Diana Shipping Inc. Q4 FY2020 Earnings Call

Greetings, and welcome to Diana Shipping, Inc.'s 2020 Fourth Quarter Conference Call. This conference is being recorded. It is now my pleasure to introduce Edward Nebb, Investor Relations. Thank you. You may begin.

Thank you, Darryl, and thanks to all of you for joining us for the Diana Shipping, Inc. fourth quarter and year-end conference call. The members of the management team who are with us today include Mr. Simeon Palios, Chairman and Chief Executive Officer; Mrs. Semiramis Paliou, Deputy Chief Executive Officer and Chief Operating Officer; Mr. Anastasios Margaronis, President; Mr. Ioannis Zafirakis, Interim Chief Financial Officer, Chief Strategy Officer, Treasurer, and Secretary; and Ms. Maria Dede, Chief Accounting Officer. Before management begins their remarks, let me just briefly remind you of the Safe Harbor notice that certain statements during the call, which are not historical fact, are forward-looking statements under the provisions of the Private Securities Litigation Reform Act. And such forward-looking statements are based on assumptions, expectations, projections, and beliefs as to future events that may or may not prove to be accurate. For a description of the risks, uncertainties, and other factors that may cause future results to differ from the forward-looking statements, please refer to the company's filings with the Securities and Exchange Commission. And now with that out of the way, it is my pleasure to turn the call over to Mr. Simeon Palios, Chairman and Chief Executive Officer.

Thank you, Ed. Good morning and thanks for joining us today to discuss the results of Diana Shipping, Inc. for the fourth quarter and full-year 2020. The story of the past year, as we know all too well, was one of our sales frontier and economic dislocation caused by the COVID-19 pandemic. Now, as we look forward towards 2021, we can hope that the increasing availability of vaccines will help an eventual return to more stable, less volatile market conditions. In any event, we will continue to pursue well-established strategies to maintain the company's financial strength, manage our fleet in a prudent manner, and focus on enhancing shareholder value. Before I summarize our financial results, I wish to comment on today's announcement regarding several senior management appointments approved by our board of directors. These actions will be effective as of March 1, 2021, and are intended to provide for an orderly succession and to ensure the continued sound strategy management of the company. The leadership appointments are as follows; Mrs. Semiramis Paliou has been appointed Chief Executive Officer, having previously served as Chief Operating Officer and Deputy Chief Executive Officer. My position as Chairman of the Board of Directors remains unchanged. I will share in large capacity as non-executive chairman when the Chief Executive Officer role is assumed by Mrs. Paliou. Mr. Anastasios Margaronis will continue to serve in his current capacity as President and Director of the company, position he has held since 2005. Mr. Ioannis Zafirakis has been appointed Chief Financial Officer on a permanent basis. He has served in that role on an interim basis since February 2020. He also will remain the Chief Strategy Officer, Treasurer, and Secretary of the company. Mr. Eleftherios Papatrifon has joined the company and has been appointed to the position of Chief Operating Officer. Mr. Papatrifon is highly qualified having more recently served as the Chief Executive Officer, Co-Founder, and Director of Quintana Shipping Limited, and previously as the Chief Financial Officer and Director of Excel Maritime Carriers Limited. I am deeply grateful for the opportunity to serve as the company's Chairman and CEO since its establishment, and I am delighted to continue as Non-Executive Chairman going forward. The orderly seamless actuation approved by our Board will ensure that we have both continuity of senior leadership and new perspectives as we maintain the strategic vision and sound management company for the future. Our incoming CEO, Mrs. Semiramis Paliou, has strong experience in the shipping industry and has helped our company well in a range of responsibilities for more than a decade. I have great confidence in the strength and capability of the entire Diana Shipping, Inc. team and their ability to lead the company into the future. With respect to our financial results, Diana Shipping reported a net loss of US$7.4 million and net loss attributed to common stockholders of US$8.9 million for the fourth quarter of 2020, including a US$1.9 million impairment loss. This compares to a net loss of US$14 million and net loss attributed to common stockholders of US$15.1 million reported during the fourth quarter of 2019, including a US$6.5 million impairment loss and US$3.3 million loss on sale of assets. For the full-year 2020, the net loss was US$134.2 million and net loss attributed to common stockholders was US$140 million, including a US$104.4 million impairment loss and US$1.1 million loss on sale of assets. This compares to a net loss of US$10.5 million and net loss attributed to common stockholders of US$16.3 million for 2019, including a US$14 million impairment loss and US$6.2 million loss on sale of vessels. Time charter revenues were $42.7 million for the fourth quarter of 2020 compared to $51.5 million for the same quarter in 2019. This was mainly due to the decrease in ownership days resulting from the sale of two vessels in 2020 and also due to decreased average time charter rates that the company achieved for each vessel during the quarter. Time charter revenues were $169.7 million for the whole year 2020 compared with $220.7 million for 2019. Turning to the balance sheet, cash, cash equivalents, and restricted cash totaled US$82.9 million at December 31, 2020. Long-term debt was US$420.3 million, which has decreased by US$54.6 million since the end of 2019. Reflecting our ongoing commitment to return value to shareholders, in December 2020, the company announced a self-tender offer to purchase up to 6 million shares of its common stock. The tender offer was completed in February 2021 at a price of US$2.5 per share. In connection with our active management of the company's fleet, in December 2020, we announced an agreement to sell the 2001-built vessel Oceanis, with delivery to the buyer no later than April 16, 2021, for a sale price of US$5.75 million before commissions. In total, including the Oceanis, we sold five vessels during 2020. We will continue to maintain a fleet of modern efficient vessels to meet the needs of the dry bulk marketplace. As we move forward in 2021, we will continue to navigate the challenging conditions while remaining sharply focused on preserving and building shareholder value. With that, I will now turn the call over to our President Anastasios Margaronis for a perspective on industry conditions. He will then be followed by our Interim Chief Financial Officer, Chief Strategy Officer, Treasurer, and Secretary, Ioannis Zafirakis, who will provide a more detailed financial overview. Thank you.

Thank you, Simeon, and welcome to all the participants to this latest quarterly conference call of Diana Shipping, Inc. During the last quarter of 2020 and the first few weeks of 2021, the market has certainly given all participants reasons to pay careful attention to current developments and make some exciting predictions about the short and medium-term developments. The Baltic Exchange Index started the year at 1,374 and closed on the last Friday, February 19th at 1,698. The Baltic Cape Index moved down from 2,008 to 1,715. And the Baltic Panamax Index started the year at 1,364 and has moved up to 2,332 as of last Friday. Turning to macroeconomic developments, according to figures released recently by the IMF, global GDP growth is expected to rise by 5.5% this year and by a further 4.2% in 2022. This follows the shrinkage of global GDP by an estimated 3.5% in 2020. We sincerely hope these optimistic forecasts come to pass, as the pandemic is continuing to affect economic activity this year and will not allow our businesses to work at their pre-pandemic pace for some quarters to come. Chinese GDP is expected to grow by 8.1% this year and by 5.6% in 2022. These growth forecasts follow robust growth of just 2.3% in 2020. In the United States, GDP after shrinking by an estimated 3.4% last year is expected to grow by 5.1% this year and by a further 2.5% in 2022. Europe, whose economic activity dropped by about 4.6% last year, is estimated to grow by 3.9% in 2021 and by a further 3.4% in 2022. Let's have a quick look at newbuilding deliveries during the last year. According to Banchero Costa, 480 bulk carrier units or 48.6 million deadweight tons were delivered last year. This total included 25 VLOCs, 84 Capes, totaling about 25 million deadweight; 24 post-Panamax and 128 Panamax, both categories totaling about 12.65 million deadweight. These figures are to be compared with a newbuilding order book we will mention later in this discussion. Look at the order book now. As far as newbuilding contracts signed in 2020 are concerned, Clarksons report that they totaled about 13.5 million deadweight tons, which is down nearly 58% compared to the equivalent figure of 2019. Clarkson also reports that in December 2020, there were 38.8 million tons of Panamax and post-Panamax on order, representing about 6% of the trading fleet. Of these, 9 million deadweight are scheduled for delivery in 2021 and 4 million deadweight in 2022. At the same time, there were 23.9 million deadweight of Capes including VLOCs on order, which was the equivalent of about 6.6% of the current trading fleet. Of these, 15.9 million deadweight are expected to be delivered in 2021 and 7.2 million in 2022. The above statistics, coupled with the overall bulk carrier order book, which is now no higher than 6%, bode well for the supply trends of the industry at least for the next 12 to 18 months. The order book to existing fleet ratio has dropped to the lowest level since 2002. One of the reasons why newbuilding orders are low is not only the uncertainty of future demand, which has always been there, but the uncertainty over the appropriate fuel for the large marine engines of the future. We agree with Howe Robinson that the dilemma surrounding the future fuels for ship propulsion is pressing. Shipping's green agenda has been firmly established since the IMO decided to include shipping in its target to reduce CO2 emissions by 40% by 2030. The fact that relatively few of the currently proposed solutions appear suitable and/or economical for retrofits might create a new building boom across the board sometime this decade. Furthermore, the combination of mandated regulations and feasible technologies that eventually become available could have a significant effect on resale prices, particularly for young, traditionally powered vessels. According to Howe Robinson, whatever green fuels eventually emerge as winners will most likely be more expensive than existing ones. Consequently, fuel-efficient ships, including those that have wind-assisted technologies, are likely to enjoy significant freight premiums. There is broad agreement that LNG is probably the only fuel currently available in sufficient quantities to achieve emission cuts in the near term of about 20% to 25%. This, coupled with the problem of methane residues that needs to be overcome, makes LNG just a bridge towards future compliant propulsion fuels. As the Chairman of one bulk carrier owner remarked, 'Do you actually build the bridge, or wait to see what is on the other side of this bridge?' These few words encapsulate the dilemma facing ship owners in ordering newbuilding vessels of any kind today. Until it is decided if the green fuel of the future will be ammonia, biofuels, hydrogen, atomic batteries, or something else, the decision to order on a large scale expensive newbuilding units will be held back, which can only be good news for the shipping market as a whole in the medium term. Let's look at dry bulk demand and supply now. According to Clarksons, the total dry bulk trade remained effectively stagnant during 2020 at 29.344 million ton miles. Expressed in tons of cargo, seaborne dry bulk trade shrank by an estimated 2.1% in 2020. The forecast is for volumes to rise by 3.7% in 2021 and reach 30.435 billion tons by the end of the year. For 2022, the forecast is for a further 2.6% increase. The projected ton-mile demand increase for this year must be set against the projected 2.6% net increase in supply of tonnage in 2021, which should support some fundamental rebalancing and possibly lead rates higher from their present levels. Such a low level of net fleet increase has not been seen according to Howe Robinson for about 15 years. Given the fact that this small increase follows a period of relative balance between supply and demand in the sector, this cannot help but bring some good news on earnings and asset values. For 2022, dry bulk tonnage is projected to increase by only 1%. If this is indeed realized, the market should be supported even further in the medium term as well considering the estimated demand increase mentioned above of 2.6%. Let's look at steel now. According to Howe Robinson, based on figures issued by the Chinese Steel Association, China's steel demand will increase slightly in 2021 compared to 2020 supported by stable macroeconomic policies. Chinese steel production rose to a record 1.05 billion tons in 2020 as the economy's gradual reopening after the coronavirus-induced lockdowns boosted demand. To comply with the government's desire to reduce carbon emissions, it is likely that China will increase imports of primary steel products, especially billets. The latter is a raw slab of steel that needs to be processed further. The inputs of such billets increased by 500% in 2020 and are likely to increase even further in 2021. Such a trend, if indeed it prevails, will reduce somewhat the amount of iron ore and to a certain degree of coking coal that China will need for its steel mills going forward. During last year, imports of steel products into China increased by 64.4% while exports fell by 16.6%. This trend is expected to prevail this year as well mainly due to the effects of the pandemic. Iron ore, according to Clarksons, iron ore imports worldwide are expected to grow this year by 3% and reach 1.545 billion tons. For 2022, the forecast is for a further 1% increase. For this year, Chinese imports are expected to keep growing as they did last year, despite potentially slower steel production growth and the partial reversal of the shift away from scrap use seen last year. Iron ore demand by other countries around the world is anticipated according to Clarksons to grow by about 11% this year after posting significant drops in 2020. For example, European imports of iron ore in 2020, excluding the United Kingdom, were down 25.2% year-on-year at 70.2 million tons. As for coking coal, Clarksons reports that the coking coal trade is estimated to have declined by 9% to around 247 million tons last year as the COVID-19 pandemic had a major impact on steel mill rates and utilization in several key regions. Total coal imports by the 27 EU members dropped 32.2% in 2020 compared to 2019 and totaled a mere 68.7 million tons according to Refinitiv vessel tracking data. This year, coking coal trade is expected to increase by 6% compared to last year and by a further 5% in 2022. U.S. and Canadian export volumes are expected to increase by around 12% this year according to Clarksons. On thermal coal, Clarksons reports that global seaborne steam coal trade is estimated to have declined by 10% to around 920 million tons last year, primarily due to the effects of the COVID-19 pandemic. While this trade remains under pressure, a partial rebound of about 4% is projected for 2021 as the world overcomes the worst impact of the pandemic. Chinese steam coal imports are expected to fall by 3% this year though volumes are highly sensitive to government policies and major uncertainty remains. Projected increases in imports by countries like India, Indonesia, and the Southeast Asian region will make up for the lower imports by China. Worth noting is that China did not import any coal from Australia in December 2020, and the ban on coal imports from that country remains in force. Those lost cargoes are now sourced from places like Russia, South Africa, and Indonesia. Small volumes are transported also overland from Mongolia. Take a look at the grain trade now. According to Clarksons, the global seaborne grain trade is projected to grow by around 2% in the 2021 grain season, falling short of the 6% increase seen in the previous grain season. This slowdown will, according to Clarksons, be connected to a much slower projected growth in the soybean trade after last year's strong 10% increase. This performance was underpinned by U.S. soybean exports, which according to definitive vessel tracking data increased by 36% year-on-year at 61.4 million tons. During 2020, China imported a total of 94.7 million tons of soybeans, which was 33% higher than in 2019. For the 2021-2022 grain season, overall volumes are expected to grow by a further 3% and reach 532 million tons. A quick look at the minor bulk trades. The minor bulk trades, which have gradually grown and have come to represent about 2 billion tons of cargo shipped per year worldwide, are estimated to grow by 4% this year and by another 3% in 2022. Several cargoes falling under this broad category, such as pet coke, bauxite, cement, copper concentrates, soya meal, and others, have shipped more and more in Panamax vessels. A look at scrapping now. According to Howe Robinson, 124 bulk carrier vessels of 15.9 million deadweight were sold for scrap in 2020. Last year saw about 11.3 million tons of capes being sold for scrap and only 900,000 deadweight worth of Panamax. For 2021, an estimated 5.6 million deadweight worth of capes are expected to head for the scrap yards and about 1.9 million deadweight worth of Panamax. These numbers will obviously fluctuate depending on the state of the freight market this year. Looking briefly at the age profile of the large bulk carrier fleet, Clarksons reported at the beginning of the year about 21% of the total Panamax fleet were over 15 years old while only 9% of the cape-sized fleet fell into that age category. Only 2% of capes in the water are over 20 years old. So, let's try and form an outlook for the industry after all the statistics that we have been talking about. The statistics seem to indicate that after a long wait, the stars affecting the fortunes of the dry bulk trades are finally becoming aligned. The statistics and the future estimates reported above, even if they materialize by only 75% or so, cannot help but bring about a long awaited recovery in the dry bulk earnings. The duration of such a good market will depend on among other things, firstly, the shipowner sentiment about the market. Secondly, the availability or lack thereof of credit. Thirdly, the pricing of newbuilding. And fourthly, charterers' perception about the future trends in this industry. Therefore, we mostly agree with the view expressed by Commodore Research that dry bulk prospects remain positive at least for the near term. China's coal import prospects for example remain encouraging. While coal stockpiles of China's six major coastal power plants have been on a free fall and recently stood at just 12 million tons. These stockpiles are enough to meet only 15 days of demand, which is an extremely low level as electricity production this winter has been setting record highs. All other commodities are also expected to move in increased volumes, while supply appears to be well under control. These features of the market, coupled with a lack of serious imbalances creating surplus tonnage during the last couple years make us as a company reasonable optimistic about the future of our industry. As has been the case up to now, the Diana management team will use market developments to strengthen even further its balance sheet, lower the average age of our fleet initially at least through vessel sales, which we have been doing for the last few quarters. Eventually, we will also be reinstating a long awaited dividend to our shareholders. Our business strategy will continue to be conservative and at the same time opportunistic, and our track record is there to prove the beneficial results of such policies implemented consistently and with full transparency. I’d like now to pass the call to our CFO, Ioannis Zafirakis, who will provide us with the financial highlights of Q4 2020 and annual results for the whole year. Thank you.

Thank you, Stacey. Good morning to everyone. I'm pleased to be discussing today with you the Diana’s operational results for the quarter and year ended December 31, 2020. During that quarter, we recorded a net loss attributed to our common share stockholders of $8.9 million, or $0.10 per share, but of course, that includes an impairment of $1.9 million impairment loss. In 2020, as you are aware, we saw two vessels that decreased the ownership days for the quarter to 3,680 compared to 3,915 for the same quarter in 2019. You are probably aware that as of December 31, we had also agreed to schedule three more vessels, of which two were delivered to their new owners in January 2021, and one is still remaining for sale. The fewer ownership days, together with the deteriorating market conditions during that quarter led to lower revenues totaling $42.7 million compared to $51.7 million in the fourth quarter of 2019. There was a decrease in the voyage expenses to $3 million compared to $4.5 million for the same quarter in 2019, mainly because of decreased commissions and decreased loss from the bunkers. The decrease in revenues that we talked about earlier resulted in a decrease in the daily time charter equivalent rate, which was $10,094, compared to $12,264 for the same quarter of 2019. We had less hire days in that quarter, and utilization improved at 99.6% compared to 96.9% for the same quarter last year. There was a decrease in operating expenses, which were $22.4 million compared to $23.4 million last year, and this is a result of the sale of vessels. Although, the total number of operating expenses was lower than the previous year's quarter, daily operating expenses were more or less the same, standing at $6,089 per day compared to $5,969 for the same quarter in 2019. We achieved this because there was an increase in crew expenses and insurances. Operating expenses were partly offset by decreased expenses in spares and repairs. The general and administrative expenses decreased to $7 million compared to $7.8 million for the same quarter last year, and this is due to decreased payroll costs including compensation costs on restricted stocks. The good news is that we had interest and finance costs continuing to decrease in this quarter due to the decreased interest rate and decreased average debt, which was at $4.6 million in that quarter compared to $6.7 million in Q4 2019. This helped with the repurchase of the $8 million worth of bonds. For the year ending December 31, 2020, the net loss attributed to common stockholders was $140 million, or $1.62 per share, and again, this includes a significant impairment loss of $104.4 million and a $1.1 million loss on the sale of vessels. As you can understand, the time charter revenues decreased also to $169.7 million compared to $220.7 million for the same period in the previous year, and the reasons have already been explained. Similarly, the daily time charter equivalent rate decreased to $10,910 per day compared to $12,796 last year. The fleet utilization for the year decreased to 97.9% compared to 98.6% in 2019, which was related to COVID-19 issues and increased drydocking days. The vessel operating expenses amounted to $85.8 million, compared to $96.6 million for 2019. That decrease in operating expenses was due to the decrease in ownership days and was offset by increased expenses in insurance expenses, repairs, operations, and taxes. Daily operating expenses in 2020 were $5,750 compared to $5,510 for the year 2019. There was an increase for the year in the general and administrative expenses, which stood at $32.8 million compared to $28.6 million for 2019. However, this is an extraordinary increase due to the accelerated vesting of the restricted shares of board members which was due to the company's restructuring in 2020 and its complete separation from Performance Shipping, Inc. Interest and finance costs decreased to $21.5 million, compared to $29.4 million last year as we explained earlier. We would like to thank you for your attention, and we will, of course, be pleased to respond to your questions. Now, I will turn the call to the operator who will instruct you as to the procedure for asking questions.

Our first question comes from Randy Giveans with Jefferies. Please proceed with your questions.

Howdy team Diana, yes, congrats to all on the promotions and new positions?

Thank you.

Thank you.

Also, you've done a great job with the asset sales, tender offers, chartering strategy; your stock has more than doubled in the last few months, so congrats on all that. Now that your share price is closer to NAV, if not above NAV, and the market outlook is fairly attractive, what are your plans for your fleet in terms of ongoing sales, maybe some acquisitions or for the share repurchases?

Now, you correctly pointed out, this is Ioannis - Randy, you correctly pointed out that it's very important to see where we are in the cycle and where we are based on our NAV. So, you should not be expecting to pay any dividend if we are trading below NAV and if the market conditions are not such that we can make sure that this dividend is going to be sustainable for the short to medium term. Now, regarding further sales of vessels, of course, we couldn’t combine it with buying back some of our shares at a discount to NAV. We will consider if we can combine it with buying back some of our expensive debt. Buying new vessels at the moment is the last option we have. But I want to stress again that we have managed, even in the last 15 years, to always have various options ahead of us to act accordingly. And this is, I think, the main characteristic of Diana Shipping, Inc. that we always have a lot of options on how to react, listening to other companies that don't have as many options. So be assured that we will choose whatever is most appropriate for our shareholders.

Sure, okay. And then, in terms of the market looking at Panamaxes now currently still outperforming Capesizes. Obviously, the forward curve is showing that inflection coming soon where Capesizes will outperform Panamaxes. Do you have a preference for one size of vessels over the other? And then also, can you describe maybe the situation, and how that will drive that inflection of Capesizes outperforming Panamax in the coming months?

Sure. We have said many times in the past in the medium to long-term, we do not see - people should be expecting that one type of a vessel should go along with the other. More or less everything is included in the price of the asset. So, the fact that you have, in the short-term, kind of inefficiency or one type outperforming the other is something that we have seen in the past. We don’t consider that to be the new norm or something that is going to continue. Certainly, you’re correct in your assumption, but I think what has happened in the Panamax sector has to do more with the sentiment regarding the Chinese New Year. You know that sentiment is very important. If we overdo it with that and if we are afraid, for example, what is going to happen in the Chinese New Year regarding fixed use and demand, then you have the results of what you showcased two weeks or a week ago in the Panamax sector. So, fundamentals are going to prevail. At the end of the day, I think you are going to see a universal move of rates upwards, as Stacey said earlier in the short to medium-term. Having said that, we think we are very well invested to that respect and to take advantage of this happening, and we will not try to make more moves today as we speak, i.e., buying vessels and so on and so forth. We think we are very well invested. If the market moves upwards, we are going to be there to take advantage of that. We have a lot of vessels to fix in the months to come. We are there to take advantage of the situation.

Sure, good deal and that's it for me. Keep up the great work. Thank you.

Welcome.

Thank you. Our next questions come from the line of Omar Nokta with Clarksons Platou Securities. Please proceed with your questions.

Thank you, and congratulations on the management transition and Laftere's joining the team. I wanted to follow up on Randy's previous topic. It's been a long time coming, and it’s encouraging to hear your positive outlook. Currently, I understand you have a fleet that you can manage and there’s no immediate need to purchase additional assets. In terms of fleet deployment, I know you traditionally don’t engage in spot trading and primarily operate on time charters. Historically, these have been for one to three years, but it seems they’ve mainly been around the 12-month mark lately. Are there any anticipated changes in how you plan to deploy the fleet moving forward? Do you foresee putting more ships on longer-term contracts? Any insight you could provide would be appreciated.

Okay. You have well noticed that we have kind of shortened our hedging period. We still have a hedging period. Having said that, we cannot stay completely still and not try to take advantage of the short-term events, which is why you see us having a lot of vessels opening during the next quarter and the quarter to come in the last quarter of 2020. The only thing that I can say is that we have shortened the period of hedging. But at the moment, it's, I would say, close to a year, whereas in a better market it is close to two years and in a fantastic market it is close to three years. So yes, we have taken some steps towards the market moving up. Having said that, we will not put all of our eggs in one basket, as you know, and this is the absolute maximum risk that we are willing to take at the moment, i.e., a year of hedging.

Okay. That’s helpful. Thanks, Ioannis. And then maybe just on that point. When it is time to deploy capital on vessels, I've been thinking about the larger ships. You operate both Newcastlemax and Capes. What would you prefer when it's time to spend money on a new larger vessel especially with the strategy sticking with time charters? Is there a clear preference in your discussions with customers on whether they prefer to put a Newcastlemax or a Cape on charter?

People have preferences, but you are not paying the same price for each preference, Omar. Therefore, theoretically, in an inefficient market, everything should be included in the price of the assets that you are buying. We are not talking here that someone has inside information, and they know that one type of vessel is better than the other and the market has not taken care of that. Theoretically speaking, there should not be someone trying to explain why one is better than the other because we are not paying the same price. If we were to be asked what is our preference, we could say that we like larger vessels, not because we think it is a more profitable business but that we think it's a more volatile business. For our model and the way we try to create value for our shareholders, the bigger the vessel, the more favorable it is, we think, for our model to create value.

Okay, that’s pretty clear. Thank you. And maybe just one final one then I’ll turn it over. Just a comment on the dividend, I joined the call a little late, but I've heard Stacey's comments about bringing back the dividend, and just want to make sure I heard correctly. Have you officially decided to bring back the dividend, or is that?

No, no, no. This is wishful thinking. He said maybe, or is - the time will come when we will introduce. We didn't say that we are going to introduce or that we have taken a decision to that effect. As I said earlier, we have to see market conditions being such that the dividend is sustainable. We must also see the stock price being above NAV in order to introduce dividends because, you know, if you are trading below NAV, the use of your money may be better to buy back the stock rather than pay a dividend.

Yes, I agree.

Yes, if I can add - the magic word was eventual. And when we get close to what we see here—or we hope—is developing something similar to what we saw several years ago coming up, in other words, the stock trading at a significant premium and earnings going up. The ingredients must be there for the situation that Ioannis described to develop and allow us to pay a dividend, but we don't know when this will happen.

Eventually, Faulty Towers, do you remember? Eventually.

I got it now. Yes. I appreciate you making that very clear, eventually. All right, thanks guys.

Our next question is coming from the line of Greg Lewis with BTIG. Please proceed with your questions.

I guess my first question is around realizing that Diana is not directly impacted on the smaller vessels. But that being said, strength in the Supermax market finds a way to spill into the Panamax market and vice versa. So, it's an interesting time in the market. In that, it seems like the Supermax market is really driving the strength in rates as opposed to typically the Capes? Just curious what you're seeing, how that's happening, and any thoughts around that would be helpful.

I think Stacey will elaborate on his analysis. But I think the most important element to what you have seen recently has to do with the sentiment, Greg, and how people were thinking about the beginning of the year. I think most of them, they were really careful and they rushed to fix vessels. The market was a bit better than expected regarding demand where seasonal issues with the demand appeared. Because of this, the market was caught without many vessels being available for charter, and this is how it happened, I think. At the end of the day, medium to long-term, everything has to do with fundamentals: How many vessels do we have in the water and what's the demand for carrying goods by sea.

Okay, great. And then just as I think about it, I mean clearly—based on your prepared remarks, we're looking at renewing our fleet. This is something that's been going on for a while now. I guess I'm just kind of curious, realizing that Diana is, I don't know if you're an aggressive seller, but clearly you have some older ships in the fleet you're thinking about selling into the market? What is— we can kind of see that the state of the modern tonnage market, has there been any pickups in interest in buying some of these older vessels in your fleet? Just kind of curious as we look out over the next six to 12 months just given the current upturn in rates, has the phone been ringing a little bit more from potential buyers of some of those vessels? Thanks.

That is 100% correct. The interest in buying our older tonnage is much higher than what it used to be 20 or 30 days ago. People are reacting to the higher rates that they saw recently and have asked to buy older tonnage where the older tonnage seems to be providing a bit better return. However, I don't know about the risk-return ratio for these.

Well, don't forget that the sale and purchase market is lagging the freight market or vice versa. You need the state strength for the sale and purchase market to come in line with the freight market. Unfortunately, the last three months, the market has been very volatile. We have not reached a steady state. Therefore, the values of the secondhand vessels have not come to align with the freight market.

Our next question comes from the line of Tucker Long with Stifel. Please proceed with your questions.

This is Tucker Long on for Ben Nolan. Thanks for taking my questions. With the recent developments and strength that we've seen in the dry bulk space, has there been an increased appetite from the charters for longer-duration contracts? You know, effectively hedging out on their end?

Yes, but I don't think that this is an indicator. I know that people are trying to use that as an indicator on what the charterers are seeing in the market ahead. This is why they may want to charter vessels for a longer period today as we speak. However, this is not entirely correct because you have the FFAs where they dictate the number more or less of the charter rate of two years or three years. This has always been the case. You don't have the charterers pressing you saying they only want to fix a vessel for two years. They may say they can do two years if you want, or they can do one year. So, although I think the question should be for the better to ask the owners to see whether they have an interest because the rate that they're going to get is more or less none. I don't know, probably I have confused you, but looking at what the charterers are asking, it's not the right thing to do recently because charterers usually accommodate any type of request regarding period, at a different number.

Yes, that makes sense. So my second question, I know you guys mentioned you're not looking to buy ships right now. But in the event that that changes, how do you guys think about your purchasing power to buy ships or I guess effectively? How much dry powder would you guys have to acquire vessels?

I think it all depends on how comfortable we are feeling with the cash that we have set aside. You can see that our cash position is very strong. The question is how much we want to leave aside, and this is going to be influenced by what type of contracts and revenues we will have assumed. At the same time, we have un-mortgaged vessels that if they are sold can allow us to buy more if we wish to do so. Although we said that we are not interested. I think if we were another company with a different risk profile, our buying power would have been around $200 million equity, so that’s $400 million in new vessels, more or less.

Okay, great. Thank you. That’s it from me.

You’re welcome.

There are no further questions at this time. I would like to hand the call back over to management for any closing comments.

Thank you, again, for your interest in and support of Diana Shipping, Inc. We look forward to speaking with you in the coming year.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.