11 our net debt to capitalization stood at 43.2%, similar to the previous quarter and taken into consideration the last vessel delivery, we estimate we will continue to have a moderate ratio of below 50%.

Our gross debt, which stood at approximately $350 million at the end of the quarter, will peak at about $360 million in the second quarter of 2012. So, we do not expect any significant increase in our debt level from the delivery of the last new building.

We continue to strive to obtain a secure and visible revenue stream with stable and predictable cash flows. At the moment fixed employment for our fleet for 2012 stands at 75%, with almost 40% already fixed for 2013.

Just to remind you within our previous presentation I had said that by the end of the first quarter 2012 we are aiming to have around 70% of our fleet fixed whereas we managed to already have 75% fixed already.

Our first goal has been to own and operate a modern fleet of gas carriers and in this respect the average age of today is 11 years, not including our tankers, which is rather young compared to the industry average.

Including the product tankers and the Aframax and the new buildings of our fleet, the average age falls to 10.5 years. We continue to believe that within our core sector this gives us a competitive advantage, as younger ships have less operating expenses, consume less bunkers and are more appealing to blue chip charters, and that is a factor would be very important as we move forward into 2012 and beyond.

We’ll continue to have strong charters which lowers our counterparty risk. This is a key for any shipping company’s performance. in any segment especially in the kind of environment where you very often hear of charges defaulting on their commitments especially in the dry bulk segment.

Because of the strength of LPG market and the participation of more established names in it, we don’t expect to have any issues with our counterparties.

Now in terms of the cost efficiency of our operation, I’m pleased to report yet another good performance in the fourth quarter. Our net income breakeven level per vessel per day excluding losses and derivatives was $5,750 per ship per day compared to $5,975 in the third quarter and $6,161 in the second quarter which puts us comfortably in the profit making category.

We continue to concentrate heavily on managing our cost base and we expect roughly five vessels we have put on bareboat charters during the last year in the addition of the brand new vessels to the fleet, we will be able to contain upward pressures on operating costs.

I would also like you to remind you once more that in terms of our general and administrative expenses, we are amongst the lowest in the public shipping sector and we are working hard to control the costs, not only in operational side but also in the managerial side.

Finally regarding our share buyback program, during 2011 we bought back 550,000 shares and since the programs’ inception we have brought back approximately 1.8 million shares or 8% of our shares outstanding at a cost of about $8.5 million.

Due to the uncertain economic environment as I had mentioned in our last presentation we did not proceed with any buybacks during the first quarter. However, the $50 million buyback program in still in place.

Slide number 3. This slide demonstrates the development of our fleet. What I would like to vessels to note is that while our fleet since the second quarter of 2010 hovers around between 37 and 38 vessels while in fact we have had very active to prudently renew our fleet.

If you look at our balance sheet the book value of our fleet in Q2 2010 was $560 million and today in spite of the $40 million of depreciation since then and a number of sales, the book value of our fleet is $614 million and that is because we have steadily renewed the fleet with larger and newer ships.

The total fleet of 37 vessels at the end of the quarter comprise of 33 LPG ships, 3 product tankers and 1 Aframax tanker and we continue to hold the number one ranking in the world in the 3000 to 8000 segment Handy Size sector.

We are committed to the LPG segment and intend to hold on to our leadership. The improvement in our cash position over the last year allows us to seek new investments whenever we may spot opportunities.

Slide four. This slide demonstrates our fleet employment profile and provides you with the earnings visibility for each of the 37 ships currently in our fleet.

At the bottom of the employment chart, we have included the percentage of fleet deployment days for '12 and 2013 and these enable you to assess the stability and predictability of our earnings. For 2012, 75% of days are already fixed and already 40% for 2013 with a number of charters extending into 2014 and beyond.

2011 was a good year for securing long-term employment. We managed to conclude new long-term charters for 16 of our ships thus securing revenues of about $63 million over the next few years.

Total contracted revenues are approximately $165 million, up to 2017 and we estimated this equivalent for the LPG ships on long-term charters is now at $9,000 a day. In terms of charter types out of the fleet of 37 ships we have 14 of the vessels on bareboat charters, 20 on time-charters and three in the spot market.

The Company’s policy is to find employment for long-term charters in order to secure its cash flow and to reduce further our risk we have arranged for a number of bareboat charters and therefore with a risk that if we fix more ships on bareboat charters we might end up being (inaudible) potential disadvantages for U.S investors.

We now turn to the financial highlights for the first quarter to our CFO, Mr. Sistovaris.

Konstantinos Sistovaris

Thank you, Harry. Good morning everyone. So let me continue the presentation with slide number five, the financial highlights for the fourth quarter of 2011. With an average of 37 vessels owned and operated in the fourth quarter, we realized net income of $4.4 million on voyage revenues of $28.9 million.

EBITDA was $13.6 million and earnings per share for the quarter were $0.22. Included in the net income figure is a $0.2 million loss on derivatives including a $1.2 million on swap interest paid? Our adjusted net income for the quarter was $3.4 million or $0.17 per share.

For the full year we realized net income of $8.5 million, on voyage revenues over $118 million. EBITDA for the year was $44.5 million and earnings per share $0.41. Again in order to present what we consider a more meaningful picture of our operational performance we adjust the net income figure for the $2.9 million loss on derivatives including a $5.5 million on swap interest paid and we adjust for $5.6 million loss on the sale of the vessels in the second quarter.

Hence our adjusted net income for the year is $11.6 million or $0.56 per share. The free cash balance at the end of the quarter was approximately $45.5 million. We also had about $5.3 million in restricted cash as part of our loan agreement.

We now turn to slide number six for a summary of our income statement in order to compare our results for the quarter and the year to last year’s. So in comparing our results from the fourth quarter of 2010, when we had an average of 38 vessels in our fleet to the fourth quarter of 2011 when we had an average of 37 vessels in the fleet revenues were essentially flat. The reason for that being was not that we had one less vessel in the fleet but the five vessels that switched from voyage charters to bareboat charters, the benefits of which we can see further down in our income statement.

Voyage costs were up by $0.6 million due to the higher fuel costs for the vessels operating in the spot market. About 15% of our fleet was operating in the spot market last year. However, our running expenses were reduced by almost $2 million as the vessels operating under bareboat charters do not have running expenses.

We had $0.5 million in additional dry-dock expenses, because two more vessels were dry-docked during this time. As a result of all of the above, our operating income was up by 16%. Our net income was up by 2%. However, excluding the derivatives, our adjusted net income was $3.4 million, compared to $2.4 million last year, an increase of 42%.

Again, on an adjusted basis, our earnings per share were $0.17, compared to $0.11 last year. Comparing our full-year 2011 income statement to the previous year, our revenues were $118.3 million compared to $111.4 million last year, up by $6.9 million or 6%.

For the same reasons I described previously, our voyage expenses that include bunker costs, port expenses and freight commissions were increased by $4.1 million, while our operating expenses were decreased by $1.8 million.

Our operating income was $19.8 million compared to $23 million, a drop of $3.2 million last year. Taking out the effect of the book value gains, losses on the sale of the vessels, which was $6.6 million year-over-year. Our income from operations in effect improved by $3.4 million.

Our net income for 2011 was $8.5 million compared to last year’s $11.1 million. But again on an adjusted basis, our operations were much improved so that our adjusted net income was $11.6 million compared to $8.4 million last year. Our earnings per share for the full year on an adjusted basis were $0.56 per share compared to $0.39 per share last year.

Moving on to slide number seven. Looking at our balance sheet, in terms of cash we continued to maintain a healthy cash balance of $51.8 million including the restricted cash that was significantly strengthened this year by the addition of the net proceeds from the sales of the vessels of about $17 million despite having cash out flows for our new building program.

As of December 31st, we had $22 million in advances for the remaining two vessels to be delivered, one of which was delivered successfully in January of this year. Our vessels book value, net of depreciation stood at $613.8 million compared to $603 million at the end of the last year. With the scheduled deliveries of new vessels and the sale of Gas Kalogeros, we would expect to see this figure reach $645 million by the second quarter of this year.

In terms of liabilities, the current portion of our long term debt that is the loan repayments that are scheduled over the next year, it remains constant at around $34 million. Other current liabilities at $22.1 million are slightly reduced.

Our long-term debt increased slightly to $317 million from $310 million due to the new facilities for the Gas Elixir, the Gas Cerberus and the Gas Myth. We would expect to see this figure top at around $320 million after we take delivery of the scheduled vessels.

We have around $9 million of principal debt repayments per quarter that is $36 million per year. That we can meet comfortably from our internally generated cash flow. I would also like to point out that we have no debt maturing over the next couple of years. So there is no need for refinance. The first balloon payment on our loans are due in mid-2014 and then the next one in 2016.

Other liabilities of $9.4 million relate to the interest rate swaps we have with our banks to protect us from increases in LIBOR rates. As of today we have around 40% of the interest rate exposure on our loans hedged. These are multi-year hedging agreements for our loans that we did a few years back and still have some years left.

On average by 2013, we would expect half of our swaps to have expired or amortized unless by this time we enter into new agreements. Stockholders equity for the fourth quarter was $313 million. I would also like to point out that with our share trading at $4, $4.5 we are greatly undervalued and the net book value of our fleet, that is our cash plus our book value minus our debt on a percentage basis is around $14.

We’re now pleased to turn to slide number eight. These are our operating highlights for the fourth quarter of 2011 and 2010. In terms of fleet data we have 37 vessels in the fleet versus 38 vessels last year. Hence the number of days for the fleet have not significantly changed.

Our utilization ratio is slightly lower because of the two vessels that had to be dry-docked and whereas therefore out of operation for some time during the fourth quarter of this year of 2011. And one vessel that had some engine problems and was off high.

Well there is a reversal of the trend we had over the last few quarters is with the large decrease in the number of spot days from 865 in Q4, 2010 and 1005 in Q2, 2011 to 732 in Q3, 2011 and 615 in Q4, 2011.

One reason for this was the sale of the vessels we did in the previous quarters as these were vessels that we’re operating in the spot market. The second reason is that we have concluded more period charters. We now only have three vessels operating in the spot market. So, to give you these numbers in percentage terms while spot days represented 25% of all our voyage days in the previous quarter now they are down to 18%.

On the other hand bareboat days has represented 19% now represent 35% of all our voyage days. In terms of average daily results we continue to see our average TCE rates improving from last year.

We achieved a time charter equivalent of 8882 per day per vessel on an adjusted basis compared to $8024 per day per vessel in the same quarter of 2010. Our total operating expenses increased from $3,878 per day to $4,216 per day. And the net margin increased from $4,146 in 2010 to $4,666 in 2011. We still operate above break-even levels in terms of income and cash flow.

We now turn to slide number nine whereas usually we’re going to provide you with some of our estimates for 2012. We have contracted revenues under time and bare boat charters of approximately $81 million. Non-contracted Voyage days for the vessels operating in the spot market all are coming of their charters are approximately 3,800. We expect our operating expenses will be reduced to around $7.8 million per quarter.

As far as dry-dock expenses we have fewer vessels of dry-dock this year six vessels compared to nine last year. Three of these vessels will be dry-docked in the current quarter. Interest payments on our loans and cash payments on our swaps we estimate to be around $15 million and depreciation expenses of $28.5 million.

As far as payments for the new building vessels are concerned remaining payments for 2012 to the yard are approximately $40 million of which $20 million was already paid in January. As we have said we have committed finance for the remaining vessel covering the full amount of future cash out flow.

Thank you very much and I will now hand you back to Harry for some further comments on the market.

Harry Vafias

Slide number 10. In this slide we show you one year time charter rates for our market. We have updated this slide with last year’s rates current rates and future estimates. Looking at the 5,000 CBM pressure ship relating the Q4 ‘10 were 265,000 per month in Q4, 2011 310,000 per month and the forecast for this quarter is to go higher to 315,000 per month.

In the segment, we operate which is a 3,000 to 8,000 CBM segment we have seen a strengthen in the margin compared to last year in the region of between 10% and 20% depending on the size and nature of the ship.

On a short-term basis, the winter where still to come in most of the Northern Hemisphere so the market will state at decelerated levels. Lately, we have seen increased activity in Southeast and Northeast Asia where the majority of our vessels trade while in Europe where the winter has been mild that the market will slow to take off but there are signs that has been strengthening us colder weather set in.

We believe that the softening in our market has allowed us to conclude new charters at the elevated levels as previously announced and most importantly for longer periods. At this point we only have 3 vessels operating in the spot market but because of our staggered employment profile we expect 13 vessels will come off charter during 2012 and we hope to renew them at higher levels. We are taking delivery of new buildings of 7,500 CBM ship in May and we are already seeing interest for chartering that ship on a long-term basis.

Slide 11. as we’ve showed in the previous slide the charter rates have improved from last year and we believe that the fundamentals in our core segment that relate to supply and demand are favorable and as a result the recovery will be sustainable despite of any short-term seasonal ups and downs.

The Middle East is the most important region for global LPG shipment trade and it’s well known that the Middle East and continents are planning for expansion of the refining facilities and the number of LNG projects to be completed. This will benefit our mild demand for LPG.

Cargo shipped out of the Middle East where 28.8 million tons in 2010 is suggested that could reach 35.2 million tons by the end of 2013 a 22% increase. While we only have three vessels trading in the region, most of the cargoes end up in the Far East where they are locally distributed on board, ships like ours since the bulk of our fleet is operating in that region. There are solid indications of the supply of LPG product will increase during 2011 and beyond supported by strong economic growth in Asia.

On the supply side the order book for undersized LPG ships is fairly small at the moment. And on the one hand, we expect the order book over the next years to decline and what is encouraging is the fact that we still have not seen new orders for pressurized ships and new building prices have not come down especially due to the strong Yen.

On the other hand, the existing fleet is relatively old, which means more vessels will need to be scrapped. Overall, net fleet growth is small suggesting the demand for vessels will be higher than the supply. If this projection is materialized, we believe that with a fleet of modern ships, we will command premium rates and we are positioning our company to take advantage of the strong fundamentals in our sector.

Slide 12. We have included this slide to emphasize the point about the order book. The order books in this slide are spread over a period of at least three years while most cases deliveries are frontloaded. I should add that the figures shown here in the graph are for all LPG sizes. As you can see for the two mainstream shipping segments our old numbers are better than last quarter, if the order book continues to be elevated at 18% for tankers and 33% for bulkers.

Our storing container segments also have high order books. Of the other sectors where we just recently renewed there is renewed interest in LNG new buildings due to the current solid chartering market. At this point increasing LNG volumes may absorb the increase in the order book, but unless there is a restraint in the ordering of new vessels this space could be over supplied in the coming years. Also the order book for product tankers of which we own three vessels increased slightly other has been renewed interest due to the fact that most of the past order book has been absorbed and there is optimism regarding the refinery expenses in the Middle East, we hope that will be restrained in the new ordering in that sector.

The last bar in this graph is our own LPG sector with an 8% order book. It’s a sector with a smallest order book but does not get as much attention and at this point if stone mile increases at an annual rate of 5% as some reports suggest, this could easily absorb the current order book.

I would like to close this presentation by saying that over the last year we have managed to take advantage of improving markets and posted solid operational profits. If you look through and beyond the one-off items and the accounting treatments of derivatives and foreign exchange hedges and focus on what they call the operational side, you will see a market improvement in our figures.

The market has not reached the year of 2008 strong levels but its steadily improving and we can be optimistic about the future. On our part we have managed to renew our fleet and will continue to do so and increase our liquidity position. We do our business with a long-term view and I believe that our decision in the previous quarter to sell some of the older spot vessels and replace them with new ones on long-term time charters is already proving to be the correct one.

We have also significantly improved our available cash recently and this will assist us in our future growth. We are looking the market for opportunities to grow our fleet. The biggest impediment to growth these days the bank finance market we’ve seen a lot of banks unwilling or unable to provide finance, however our company has earned a support of its banks and we have solid indications that our banks will be ready to finance for future growth.

As far as the stock pressure is concerned I repeat that represent a very attractive prospects for investors. We are a solid company in an industry which outlook is much brighter and we are valued very cheaply far below our breakup value.

Just consider what we have $50 million in cash, $300 million in shareholder equity and below $100 million in market cap. We have now reached the end of our presentation. We’d like to open the floor for your questions. Operator, please open the floor. Thanks.

Question-and-Answer Session

Operator

We will now begin the question and answer session (Operator Instructions). Your first question comes from Natasha Boyden with Cantor Fitzgerald. Please ask your question.

Natasha Boyden – Cantor Fitzgerald

Harry, what’s your strategy going forward now that you’ve got the majority of your new builds been delivered and I think you said in the presentation you have one last. I mean, do you find asset values in the LPG space attractive here or an intend to expand the fleet or is your focus now going to be more on cash flow generation and deleveraging?

Harry Vafias

I think we have a very low debt. So deleveraging won’t be a very clever idea, since our debt is very cheap anyway. So our strategy would be cautious growth.

Natasha Boyden – Cantor Fitzgerald

Okay. And obviously primarily in the LPG space, but you do have vessels in a couple of other sectors; would you primarily be focusing on the LPG space and if so, what is the liquidity like in the LPG space given the very small order book and what not going forward?

Harry Vafias

If we buy assets on the basis of just value; I guess we don’t have to go for LPG shares, because the values have not dropped and therefore, are not considered cheap. If we will go for tankers. If we go for cash flow generation, then we’ll go for LPG ships, because obviously, the rate that will be generated by the LPG ships in the next two, three years are generally speaking on a big pro-rata; much stronger than those of the tankers. So what we find then how the board will react. The very few LPGs are available for sale, definitely being the largest company in the segments; we are presented with the opportunities. If we don’t find anything interesting; I guess we have no choice but to go for new buildings.

Natasha Boyden – Cantor Fitzgerald

So it’s sort of the newer second hand versus new builds more pleasurable to you at this point, because you can get them on the water immediately?

Harry Vafias

Definitely, but there is nothing for sale at the moment.

Natasha Boyden – Cantor Fitzgerald

Okay, okay. Just moving over to your share repurchase program. You said you haven’t repurchased any shares this quarter, but you still have a fair amount available under that facility. Sort of what’s going on given your view that this stock is considerably unvalued? Are you sort of keeping the cash for asset acquisitions or what’s going on there with the share repurchase program?

Harry Vafias

The share price is very cheap as you can see yourself and from an NAV point of view; and from any other formula point of view. The point is, we don’t know what is best at the moment; buying back stock or buying ships. We want to keep our leading position in these segments. Our competitors are ordering ships, but not on the pressurized size; on the ethylene type primarily. So we probably going to buy ships if we can or if we buy new buildings and vessels of deliveries far forward; we’re definitely going to buy stock as well. Having bought close to 2 million shares, I don’t think that’s a small accomplishment.

Natasha Boyden – Cantor Fitzgerald

Okay and then you just actually led it or right into my last question. Harry, what do you estimate that the NAV of StealthGas is currently?

Harry Vafias

Around $14.

Natasha Boyden – Cantor Fitzgerald

Around $14?

Harry Vafias

Which is with the fresh evaluation taken in January.

Operator

Your next question comes from Jeff Geygan of Milwaukee Private. Please ask your question.

Jeff Geygan – Milwaukee Private

The 13 ships that will be coming off of charter in 2012; do you have an estimate of the average TCE for that group?

Harry Vafias

No, because it’s a ship that had been on (ph) long run for charters, some are on bareboat, some are on TC. No, if you ask me completely off my head, just to guess it would be between $7,000 and $8,000.

Jeff Geygan – Milwaukee Private

Okay, thank you. Second question, is some of the new charters you put in place have been through longer-terms and have enough experience historically with your company i.e. for five years; what do you think has changed in the mind of your charter that they’re willing to lease for such a period?

Harry Vafias

It’s obviously, as they are optimistic about the market.

Jeff Geygan – Milwaukee Private

And the last question; the Kalogeros which you announced you’re selling is a relatively young ship built in 2007. Historically it seemed to me that you’re selling older ships to try and keep your average age around that 10 year or 11 year age; they just represent the change in your thinking on strategy?

Harry Vafias

No, we want to sell only older ships and buy only young ships. So this has been an exception in our strategy.

Jeff Geygan – Milwaukee Private

Okay, thank you.

Operator

(Operator Instructions) The next question comes from (ph) Bruce Berger a private investor. Please ask your question.

Unidentified Analyst

Yes, I had a question regards to your statement with the passive foreign investment company. What are you planning to do to get around that and what are the (ph) replications to U.S. investors?

Harry Vafias

If you’re a PFIC, you cannot do anything to get around that. If you are one; you are one. The implication for U.S. investors is higher tax on the dividend. We are not giving any dividend and higher tax on capital gains. When you sell the stock, if you sell the stock and if we have been a PFIC, we stay a PFIC, because we might be a PFIC for the short while and then we might add more assets that are not passive assets and therefore get out of the PFIC. At the moment, we are not PFIC; we are just warning people because we don’t like surprising our investors.

Operator

(Operator Instruction) Your next question comes from Jay Weinstein of Highline Wealth. Please ask your question.

Jay Weinstein – Highline Wealth

Hey, good morning. When you take delivery of your final new build I believe the book value of the assets would be around the vessels would be about $640 million. Approximately how much of that is allocated to the LPG fleet and how much is allocated to the four ships that are in the tanker segment? Hello?

Harry Vafias

Around one quarter.

Jay Weinstein – Highline Wealth

I’m sorry, a quarter to which one?

Harry Vafias

A one quarter to the tankers and the rest is gas.

Operator

The next question comes from Bruce Berger. Please ask your question.

Unidentified Analyst

Yes Harry, I wanted to get your thoughts on products in Aframax tanker prices and your interest in purchasing at these levels?

Harry Vafias

I didn’t understand the question.

Unidentified Analyst

Do you think that the current valuations for Product Tankers is such that you want to start buying some with the cash that you have?

Harry Vafias

No, we would not buy product on just in any case.

Unidentified Analyst

What about Aframax?

Harry Vafias

Aframax; if you see brand new ships falling below 40 and it does make sense.

Operator

(Operator Instructions) There are no further question at this time. Please continue.

Harry Vafias

We would like to thank everyone for joining us at our conference call today and for your interest and trust in our company. We look forward to having you with us again at our next call for our first quarter results in May. Thank you.

Operator

That does conclude the conference for today, Thank you for participating. You may all disconnect.

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