FRFHF Earnings Call Transcriptbeta

Operator: Welcome to the Seaspan Corporation Conference Call to discuss the financial results for the quarter ended March 31, 2015. Hosting the call today is Gerry Wang, Chief Executive Officer, Co-Chairman and Co-Founder of Seaspan Corporation; and Sai Chu, Chief Financial Officer of the Seaspan Corporation. Mr. Wang and Mr. Chu will be making some introductory comments and then we will open the call for questions. I will now turn the call over to Sai Chu.

Sai Chu: Thank you, Operator. Good morning everyone and thank you for joining us today. Before we begin, please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the first quarter 2015 earnings release and earnings webcast presentation slides available on our website www.seaspancorp.com, as well as in our Annual Report on Form 20-F for the year-ended December 31, 2014 filed with the SEC. I would also like to remind you that during this call, we will discuss certain non-GAAP financial measures, including adjusted EBITDA, cash available for distribution to common shareholders, normalized net earnings, normalized earnings per share. For definitions of such non-GAAP financial measures and for reconciliations of such measures to the most closely comparable U.S. GAAP measures, please refer to our earnings release. I will now pass the call over to Gerry, who will discuss our first quarter highlights as well as some recent developments.

Gerry Wang: Thank you, Sai. Please turn to Slide 3 of the webcast presentation. During Q1, we continued to deliver on our strategic objectives. We expanded our operating fleet with the delivery of one 10000 TEU SAVER design vessel. We continue to return capital to shareholders in the form of dividends. We demonstrated access to diverse sources of capital to fund our growth and enhance our capital structure. We continue to grow our fleet and our long-term contracted revenue base. Turning to our first quarter results, I would like to highlight three points. First, we ended the quarter with 78 vessels in our operating fleet and 85 vessels in our managed fleet or a total of 111 vessels in our managed fleet including our order book. We took delivery of our seven SAVER design 10000 TEU containership, the MOL Beacon, which began an 8-year fixed-rate time charter with MOL. Our operating fleet achieved 98.9% utilization for the quarter including our four scheduled dry-dockings and we continue to generate stable cash flows from long-term time charters. Our new building program has been proceeding smoothly at all three shipyards, YZJ, HHI, and CSBC. We ended the quarter with 26 vessels under construction for Seaspan and GCI. Second, we completed several financings and re-financings during the quarter, demonstrating our access to diverse sources of capital and attractive returns. We entered into financial arrangements with Asian financiers to refinance the three 4500 TEU vessels for total proceeds of $150 million. We also entered into a term loan facility with the bank for $115 million to finance the 14000 TEU YM Wish, which would be delivered on April 1. The 10000 TEU MOL Beacon vessel was delivered at the end of March and was funded with $110 million operating lease with another Asian financier, further diversifying our sources of financing. We continue to see improved financing terms and reduced margins for our secured financing requirements. This improvement continues to enhance our capital structure and it should ultimately result in better returns for our projects and for our common shareholders as well. We expect our financing for the remaining newbuild program to continue progressing smoothly. Finally, I’m pleased to announce that we have started Q2 2015 by adding seven newbuild vessels to our managed fleet. We have signed agreements for the construction of five 11000 TEU fuel-efficient SAVER design containerships with Hanjin Shipbuilding for approximately $470 million for delivery in 2017. Simultaneously, Seaspan has also signed 17 year charters for those vessels with one of the leading operators. The allocation of those vessels between Seaspan and GCI has been set at three and two respectively. Additionally, we entered into contracts with YZJ for the construction of two 10000 TEU newbuild containerships for an aggregate purchase price of about $186 million for delivery in early 2017. They would be the sister vessels to our existing order book at YZJ. The allocation of those two vessels will be most likely one for Seaspan and one for GCI. We continue to hold an auction to order six more sister vessels for delivery during second-half 2017 and early 2018. We’re in active discussions with our customers for the four firm vessels and the six operating vessels of our SAVER design 10000 TEU class at YZJ. I will now turn the call over to Sai to discuss our quarterly financial results. Sai, please.

Sai Chu: Thanks, Gerry. Please turn to Slide 4, where I will discuss our results for Q1 compared to Q1 of last year. Our results reflect the six 10000 newbuilds delivered since last year and the use of the operating leases for three of our MOL 10000 newbuilds. Revenue increased by $20.6 million or 12.2%. Vessel utilization was 98.9% consistent with last year’s quarter. During Q1 we had 37 fewer off-hire days, offset by an additional 39 days for scheduled dry-dockings for four vessels. Ship operating expenses were $44.6 million and 8.1% or $3.3 million increase reflecting the higher ownership days. We expect quarterly ship OpEx to continue to increase this year due to anticipated expansion of the fleets, increase in our average vessel size and slightly higher costs related to some of our older vessels. G&A was $6.8 million, a decrease of $1.2 million or 15.5% primarily due to a reduction in stock-based compensation expense. Operating lease was $6.2 million, an increase of $5 million. Adjusted EBITDA for the quarter was $136 million, a $12.2 million or $9.8 million increase. Cash available for distribution for the quarter was $75.8 million, a $7.9 million or 11.6% increase, due to delivery of the newbuilds, higher interest income, lower preferred share dividends partially offset by higher interest expense at hedge rate and increases in amounts paid for dry-docking. Normalized net earnings for the quarter increased by $9.6 million or 33.2%. On a per-share basis, normalized EPS was $0.25 compared to $0.18, an increase of 38.9%. For 2015, we expect to see some improvement in EPS due to the full-year contributions for the 2014 deliveries and the additional eight deliveries this year. However, EPS improvement will be limited due to the capital costs associated with investing in our large newbuild program through 2017. We remain focused on managing our cost to capital and continuing mix for attractive financing alternatives. We believe our focus strategy of acquiring technological events and efficiencies while entering into long-term charterers of creditworthy counterparties will result in shareholder value over the long-term. Our board declared a Q1 dividend of $0.375 per common share, which represents an 8.7% increase over the prior quarter and is our six dividend increase since Q2 2010. We feel this is our sustainable dividend level, the balances return to shareholders, while allowing us to maintain financial flexibility and take advantage of attractive growth opportunities that exist in the current market. Please turn to Slide 5, for balance sheet information, where we’re well compared Q1 to Q4 of 2014. Our debt and capital lease balances at the end of the quarter were $3.75 billion versus $3.6 billion, an increase of $156 million. This is due to the refinancing of three 4500 containerships and drawdown of a term loan for one 14000 TEU containership, partially offset by a reduction in the amounts outstanding under our credit and lease financing facilities. Overall, total liabilities increased by $174.2 million, shareholder’s equity decreased by $5.6 million since the beginning of the year. As Gerry mentioned, our capital structure continues to evolve and diversify, as we execute on our significant newbuild program. During the quarter, we entered into financing or reinsurance with Asian SPCs to refinance three 4500s, the total proceeds of $150 million. This replaces previous lease financings that was repaid in December. We also entered into these financing arrangements within an Asian SPC for $110 million of the funding of the MOL Beacon, which was delivered at the end of March. These lease financings drive Seaspan with an attractive cost to capital with higher advance rates and difficult secured lending. However, due to higher advance rates, as well as lease accounting treatment, we anticipate that EBITDA and earnings contributions from the MOL Beacon would be lower than if we finance with traditional secured lending. Subsequent to the end of the quarter, we reached a milestone as we took delivery of our first two 14000 the Yang Ming Wish and Wellhead finance with almost $200 million in secured loans. On April 10, we entered into a term loan facility for up to $195 million finance two of our 14000. Also in April, we closed on a revolving loan facility with syndicated banks for $200 million and entered into a term loan facility for up to $228 million to finance one of our 14000 and two of our 10000. As we move forward for this year, we plan to continue to diversify our capital structure, by history of execution, strong customer base, modern assets will allow us to continue to obtain attractive financing terms. This in turn should contribute to improve returns for our shareholders. Please turn to Slide 6, for latest forward guidance. We have another five vessels scheduled for delivery in 2015, one 14000 in Q2, chartered to Yang Ming, three 14000 in Q3 also chartered to Yang Ming, and one 10000 in Q3 to be chartered to Maersk. For 2016, we expect to take delivery of two 14000 chartered to Yang Ming and 3 10000 two of which are chartered to MOL and final one to Maersk. And one 10000 for which we are seeking at charter 4. The three 11000 newbuilds on 17-year charterers will also be delivered in 2017, and two 10000 ordered in April, are also expected to be delivered in 2017. These vessels remain subject to the ROFR with GCI, but for purpose of this presentation, you will assume only one remains with Seaspan. Our remaining CapEx is approximately $1.4 billion with $660 million remaining this year, $460 million next year and $245 million in 2017. During the remainder of 2015, we expect to have a total of 220 dry-docking days with about 110 in Q2, 85 in Q3, and 25 in Q4. We expect approximately 240 and 120 dry-docking days by 2016 and 2017 respectively. Each of these remains subject to adjustment. Please turn to Slide 7, for details regarding our new orderbook. A total of 17 x vessels will be delivered from 2015 to 2017. Our new orderbook represents total capacity of 205,000 TEU. We expect to fund the rest of our newbuild fleet first for delivery through 2017 with about $700 million of additional borrowing and our debt facilities currently in place, another $650 million secured as we are in negotiations. I would now like to turn the call back over to Gerry.

Gerry Wang: Thanks, Sai. Please turn to Slide 8, where I will briefly discuss the industry. Consistent with our comments last quarter, there has been no material change in market fundamentals. We continue to expect overall supply and demand to remain fairly balance varying to some extent a more specific trade lanes. Charter rates for Panamax vessels have remained stable over the past few months and we’re also seeing newbuild in prices to continue to strengthen for larger vessels. On the supply side, we expect tonnage growth of about 6% to 8% for 2015. Major operators continued to be managed to provide through scrapping, redeployment, slow steaming and idling of ships. The total orderbook remains at approximately 19% of effective loading capacity, or about 6% per annum on average. Vessel scrapping is expected to continue at high levels, particularly for the 80s and 90s built ships. On the demand side, we expect global containership volume in TEU measure to grow by up around 5% to 7% in 2015, led by increases in demand on major trade lanes. Nearly, 85% of vessel deliveries in 2015 are 7500 TEU or larger, as lot of the majors continue to modernize their fleets, improve their costs structures with large modern vessels. We have seen a continued demand interest for our SAVER design vessels of 10000 TEU and 14000 TEU classes from our customers, despite the significant reduction in bunker fuel costs. The completion of the Panama Canal set of locks in 2016 will allow vessels up to 13000 TEU to transit the waterway. We’re in discussions with the Panama Canal for allowing our 14000 TEU class vessels to go through. It is expected that the line operators will use the new Panama Canal for increasing cargo from the Asia to U.S. East Coast and Asia to South American East Coast. Meanwhile, the existing Panamax vessels will be redeployed to into Asia trades, Asia to Africa trades and Asia to Australia and New Zealand trade, a trend we’re seeing already. Beginning in - finally, in spite of the industry recovery, we expect the outsourcing trend to continue, as demonstrated over previous cycles. Given that we are the leader in the space that we continue to maintain our strong customer relationships, we will continue to capture a substantial share of the growth opportunities in our industry. Moving to Slide 9, this shows the staggered maturity profile of our charter portfolio. The average remaining charter length of our operating fleet is approximately six years on a TEU weighted average basis. In 2015, we may have to have up to 11 Panamax vessels for re-charter and in 2016 up to nine vessels, depending on the exercise of the existing charter options. Overall, the 2015 vessels up for re-charter represent approximately 2% of 2015 EBITDA and the 2016 vessels represent approximately 3% of 2016 EBITDA. Even though we have seen noticeable improvements in charter rate for Panamax vessels, we will continue to monitor market condition to determine the best strategy for those vessels. In Q1, we took delivery of one 10000 TUE vessel, the MOL Beacon. So far in Q2, we have taken delivery of two 14000 TEU class vessels, the Yang Ming Wish and the Yang Ming Wellhead. For the remainder of 2015, we expect our fleet to expand further with the delivery of one 10000 TEU in the four 14000 TEU vessels. In 2016, we expect to take delivery of three 10000 TEU vessels and a two 14000 TEU vessels. In 2017, we expect to take delivery of three 11000 TEU vessels and one 10000 TEU vessel. All those future deliveries altogether represents TEU growth of roughly 33%, overcome the level for our fleet. Despite the substantial fleet growth we have experienced over the past three years, we expect to continue to see opportunities for further growth. Please now turn to Slide 10, where I will reiterate our vision for the future. We believe Seaspan is well positioned to continue to enhance its leadership position and create shareholder value over the long-term. We will continue to fuel fleet growth with a controlled and balanced approach, being patient and disciplined; and then using financial strength, and technical and operational leadership position to capitalize on opportunities that meet our strict criteria. Our core focus will be remaining on designing, owning and chartering large modern fuel-efficient containerships to creditworthy customers. We have a history of returning capital to shareholders and we remain committed to sustainably increasing our common share dividends over the long-term, as we continue to opportunistically grow our business. At the ship leasing franchise we consider it to be critical to consistently maintain a strong balance sheet, diversifying our capital structure and enhancing our financial strength including maintaining appropriate leverage will remain our top priorities. As I said before, we may expect our 2015 results to be somewhat muted as we continue to invest in new vessels for our future. However, we also expect that our strong base of cash flows from existing charters as well as future growth will enable our franchise to become stronger and well established for the long-term value of our shareholders. I would now like to open the call for questions. Operator, please go ahead.

Q - Gregory Lewis: Yes, thank you and good morning.

Gerry Wang: Good morning.

Gregory Lewis: Gerry, when I look at those 17-year contracts with the - it looks like those assets the residual risk on those vessels has been transferred back to the charter. What was sort of the genesis of going down that path? Was that something that was, that you posed to the client or was it something that they were actually interested in doing?

Gerry Wang: Well, put this way. It was really the requirement of this particular charter as it’s kind of one-off transaction with it. Then we saw the opportunity there. Ship prices were very attractive and delivery dates are pretty good for the year of 2017 and we just went ahead and did it, because at the end of the day it met with our criteria, the customer, the return, the type of vessels and financing, all those things. So it’s kind of one-off transaction. It doesn’t represent the general trend for us.

Gregory Lewis: Okay, great. And then another on the more recently announced two newbuilds, it doesn’t look like you’ve exercised your right to acquire those yet. Do you sort have any sense for - should we be as we think about modeling these out, do you have any sort of sense at a minimum should we think that Seaspan is going to at least acquire one of those vessels or it’s still too early to make that judgment?

Gerry Wang: Seaspan will acquire one vessel out of the two.

Gregory Lewis: Okay. Perfect. And then just bigger picture, I mean, clearly your position the company in the larger vessel classes, the super post-Panamax, the longer-term contracts, that being said, we’ve seen a pick-up in charter rates, we’ve seen a pick-up in asset prices and there are some smaller vessels Panamax range, sub-Panamax range, getting a little bit older in the fleet. As we think about the next, let’s call it, two to three years, is that something where we should be expecting those vessels to potentially being re-chartered or do we think we can continue to see the company high-grade the fleet a little bit?

Gerry Wang: Generally speaking, Seaspan’s overall strategy is to operate large and modern containerships. Those Panamax vessels obviously at the time of the ordering were very big and they have become smaller and smaller in our fleet right now, given the ever evolution of the vessel size increase. Our strategy for those vessels is very simple. We’ll continue to monitor the market conditions. At this point of time, we actually are very happy with the charter rates, because they produce very good cash for us. At the same time, if the value of those vessels picks up and our strategy is to sell them as soon as the value reaches certain point. We don’t intend to keep the older vessels for too long.

Gregory Lewis: Okay. Perfect, guys. Hey, thank you very much for the time.

Gerry Wang: Thank you.

Operator: Our next question comes from Ben Nolan of Stifel. Your line is open, Ben.

Benjamin Nolan: Thank you. I have a few questions. First of all with respect to the vessels that you ordered the 11000s with the 17-year contract, obviously, that contract is substantially longer than the - what we have seen in the market lately. Did you - were you still able to earn sort of your targeted rate of return on that or given the length of the contract was that - where the rates of return are a little bit adjusted for that?

Gerry Wang: Yes, yes, the answer to the question is, yes, the returns are fairly consistent with our overall project requirement.

Benjamin Nolan: Okay. And also it seemed as though the price, certainly relative to the 10000s was pretty compelling on a TEU basis. What’s the thinking behind not making that move to more of the 11000s as opposed to ordering additional 10000 vessels that are touch more expensive on a TEU basis?

Gerry Wang: As a matter of fact, they are very, very similar vessels except the 11000 TEUs from Hanjin Shipper has slightly different description and allocation of boxes. It’s more like aircrafts, same configurations but with different seat configurations resulting in certainly larger TEU capacity but in essence the actual TEU carrying capacity will be almost identical.

Benjamin Nolan: Okay. So relatively homogenous with what you already have. So another question I had sort of gets back to Greg’s question on the Panamax. It’s something that I’ve seen lately as some owners of more modern Panamax tonnage actually taking the vessels into the yard, splitting them in half, adding center component to it to increase the capacity and also reduce consumption. And it sounds like that’s pretty successful. Is that something that you guys have considered at all doing or that’s little bit too far out of the box?

Gerry Wang: We’re not doing that. We went through the - anticipated a study of things like that. We arrived at the conclusion that it’s best for us to keep the vessels as they are, because they would be a good design, they’re flexible designs and they’re popular with the charterers as well. And as a matter of fact, the current charter rates are actually very nice for us. We’re very happy with the charter rates that we get, because they generate pretty decent net cash flow for us. And we’re continuing to take them as long as the ship value is there and if the ship value picks up and hopeful we’ll just sell them and redeploy the capital for our growth on larger vessels.

Benjamin Nolan: Okay, makes sense. And sort of in keeping with that the financing - the refinancing that you guys got on those three Panamaxs is - would appear to be well in excess of the value of the assets. Can you maybe talk me through exactly how that was maybe am I thinking of the asset values incorrectly?

Gerry Wang: Yes. The refinancing of that three 4500 TEU is best on the long-term charter attached to those…

Benjamin Nolan: Okay.

Gerry Wang: …those vendor they - our finance is looking at the charter value versus the steel value. When you look at our fleet we have the remaining approximate six year at time charter, we’re looking at the charter adjusted valuation versus the NAV which is steel value.

Benjamin Nolan: I see, okay. And then lastly, curious, how you think here, this year is trading at close to an 8% yield, which is a relatively high cost of capital and it’s not too far away from where the - your targeted returns are on newbuild. How do you think about allocating capital to growth versus maybe allocating capital to your share repurchase programs something like that?

Gerry Wang: Yes. Well, the yield is what it is, it comes and goes, and they moves up and down, we have no control, we just continue to run our business. We try to look at alternative purchase of capital as far as just demonstrated that we’re in a position to achieve very attractive financing trends, both for cost and also for the loan amount, for example, on the 4500 TEU second-hand vessels. We manage to get $50 million each to reflect the charter attached value. And so we are very happy with all the diversification of the capital at very attractive trends for them, and equity cost is only a percentage of it, and the overall cost of financing is actually going down.

Benjamin Nolan: Okay. All right. That does help me. Thanks a lot, guys.

Gerry Wang: Thank you.

Operator: Our next question comes from Donald McLee of Wells Fargo. Donald, your line is open.

Donald McLee: As you guys previously noted your - following your recent orders your combined owned managed fleet sits at about 118 containerships, and that’s almost in line with your previously guided target of 120. How should we expect the pace of your fleet growth to change as you kind of approach that previous target and do you have a revised longer-term target?

Gerry Wang: We don’t know, by the way, I expect, we add another at least 5 to 10 vessels within this year. Again, as I said, on the Panamax vessels and all the vessels if ship values moves up to the level we feel, it’s time to pull the trigger to sell them and redeploy the capital, then the number of vessel will come that. So at the end there is a dynamic situation and we don’t have really a hardcore target number of vessels in our business model. But we’ll just see how things go and we’ll go from there.

Donald McLee: Gotcha. And this in terms of kind of where that growth is going to come from, do you think you will be placing a majority of your order directly at Seaspan or those - or should we expect those to come by the GCI JV?

Gerry Wang: All right, I would look at both.

Donald McLee: Both. And just one more question in terms of your view of the larger 20000 TEU containerships, how do you view the return profile of those vessels relative to the kind of the profile of your recent orders in the 10000 to 14000 TEU range?

Gerry Wang: Yes. We feel the 20000 TEU vessels like, the aircraft, Airbus A380, they are super large vessels. And while the return can be decent, but we are looking at that class a little different and we want much longer-term of the charter to justify the investment. So we haven’t had a chance to conclude a deal like that, we’ll be waiting very patiently for deal with much longer charter period preferably a 15-year or longer to justify our investment for this cost.

Donald McLee: All right. Thanks, that’s helpful. That’s all of my questions.

Gerry Wang: Thank you.

Operator: The next question comes from Shawn Collins of Bank of America. Shawn, your line is open.

Shawn Collins: Great. Thank you. Hi, Gerry. Hi, Sai. Good morning.

Gerry Wang: Good morning, Shawn.

Shawn Collins: Thanks. So congrats on the announcement of the seven newbuilds, $650 million in value or cost. Can you just talk about some of your thoughts around how you plan to finance these new ships?

Gerry Wang: The financing for those vessels will actually be fairly straightforward, because at this point of time, we have plenty of demand for our financing requirements and to be honest this is like one to four, five ratio available to us. So we don’t have a fixed plan yet as to how define them, but we have a plenty of time in our hands, we just pay 10%, 20% upfront and we just wait for in the best financing proposal ahead of us - in front of us. And at this point in time, we don’t know what will be here, but it will be a fairly straightforward.

Shawn Collins: Okay, understood, that’s great. I know it’s early days and you just announced it.

Gerry Wang: Yes.

Shawn Collins: Just turning to the West Coast port shutdown and the delays caused by that, just wondering if your sense is that - is the congestion caused by that if that has worked its way through the system or if this is still a factor in the system?

Gerry Wang: It’s still a factor in the system. I recently visited some several CEOs who were talking about the repercussions of the West Coast strike and unfortunately the situation is still pretty bad for certain ports and for certain trade lanes and our customers and shippers as well are still feeling the pain. That’s why some people are looking at U.S. East Coast as a permanent solution and to the problem, because they cannot afford to go through this up and down every five, seven years.

Shawn Collins: Okay, great. And then just one last question. So with the seven newbuilds you’re building five of them in Korea at HHI and two of them in China at YZJ. Can you just talk about how do you chose each yard and kind of compare and contrast the strengths and or just compare and contrast the two yards between them?

Gerry Wang: Well, they are similars shipbuilders for YZJ, obviously have built quite a few sister vessels for us. So to build more vessels of the same design would be, I said is simple and straightforward for them, then we compare the specifications and pricing and delivery times, and we come to the conclusion, hey, it’s an opportunity to do a 17-year long-term charter for one of the leading operators. We went ahead and we did it. And the return criteria was met and the - all our restrictive criteria for new projects were met then we’ll pull the trigger and would be the view.

Shawn Collins: Okay, great. Well, thanks very much for the insight, Gerry and Sai, I appreciate it.

Gerry Wang: Thank you.

Operator: [Operator Instructions] Our next question comes from Prashant Rao of Citi Research. Your line is open.

Prashant Rao: Hi guys. My question was really on the Panamax side. Clearly, we’re seeing some strength in rates from fleets being rightsized and scrapping activity increasing, but I was wondering is any portion of the strength attributable to sort of an organic growth or is this clearly - is this purely on fleet size in your view?

Gerry Wang: All right. In my view, I think is a combination of several factors, one of which was due to the West Coast strike. Then the second is due to the open up of South Africa, replacing the smaller vessels for the volume involved. The third thing, I think is over last 10 years or 8 years, nothing has been built of the size the 4250 TEU vessels are very flexible and very good, even though they are over ten years old,, they still remain as a very flexible type and versus good vessels for the operators use. And market has picked up and the few consumption is not material fact anymore. So that’s why those vessels have come back alive. The charterers have really improved to $14,000, $15,000 per day versus $6,000, $7,000per day. To give you a little comparison, today’s $15,000 per day will be comparable to about $20,000 per day about eight, ten years ago. Why? Because the interest rate has come down so much lower than eight, ten years ago. So we’re very happy with the charter revenue we get from them. But as I said, for the previous caller, if ship value picks up as a result of the charter rates recovery then we’ll be happy to sell them and redeploy the capital for modern and bigger vessels. But at this point of time, we are enjoying the charter rates that we get.

Prashant Rao: Thanks. I guess, kind of tying into that, there’s been growth coming on volume side from both like intra-Asian and then also some non-mainline routes. Would you say that those - how much of that is tied into the growth that you’re seeing in Panamax deployment or use, when you just spoke about South Africa opening up, but also on the intra-Asian side? And then I guess more broadly in terms of intra-Asian volume what sort of exposure your charterers have to that market and how do you see that as a growth factor for 2015?

Gerry Wang: Yes, the intra-Asia has always been fairly stable and pretty good. And obviously the smaller vessels are being phased out and they’re being replaced by fairly larger vessels like the 4250s and the 5000 TEUs. We see that trend happening there, but at the same time as I said Asia to South Africa, Asia to Australia/New Zealand also picking up for using the 4250s and 5000 TEUs replacing the two-three-tonne [ph] TEU vessels. So it’s a cascade, in fact, from larger vessels all the way down and the fact over the last 18 years, nothing has been built for the smaller vessels. All of a sudden, we see the industry, the markets needing those vessels to fill up the voids. And the total-ends [ph] they want to operate and we’re happy to see the recovery of charter rates to reflect the demand-and-supply situation and that’s just market cyclicality as we always say. And as time goes forward, we’ll hope this trend will continue then hopefully the value of the Panamax vessels will pick up. Then we’ll be in the position to make a decision whether to retain them or sell them to retain the cash for redeployment. And we’ll see. So we’ll keep our eyes open for next 6, 12 months, 18 months. And the good thing about Seaspan is we don’t have to sell them. We have all the flexibilities in our hands. So we’re pretty happy where we are now, but going forward we are very open minded.

Prashant Rao: Okay. Thanks so much for your time, guys.

Gerry Wang: Thank you.

Operator: I’m showing no further questions at this time. I would now like to turn the call back to management.

Gerry Wang: Excellent, thanks for taking the time to joining us for this call. And we look forward to speaking to you again next quarter. Thank you very much. Have a great spring/summer. Thank you. Bye-bye.

Operator: Ladies and gentlemen, that concludes today’s conference. Thank you for your participation and have a wonderful day.

Gerry Wang: Thank you.

Operator: You’re welcome.