Diana Shipping Inc. (DSX) Q2 2026 Earnings Call Transcript

Thank you for standing by, ladies and gentlemen, and welcome to Diana Shipping Incorporated conference call on the second quarter 2026 financial results. We are joined by the company's chief executive officer, Ms. Simi Ramas Paliwal. At this time, all participants are in a listen-only mode. There will be a presentation followed by a Q&A session. To ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. Please note that this conference is being recorded. We will now turn the floor over to Ms. Paliu. Please go ahead.

Good morning, ladies and gentlemen, and welcome to Diana Sipping Inc.'s second quarter, 2026 Financial Results Conference Call. I am Samira Mispaliu, the CEO of the company, and it's a pleasure to present alongside our esteemed team, Mr. Ioannis Afirakis, Director and President, Ms. Maria Dede, Co-CFO and Treasurer, Mr. Dave van der Linden, Chief Commercial Officer of Diana Shipping Services. Before we begin, I'd like to remind everyone to review the forward-looking statements on page 4 of the accompanying presentation. The second quarter of 2026 maintains strong momentum, which carried over from the previous quarter. Disruption caused by geopolitical events continues to create significant inefficiencies in the market, thereby supporting freight sentiment and forward expectations. Minerals are increasingly shifting from ordinary commodities to strategic national assets. Resource-rich countries are using their leverage to impose export and pricing controls, while import-dependent countries are scrambling to diversify supply chains and energy needs. The result is a dry bulk market supported by near-term trade flow adjustments, but still exposed to longer-term uncertainty, mainly due to considerably supply increases, especially in the sub-CAPE segments. For now, congestion, slower speeds, dry docks, and longer ton-mile trades have been able to absorb the new tonnage. In the quarter, Diana took period coverage across several sizes in the fleet, again at rates significantly higher than their previous charters. Meanwhile, we continue to avoid sending our vessels into conflict areas, and our thoughts remain with the many crew members which are in harm's way. Turning to slide 5, let's review our company snapshot as of today. Diana Chipping, Inc., founded in 1972 and listed on the New York Stock Exchange since 2005, operates a fleet of 36 dry bulk vessels, one of which is mortgage-free. Our fleet has an average age of 12 and a half years and a total deadweight capacity of approximately 4.1 million tons. We anticipate the delivery of two methanol dual-fueled new-building Campermax dry-bulk vessels at the end of 2027 and early 2028, respectively. Fleet utilization reached 99.8% for the six months ended June 30, 2026, highlighting our effective vessel management strategy. As of the end of the second quarter, we employed 943 individuals at sea and ashore. Financially, our net debt stands at 44% of market value. This is supported by $118 million in cash reserves as of quarter end, a 155 million equity investment in Jenko, approximately 50 cents per share of potential free cash flow to equity based on fixed rates and FFA rates over the next 18 months, and total secured revenues of approximately 157 million U.S. dollars as of July 22, 2026. Moving on to slide 6, let's go over the key highlights of the second quarter 2026 and recent developments. On May 4, 2026, we launched a tender offer to acquire all outstanding shares of Jenco and Trading Limited, not already owned by Diana, for 23.50 per share in cash. On May 15, 2026, we were awarded the the Gold Award in the Governance Leader Award category at the Environmental, Social, and Governance Shipping Award 2026. On May 27, 2026, we amended our tender offer price to $24.80 per share in cash and extended the tender offer deadline to June 26, 2026. On On June 17, 2026, we submitted an updated non-binding offer directly to the Genco board to acquire all outstanding shares of Genco not already owned by Diana to a total implied value of $27.34 per share, comprised of $24.80 per share in cash plus one Diana share valued at $2.54, based on Diana's volume-weighted average price per share. On June 29, 2026, we further extended the tender offer deadline to July 10, 2026. On June 30, 2026, we extended the fully committed financing supporting of Diana's offer to acquire the outstanding shares of Genco, not already owned by Diana, in the amount of $1.4 billion U.S. dollars. On July 13, 2026, we further extended the tender offer deadline to July 24, 2026. As of July 22, 2026, we have secured $94.7 million U.S. dollars of contracted revenues for 88% of the remaining ownership days of the year 2026 and have secured $61.3 million of contracted revenues for 25% of the ownership days of year 2027. On July 27, 2026, we terminated the tender offer. Our June 17th cash and stock offer remains outstanding with the JNCO board. Today, we are pleased to declare a quarterly cash dividend of one cent per common share with respect to the second quarter of 2026, totaling approximately 1.3 million U.S. dollars. Slide 8 summarizes our recent chartering activity. From May 21, 2026 to July 22, 2026, we have secured time charters for five vessels. An ultramax vessel at a daily rate of 18,350 for 382 days. Three panamax and camtamax vessels at an average daily rate of 16,500 for an average of 279 days. Slide 9 highlights out this disciplined chartering strategy. We focus on staggered, medium- to long-term charters to avoid clustered maturities, ensuring earnings, visibility, and resilience against market downturns. This disciplined chartering strategy has secured for the remaining of 2026 approximately $94.7 million in contracted revenues, resulting in an average time charter rate of approximately $18,337 per day. For the rest of 2026, only 12% of the days remain unfixed. The average contract duration is one year and a quarter, covering some days of 2027. Now, I'll pass the floor on to our co-CFO, Maria Dede, for a more detailed financial analyst.

Thanks, Amiramis. Good morning, everyone, and thank you for joining us today. I will walk you through our financial performance for the second quarter and six months ended June 30, 2026. For the second quarter of 2026, TimeSATA revenues increased to $57.3 million from $54.7 million in the second quarter of 2025. Adjusted EBITDA increased to $24.3 million from $22 million in the prior year period. Net income was $20.8 million compared to $4.5 million in the second quarter of 2025. Net income attributable to common stockholders was $19.3 million compared to $3.1 million in the second quarter of 2025. Diluted earnings per common share were $0.16 for the second quarter of 2026 compared to $0.03 for the second quarter of 2025. Profitability during the quarter benefited from the higher time-charted equivalent rate achieved by the fleet, lower interest expense resulting from the continued reduction of debt and lower average interest rates. In addition, earnings also reflected increased dividend income and a significant gain on equity securities during the quarter compared to a loss recognized in the second quarter of 2025. We continue to maintain a strong balance sheet and substantial liquidity while steadily reducing leverage. As of June 30, 2026, cash, cash equivalents and restricted cash amounted to $117.9 million. Long-term debt and finance liabilities net of deferred financing costs decreased to $606.1 million as of June 30, 2026, from 636.1 million as of December 31, 2025, reflecting scheduled data monetization and our discipline capital management strategy. During the quarter, we operated an average of 36 vessels compared to 37 vessels during the same quarter of last year. This decrease reflects the smaller fleet size following a vessel sale completed last year, which affected ownership available and operating days. Our fleet generated a time charter equivalent rate of $16,581 per day, representing a 7% increase from the $15,492 per day in the second quarter of 2025. Fleet utilization remains strong at 99.6%. Vessel operating expenses were 21 million compared to 20 million in the second quarter of 2025. On a per day basis, daily operating expenses increased to $6,396 from $5,944 in the prior year quarter, reflecting higher crew-related costs and stores, repairs and maintenance expenses. In the six-month standard June 30, 2026, time-charted revenues increased to $112 million compared to $109.6 million during the same period last year. Voyage expense amounted to $6.5 million and consisted primarily of brokerage commissions. In the six months ended June 30, 2026, our fleet generated a time-shared equivalent rate of $16,309 per day, representing a 4% increase from the $15,615 per day in the six months ended June 30, 2025. Fleet utilization increased to 99.8% compared to 99.5% in the prior year period. Vessel operating expenses were 40.4 million compared to 40 million in the six months and ended June 30, 2025. On a per day basis, daily operating expenses increased to 6,203 from 5,905 in the prior year period, reflecting higher crew-related costs and stores, repairs and maintenance expenses. In this slide, debt maturity and amortization profile, we continue to maintain a disciplined approach to leverage. Our debt portfolio remains well diversified among secured bank facilities, sale and leaseback arrangements and our senior unsecured bonds. This structure provides a balanced mix of floating and fixed rate exposure while maintaining financial flexibility. Our amortization profile remains gradual and predictable with no significant near-term refinancing concentrations. The principal maturity remains the $175 million senior unsecured bond maturing in 2029, which we intend to address well in advance to ensure continued liquidity stability, minimize refinancing risk, and maintain predictable cash flows. As of June 30, 2026, our cash flow break-even rate stood at $16,859 per day, including voyage operating, general and administrative expenses, financing costs, and debt amortization. For the remainder of 2026, we have secured 88% of our ownership days at an average contracted charter rate of approximately $18,337 per day, providing estimated contracted revenues of approximately $94.7 million. Based on the FFA CARES as of July 22, 2026, total potential revenues for the remainder of 2026 including both fixed and unfixed operating days could reach approximately 110.3 million exceeding our break event cost by 11.4 million or approximately 10 cents per share. For 2027 we have secured 25 percent of our ownership days at an average contracted charter a rate of approximately $18,807 per day, providing estimated contracted revenues of approximately $61.3 million. Based on the FFA cares as of July 22, 2026, potential revenues for 2027, including both the fixed and unfixed operating days could reach approximately 267.9 million exceeding our break-even costs by 46.4 million or approximately 40 cents per share. Overall, our competitive break-even level reflects our continued focus on operating efficiency, cost discipline and prudent financial management. At the same time, our chartering strategy provides meaningful upside exposure should market conditions continue to improve. This slide highlights our commitment to return capital to shareholders. The company has consistently declared quarterly dividends since the third quarter of 2021 through both cash dividends and dividends in kind. In line with this policy, we declared a dividend of one cent per share for the second quarter of 2026. Including this declaration, cumulative distributions to shareholders since 2021 amount to approximately $2.72 per common share. As always, future dividends remain subject to board approval and will depend on earnings, cash flow generation, capital requirements, and overall market conditions. And I will now hand over to Dave Vanderlinden for an overview of the dry bulk market.

Thank you, Maria. And again, welcome to the participants on this latest quarterly earnings call from Diana Shipping Inc. Let's move to slide 16 for a brief dry bulk market overview. Like our CEO mentioned earlier, the dry bulk market maintained its positive momentum in the second quarter with both spot rates as well as period rates improving across also supporting the market remain largely the same not necessarily an explosion in demand but rather a utilization tightening cost by longer ton miles a substantial dry dock schedule size vessels once again outperformed with Q2 earnings at 39,806 based on the new 182 5 TC index Midsized vessels continue their momentum as well, with Q2 earnings averaging 19,243 for Camzarmax and 19,402 for Ultramax vessels. In the second quarter, we saw the 12-month time charge rate increase for all sizes as well. However, the start of Q3 is witnessing a bit of a softening in the near-term sentiment, especially on the 182,000 index type. Without scrubber, the one-year rate stands at around $31,000 a day, and the rate for a modern camsar max is around $20,000 a day, and for a modern ultramax is around $18,000. The market remains heavily influenced by significant geopolitical and trade disruptions that continue to alter shipping patterns, and the Middle East conflict has come back again. And even though the lack of adequate fuel supply seems to have subsided, we're going to take a look at the key demand drivers. The Cape Side sector saw the highest rate increases in the quarter due to strong iron ore flows from Australia and a considerable ramp up in Simandu shipments from Guinea. The Guinean bauxite exports also witnessed a strong first half of the year. they ended with a 17% increase. Ever since then, this trade has been tapering off as we are heading in the rainy season and also following the report that winning. Meanwhile we haven't heard any news regarding a possible export limit which was expected to be imposed by the Guinean government in the second half of the year. The Kamsamax sector remains supported by grain shipments in the Atlantic and coal shipments in the Pacific. The Ultramax sector has managed to take advantage of the same trading patterns and has additionally seen an increase in Atlantic coal. Seaborn grain loadings continue their rise in Q2, with China importing a record 13.5 million tons of soybeans in June, mainly from Brazil, which had a record harvest, so continue to see more in the near future, as further disruptions in LNG flows appear to be... Even China has picked up shows that China imported in late May. For the first half of the year, China's coal imports rose 1.7% from a year earlier. Amid rising expectations of a strong El Nino and current projections for lower water levels at Gatun Lake, the Panama Canal Authority has cut daily booking capacity already from 36 to 34 transit. It's recalling that at the height of the Strait of Hormuz's disruption, it was estimated by BIMCO that Panama Canal transits had... Regarding global GDP, the Middle East conflict continues to negatively affect global growth, with China's GDP growth flowing to 4.3% in the second quarter. Tramax and Ultramax vessels, the fleet number of vessels directly affected in June for less...

Including today's presentation and reflecting on today's results, I would like to emphasize that we believe they clearly demonstrate that Diana's business continues to perform it by improving the cash-generated value circumstances, which would be expected to receive far greater recognition from the market. We believe this is a trade at a substantial discount to NAV. We believe this valuation is the company's underlying fundamentals for asset quality. As investors increasingly refocus on Diana's standalone performance and intrinsic value, we believe this discount should progressively narrow. Looking further ahead, should the proposed transaction with Jenko be completed, the combined company would represent a substantially larger, more diversified, and more liquid platform. While no valuation outcome can be assumed, we believe such a company would naturally be evaluated under a different valuation framework than Diana on a stand-alone base. We therefore believe it's an opportunity for investors to benefit from the company's improving operating performance and the potential for a gradual re-rating over time. Diana Shipping Inc.'s industry experience team adapts to addressing industry challenges and identifying opportunities, and a disciplined strategic approach. A solid balance sheet with a strong cast position and a counter-cyclical mindset. Ongoing fleet modernization efforts, a focus on rewarding our shareholders today. We are now happy to take your questions and keep them focused on our second quarter performance and related topics.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Once again, that's star one to ask a question at this time. One moment while we vote for questions. Once again, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. I would like to turn the call back over to Management for closing comments.

Thank you for joining us today for the Diana's second quarter of the year 2026 financial results. We look forward to presenting to you again in the next quarter. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.