Diana Shipping Inc. Q2 FY2021 Earnings Call

Greetings, and welcome to the Diana Shipping 2021 Second Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ed Nebb of Investor Relations. Thank you, sir. Please go ahead.

Thank you, Donna, and thanks to all of you for joining us for the Diana Shipping Inc. 2021 second quarter conference call. The members of the management team who are with us today are Ms. Semiramis Paliou, Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Ioannis Zafirakis, Chief Financial Officer, Chief Strategy Officer, Treasurer and Secretary; Mr. Eleftherios Papatrifon, Chief Operating Officer; and Ms. Maria Dede, Chief Accounting Officer. Before management begins their remarks, let me just remind you of the safe harbor notice, which you can see on today's news release. Certain statements made during the conference call, which are not historical fact, are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act. Forward-looking statements are based on assumptions, expectations, projections, or beliefs as to future events that may or may not prove to be accurate for the 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 without further delay, it is my pleasure to turn the call over to Ms. Semiramis Paliou, Chief Executive Officer.

Thank you, Ed. Good morning ladies and gentlemen, and welcome to Diana Shipping Inc. second quarter 2021 earnings call. My name is, as Ed mentioned, Semiramis Paliou, the company's CEO. And it is an honor and a privilege to be presenting to you today. Let's turn to Slide number 4. I will briefly update you on the company snapshot as of today. We currently have 36 vessels in the water with a carrying capacity of approximately 4.6 million deadweight tons. This is one vessel less from last quarter due to the delivery of the motor vessel Naias to her buyers late last week. We expect our fleet to grow again by one vessel though, after we take delivery of our recent acquisition, the motor vessel, Magnolia, a Japanese built 2011 Kamsarmax vessel. Our fleet utilization has remained at a very high level coming in at 99.6% for the second quarter of 2021 as against 98.6% for the first quarter of the year. 31 vessels of our fleet continue to be managed in-house by Diana Shipping Services and five vessels are managed by our 50:50 joint venture with Wilhelmsen Ship Management. At the end of the second quarter, we employed 876 people at sea and onshore. Let's move on to Slide number 5. I will go over the highlights of the second quarter and recent developments. Market conditions have remained robust during the last quarter and continue to be positive to this date. While we have seen some volatility, especially in the FFA rates during this period, spot rates remain firm and are close to 10-year highs for every dry bulk segment. Stacy will expand further on the market dynamics and the market acquisitions for the near to medium term further on in this call. Specifically for our company, in April, we put in place an ATM program, which we view as a good tool to have and to use should specific market conditions exist. As of today, we have not utilized the ATM program. In June of this year, we successfully issued five-year US$125 million senior secured bonds on the Oslo Stock Exchange with a coupon of 8.375%. Approximately US$74 million of the proceeds were utilized for the repurchase of the majority of our existing 9.5% senior unsecured bonds. The remainder of the new bond proceeds will be used for the repurchase of the remaining old bonds in September and for general working purposes. Within July, we agreed to acquire the motor vessel Magnolia, a 2011 Japanese built Kamsarmax vessel for US$22 million. We anticipate taking delivery of our new acquisition by the end of February of next year. Also last week, the motor vessel Naias was delivered to her new owners. The combination of the two sale and purchase transactions has allowed us to maintain our fleet size intact, while at the same time improving somewhat the average age of our fleet. In July, a tender offer was initiated to repurchase approximately 3.33 million common shares at the price of US$4.5 per share. As we have done in the past, we are ready to put to use our liquidity when we feel that our shares are trading at levels that we consider attractive given the prevailing market fundamentals. Also, within July, we concluded a supplemental agreement with Nordea to extend the existing loan maturity until 2024 while at the same time upsizing the facility by US$460,000. As we stand, we are very comfortable with our debt maturity profile and Ioannis will go over this in more detail further on in our call. Lastly, our consistent chartering strategy has allowed us to secure approximately US$167 million of contracted revenues for the full year 2021. Turning to the financial highlights for the second quarter of 2021 on Slide 6. We find ourselves as of June 30, 2021 with a cash and cash equivalents position of US$155 million, including restricted cash as against US$82.9 million as of December 31, 2020. Our debt net of deferred financing costs stood at US$461.5 million at the end of the second quarter of 2021 as against US$420.3 million at the end of 2020. Our time charter revenues for the second quarter of 2021 amounted to US$47 million as against US$41 million for the second quarter of 2020. Last but not least, the company this quarter returned to profitability posting a profit of $0.02 per share for the second quarter of 2021 versus a loss of $0.14 per share for the same period of 2020. Again, Ioannis will go over these as well as the six-month numbers in more details further on in this call. Moving on to Slide 7, you find a summary of all of our recent chartering activities. Once again, consistent with our conservative and disciplined chartering strategy, we have taken advantage of the improving chartering markets and have secured attractive time charters for eight vessels of our fleet. More specifically, we charted six Panamax to Post-Panamax vessels at the weighted average daily rate of US$25,693 for a remaining average period of 116 days per vessel. This can be compared to the US$16,571 weighted average daily rate we achieved for the fixtures presented during our last earnings call, which is a clear indication of the market improvement. We have also charted two Capesize vessels at a weighted average rate of US$25,957 a day for a remaining average period of 234 days. Again, this is a significant improvement from the US$18,896 we achieved as an average weighted daily rate for last quarter's fixtures. We will continue chartering our vessels that will be redelivered to us in a similar way by staggering maturities, locking in cash flows and positioning us in a manner that will allow us to continue to participate in a continuously improving market in a balanced way as evidenced by the recent fixtures just presented. I will now turn the call over to Ioannis to go over our second quarter 2021 financials in more detail.

Thank you, Semiramis. I'm very pleased to be discussing today with you our operational results for this quarter and the six months ended June 30, 2021. As you can see in this slide, during the quarter we recorded a net income of $1.4 million, that is $0.02 per share. Our time charter revenues increased from $41 million in the second quarter of 2020 to $47 million in the second quarter of 2021—a 15% increase despite the fact that we've had more vessels in the previous quarter. Of course, you understand that this increase is attributed to the increase in the charter rates that we achieved for our vessels compared to what we had in the same quarter last year. At the same time, the whole year's expenses were only $2.3 million compared to $3.8 million for the same quarter in 2020. And that decrease is attributed to some gains that we made from banking compared to a loss that we had of $1.6 million last year. We have managed to decrease our operating expenses by 8% to $19.2 million compared to $20.8 million last year, and this has to do with a lesser number of vessels in our fleet. Our general and administrative expenses increased to $7.2 million compared to $6.8 million for the same quarter last year, mainly because we had an increased cost of restricted stock. Interest and finance costs continue to decrease in this quarter and, of course, this is attributable to the decreased interest rates and our reduced average debt. Now, if we look at the six months figures, we've had a net loss attributed to common stockholders of $1.4 million—that's $0.02 per share. The time charter revenues increased to $88.1 million compared to $84.7 million for the same period last year for the same reasons that we explained earlier. Our voyage expenses decreased in the first half of 2021 compared to the same periods of 2020, again because we had a $0.7 million gain from banking compared to a $2.9 million loss last year. The voyage operating expenses again were reduced to $37.7 million from $42.1 million that we recorded in the first half of 2020. General and administrative expenses decreased to $13.9 million compared to $16.2 million in the first half of 2020, reducing figures were dropped due to accelerated vesting of restricted shares of our board members. This interest and finance costs amounted to $9.3 million compared to $12 million last year due to the decreased average debt and also the decline in interest rates. Looking at the balance sheet, as you can see, our cash, cash equivalents and restricted cash increased to $155 million compared to $82.9 million, which relates to the refinancing agreements entered into during the six-month period of 2021, including the $91 million loan from ABN AMRO and $125 million refinancing of our 9.5% unsecured bonds with a new issuance at a decreased coupon of 8.375%. These transactions caused the increase in long-term debt net of deferred finance cost by $41 million. However, it is worth mentioning that our net debt stands at only $315 million. Looking at some selected financial data now, you should be aware that in 2020 we sold two vessels, and as of December 31, 2020, we had agreed to sell three vessels, which were delivered to their new owners in the first quarter of 2021. The sale of these vessels resulted in fewer ownership days during the reported quarter of 2021 compared to the same quarter last year. Nevertheless, our fleet utilization improved to 99.6% for the second quarter of 2021 compared to 98.3% for the same quarter last year. Better utilization rates and time charter rates resulted in an increase in our daily time charter equivalent rate to 13.47 compared to 10.5 last year. Daily operating expenses were at 5,696 compared to 5,577 for the same quarter in 2020, mainly due to some minor increases in crew expenses. In the first half of 2021, fleet utilization increased to 99% compared to 97% for the same period. The daily time charter rate equivalent for the first half of 2021 was 12,400 compared to 10,900 for the same period last year. Daily operating expenses slightly decreased to 5,548 compared to 5,593 for the same period last year—a 1% decrease. Now let's move into how we have managed to set our current debt amortization profile based on what we have done recently as explained by our CEO. We have managed to create the picture that you see here regarding our debt amortization. And you can see clearly how strong our debt amortization profile currently stands, especially with what we have done recently with the Nordea supplemental agreement that we executed and we basically exercised both of our options to bring the debt facility to mature two years ahead from now. To put this in perspective, assuming that in the next three years, we earn $21,000 on average on our vessels, we would have generated free cash flow to repay the entire debt until 2032. If we were to fix all of our vessels at $16,800 for the next five years, we would again generate enough to repay all of our debt. If we move to the next slide, you can see a similar slide to what we presented in the previous quarter regarding our free cash flow breakeven, which we find very healthy. Comparing that with the average daily time charter rate of fixed revenues for 2021, you can see that especially for 2022, there is a lot of free cash flow. I think the next slide provides a better picture of where we stand now as a company based on the market conditions. On the left-hand side, you can see for 2021, the remaining period for 2021, the ability of the company to generate based on the FFAs around $42 million as free cash flow. For 2022, the same exercise shows that if we assume our cash flow breakeven is the number that we provided earlier and we fixed our vessels for one year based on the FFAs that exist today or recently, we can generate another $134 million for 2022. On the right hand side, you can see this on a daily basis, which I think is really interesting to understand where we stand today based on our cash position, debt position, and cash flow generating position. I think there will be questions about that, but I will leave it for now and turn the floor to Stacy to talk about the market, the dry bulk and market overview.

Thank you, Ioannis. I will start with Slide 17, the obvious place to look at the latest developments in dry bulk carrier earnings in both the spot and period markets. They need to be placed in perspective by looking at the Baltic indices and how they have moved during the last three months or so. Present levels will also be compared with the all-time highs reached about 13 years ago. On April 1, the first trading day of the second quarter, the BDI stood at 2072 on August 2, it closed at 3282. The all-time high of this index was 11,793 on May 20, 2008. The Baltic Cape Index was at 2394 on April 1, yesterday it closed at 4,272. This index reached 19,687 on June 5, 2008. On April 1, the Baltic Panamax Index stood at 2484 and yesterday closed at 3290, the all-time high of this index was 11,713 on October 30, 2007. At the beginning of the second quarter, the five T/C routes for Cape stood at $19,853 a day; yesterday the rate was $35,429, with the all-time high being $233,988. For Kamsarmax now, the five time charter rate was at $22,354 per day on April 1 while yesterday it reached $29,610 with an all-time high of $94,977. These statistics, which I may have been a bit too detailed on help to remind us how distant current earnings are from the all-time highs seen nearly 13 years ago, though this does not mean we will witness those levels again before the market turns south. It does, however, serve to illustrate that earnings, while profitable, are not near their all-time highs. Looking at Slides now 18, and soon we'll shift into 19 to look at the prices of commodities, we'd like to mention that global GDP growth has been driving up commodity demand for at least the last 20 years, and impressive compound average growth rates for all major commodities shipped in bulk have helped to increase demand for bulk carrier tonnage and have underpinned the recent increase in earnings. GDP growth in China is expected to be 8.4% this year and 5.6% in 2022. In the United States, GDP is expected to grow by 6.4% this year and by 3.5% next. In Europe, growth is estimated to be 4.4% this year and 3.8% in 2022, while world GDP growth figures are 6.5% for this year and estimated at 4.4% for 2022. According to the latest report issued by Clarksons, bulker ton mile demand is projected to grow by 4.3% this year and should be compared with an estimated 3.3% growth in the fleet during the same period. Demand in 2022 is expected to grow by 2.2%, while supply is anticipated to increase by nearly 1%. Looking at iron ore, it is projected that worldwide iron ore volumes are expected to grow by around 4% this year and a further 1% in 2022. While volumes look set to continue strengthening year-on-year growth is expected to slow somewhat during the second half of this year compared to the record volume seen in the same period in 2020. As regards to Chinese iron ore prices, which we will look at in the next slide, these have increased by 38% year-to-date according to Clarksons. The Chinese government, according to Clarksons, has shown concern over the rapid increase in commodity prices. In this regard to cool off steel demand, the government canceled export tax rebates in April, and steel mills are also producing steel from scrap, that partly replaces expensive iron ore requirements. Likewise, the Chinese government is utilizing, according to Commodore Research, its reserves of every type of bulk commodity, including coal in an effort to alleviate commodity shortages and steep price increases. Coking coal now is expected to grow by 6% this year after dropping by 7% in 2020. This is mainly due to the effects of the pandemic. China's ban on imports of coal from Australia has led to increases of shipments from Australia to India, Japan, Korea, and Taiwan, which in some cases have led to increases in ton mile demand. Coking coal prices have increased according to Howe Robinson by 100% since this time last year. Regarding thermal coal, after a steep drop of 10% in 2020, shipments are expected by Clarksons to increase by 4% in 2021, with volumes reaching 956 million tons. Shipments are anticipated to grow by another 1% in 2022. In this respect, it's worth mentioning some statistics from Commodore Research. They report that Indian power plants' coal stockpiles stand at 43% below last year's levels and are just enough to meet 13 days of demand. Clarksons report that Australian thermal coal prices have increased by 38% year-to-date and according to Howe Robinson prices are up 214% from this time last year. In China, the government is using, as mentioned earlier, coal reserves to help alleviate commodity shortages. As a result of all this, it is safe to conclude that more coal is needed to meet demand and also to rebuild stockpiles for the future. Looking at the longer-term picture, coal consumption is supposed to drop from current levels by 20% until 2030. We agree with Clarksons that seaborne coal trade might outperform this because of growing demand from markets in Southeast Asia and China. However, it does look likely that seaborne coal trade peaked in 2019, and that coming years may well mark a turning point as the post-pandemic rebound gives way to a longer-term softening in demand. Now, regarding grains, according to Clarksons, seaborne grain trade during the 2021 season is expected to grow by 4.5% this year and reach 534 million tons. Clarksons predict a further increase of 2% in 2022. Chinese seaborne grain imports were up 50% during the first five months of this year. During the same period, the United States grain exports were also up by 50%. In line with the commodity price trend, Clarksons report U.S. corn prices have gone up 37% year-to-date and U.S. wheat prices are up 6% over the same period. Moving on to supply in the shipping industry on Slide 20, according to Banchero Costa in 2021, net of slippage and cancellation, about 348 bulkers are expected to be delivered with a total capacity of 34.1 million deadweight. According to Clarksons, the bulk carrier order book now stands at 626 ships with a total of 53.7 million deadweight, the lowest level in tonnage terms since 2003, and that is less than 6% of the current ship capacity—the lowest percentage since 1991. It is interesting to note as Clarksons point out that the order book stood at 80.5% of the trading fleet following the onset of the financial crisis. The fleet of vessels between 65,000 and 80,000 deadweight has actually shrunk during the first five months of this year, according to Banchero Costa, and so has the fleet of ships between 120,000 and 190,000 deadweight. This building orders partly reflects continued uncertainty over fuel and technology choices against an increasingly strict environmental and regulatory agenda. Even though 16% of tonnage ordered this year is LNG capable, there is no clear winner to date in terms of alternative fuel choices to oil. From the worldwide building order book today, 42% in CGT terms is accounted for by LNG carriers and 39% by container ships. Therefore, a mere 19% of the order book is represented for all other types of vessels combined. Looking quickly at scrapping, even though age is only one factor in the decision-making process to scrap the vessel, it is worth noting that 23% of Panamaxes and 11% of Capes are over 15 years in age. Clarksons expect that about 7.7 million deadweight worth of bulkers will be scrapped this year, and about 12.2 million deadweight in 2022. Even though Banchero Costa estimates about double that capacity will be scrapped this year, we consider this to be overoptimistic if earnings remain at current levels or move higher. Finally, regarding the outlook of the industry, we maintain the same view expressed in our last quarterly presentation regarding the outlook of the bulk carrier industry. In summary, nothing has occurred to make us change our agreement with the view expressed by Howe Robinson in their monthly report. In short, we believe that world GDP growth will follow the 2005-2021 trend and lead to sharp increases in seaborne cargo volume. This may lead to increases of about 6.7% for 2021 and 4.3% in 2022—higher volumes than the Clarksons estimate that we referred to. Therefore, we remain optimistic about the longevity of the strong bulk carrier market we are witnessing today. This positive scenario could be ruined by an abrupt drop in demand due to factors unrelated to shipping or by a sharp increase in new building orders. As we mentioned earlier, yards do not have much capacity to offer to dry bulk new buildings, which they do not prefer due to the low profit margins compared to other types of ships. Thank you. Now Semiramis will provide us with the closing comments of this presentation.

Thank you, Stacy. Before we move on to the questions and answer session, I would like to summarize the key points as follows. As it has been the case across all market cycles, the company has maintained a robust balance sheet that serves as a guarantee for the seamless continuous operation of the company. Recent moves have reduced even further the cash flow breakeven points compared to recent years, and in conjunction with the prevailing positive dry bulk market, it allows the company to generate even stronger free cash flows. The company is in the fortunate position that conditions have arisen to entertain potential fleet growth, fleet renewal, and our dividend distribution. Lastly, we remain committed to maintaining the disciplined strategy that has been implemented since inception, which has allowed and should continue to support shareholder value generation throughout the various market cycles. Now, I will turn the call over to the operator to commence the question-and-answer session. Thank you.

Thank you. The floor is now open for questions. Our first question is coming from Randy Giveans of Jefferies. Please go ahead.

Howdy team Diana, how is it going?

Very well. Thank you, Randy.

Excellent. Alright, well, I guess, the first question—the S&P market for second-hand ships is very robust right now. You recently announced that acquisition of a 2011-built Kamsarmax, but not until February of 2022. So, I guess, why that vessel and why such a delay in delivery? And then are you evaluating any further potential sales or acquisitions?

Hi, this is Ioannis Zafirakis. The key factor for us is to feel comfortable with the vessels that we are buying. There are not a lot of nice vessels available, and it had to do with the quality and type of vessels. Also, taking such a forward delivery is not something that we typically do, but we feel very comfortable with our existing charters. So to cut a long story short, the reason why we bought this vessel is due to its quality. Also, understand that this doesn't mean we will start a buying spree or make significant acquisitions. This vessel was one of our choices to utilize the extra money we raised from the new bond issuance.

That's fair. And then I guess speaking of another good way to utilize the amount—any updates around that tender offer, which is expiring here in about two weeks? How did you maybe come up with the $4.50 share price and then the 3.3 million share amount?

This is a very important point for us. First of all, we noticed that one day we were trading close to NAV and then, without a clear reason, our stock dropped significantly. We realized this was an opportunity to engage the tender offer at $4.5, which we considered very attractive for our stock. As analysts, you have your NAV per share calculations, and at $4.50, we see a big discount. If we find assets to purchase at these levels, we will also consider that another good use of our available funds. Overall, we have established a company that can quickly seize opportunities as they arise.

Sure, and I certainly applaud that decision; you're showing your nimbleness and taking advantage of what we think is an unforeseen pullback here. So, congrats again, and good luck. Thank you.

Thank you. You're welcome.

Thank you. Our next question is coming from Omar Nokta of Clarksons Securities. Please go ahead.

Yes, thank you. Hi, Ioannis. I just wanted to follow up on Randy's question regarding the Kamsarmax. It sounds like there's something specific about that vessel that makes it worthwhile with a six- or seven-month wait. Is there any other color you can provide on what makes it stand out relative to what else is out there?

Hi, Omar. The difference is not necessarily six to seven months, because if you try to buy a similar vessel with prompt delivery, it would probably be available in September, October, or November of this year. So the extra time frame we waited is only about a quarter—maybe three months. Additionally, the price we agreed upon was much lower than what we would have paid for a vessel with prompt delivery. To give you an example, an estimate might value that vessel with the October delivery at $25 million; rather than paying upfront, we opted to wait and pay $3 million less for a February delivery. The critical aspect is finding the right asset—a Japanese built Kamsarmax vessel. We have similar vessels in our fleet, and we know that they trade exceptionally well, they're fuel-efficient, and they won't require many modifications for upcoming rules in 2023. Saving $3 million rather than paying it upfront while still having a good vessel is worth the wait.

Omar, you understand that the only difference in a forward delivery is not about the payment but the risk of chartering the vessel. That's the main difference. Otherwise, as Eleftherios said, if you were to take delivery close to the purchase date, you would have paid for it. Our only risk is that by February, when we take delivery, we need the market to justify the $22 million price tag. However, we have taken precautions against extreme scenarios by securing existing charters to mitigate that risk. For us, it's another vessel opening in early 2022.

Thanks for that clarification. It seems like a good quality vessel, and one you have operated vessels similar to, so you know what you're getting. Is there any concern at all that as you get closer to that February delivery date, the seller might decide that asset values have gone up too much and they'd rather renegotiate? Is there any risk in that regard?

We have a signed contract—an MOA. The terms are definite, and this situation cannot actually happen. If it were to happen, you would have grounds for arbitration due to a breach of contract, but this is extremely rare.

The sellers are very serious. Japanese deals tend to be conducted in good faith.

Throughout my long career in shipping, I have seen this happen very rarely, but I do recall the costs to the party reneging on the contract being higher than any potential benefit they might expect to gain from taking the ship at a higher price. So I don't believe anyone would seriously entertain that notion.

Understood, thank you. Just a separate question—obviously, Diana's longstanding approach has been to deploy your vessels on one-year, two-year, and three-year contracts. We have seen a lot of twelve-month time charters recently, but haven't noticed much in terms of agreements beyond that. Are you beginning to see any inquiries in that two- and three-year range, and is that something that interests you?

I think it's a matter of how the FFA—those inquiries will depend on the FFA and how the curve flattens out in the future. We are definitely one of the companies that would seriously entertain going for two- or three-year charters, as long as that curve behaves more sustainably with better rates. If you go out and inquire, you're likely to find two- or three-year charters. We might not favor that, but we are approaching a point where the rates could become attractive enough for us to consider longer commitments.

Got it, thank you, guys.

Now that you mention it, I'd like to add that we firmly believe there will soon be a moment in the market where the sentiment regarding its sustainability will become more evident. We'll have a clear view on the positive market outlook, and we're waiting for that opportunity to execute our strategy effectively. We think that holding back has been prudent, and we are fully prepared to act when conditions are optimal for our shareholders.

Understood. Thank you.

Our next question is coming from Ben Nolan of Stifel. Please go ahead.

Thanks. So I have a few—I’ll start, actually, I’ll start maybe Anas with where you just ended your conversation with Omar, tying into Stacy's earlier comments in his prepared remarks that outlined a degree of optimism. You're known for your belief in market efficiency, that it prices both positives and negatives equitably. However, you seem more bullish now. Do you expect the market to improve and the FFA curve to improve as well? Can you share your perspective on why you are taking a more aggressive stance or how the market might not be pricing in the fundamentals?

I believe we now have the right balance sheet and size as a company to maintain a disciplined approach. We think based on what we see in the market in the short term. This is the only insight anyone can give you. I think June will reveal when we can do what we know how to effectively create shareholder value. This will allow us to capitalize on our patience during this disciplined wait. I keep reiterating this because I've observed other companies rushing their strategies before they fully understand the market dynamics. I believe the remainder of the year will be stronger, paving the way for us to deploy our balance sheet wisely. While I cannot give you assurance on specific actions, I can affirm that we are well-prepared for the optimal risk-reward opportunities for our shareholders.

Okay. Well, let me approach it differently. You seem to be optimistic about the market going higher, yet the FFA curve for next year is significantly lower than current rates. What do you believe the market is missing?

The market is overestimating the challenges ahead. The actual problems that exist have fostered an environment where the market is reacting excessively. An overreaction can create investment opportunities. We think the emissions issues, banking issues, and general financing challenges have been overreacted to in the market. If demand continues to improve, we anticipate prices rising further.

Great. Just one final macro question—when looking to 2008, which was a uniquely strong year, do you see any supply and demand dynamics that give you hope for a repeat of such performance? Or is that thought overly optimistic?

To say that it's likely is to be overly optimistic and aggressive, which we have traditionally avoided. However, it is possible to envision a scenario where demand continues to rise, albeit not explosively like in 2008, but steadily and healthily. If we realize that we can't build ships to meet demand, particularly given the limitations on new construction, we could see a significant uptick in rates. Keep in mind that it doesn't take an enormous shortage of ships to generate substantial rate increases. A sustained shortage of bulk carriers combined with positive sentiment could lead us to levels reminiscent of 2008, but we refuse to assume that it will happen, just that it could.

Okay, great. Lastly, for record-keeping, you mentioned that you hadn't been active under the ATM program, is that correct? If so, how should we consider the share count prior to the tender offering?

Yes, the same number as in the previous quarter.

That's right, the same number.

There's no additional questions. Thank you at this time. I'd like to turn the floor back over to management for closing comments.

Thank you all for joining us today. We look forward to talking to you again at our next earnings call. Thank you very much.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time. Have a wonderful day.