Earnings Call Transcript - DSX Q4 2021

Operator, Operator

Greetings and welcome to the Diana Shipping Inc. 2021 Fourth Quarter Conference Call. Please be aware that this call is being recorded. I will now hand over the call to Ed Nebb from Investor Relations. Thank you, and you may begin.

Ed Nebb, Investor Relations

Thank you, Hillary. Thanks to all of you for joining us. Let me remind you that under the safe harbor notice, which you can see at the end of today's news release, certain statements made during the call, which are not historical fact are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act. For a description of the risks and uncertainties and other factors affecting these statements, please refer to the company's filings with the Securities and Exchange Commission. And now without further ado, it is my pleasure to turn the call over to Ms. Semiramis Paliou, Chief Executive Officer.

Semiramis Paliou, CEO

Thank you, Ed. Good morning, ladies and gentlemen, and welcome to Diana Shipping Inc.'s fourth quarter 2021 earnings call. My name is Semiramis Paliou, the company's CEO, and it is an honor to have the opportunity to present to you today. Joining me this morning on the call are Mr. Stacey Margaronis, President of Diana Shipping. Mr. Ioannis Zafirakis, CFO and Chief Strategy Officer; Mr. Eleftherios Papatrifon, Chief Operating Officer; and Ms. Maria Dede, the company's Chief Accounting Officer. Before I begin, I kindly ask everyone to review the forward-looking statements applicable to today's presentation, which can be found on Page 2 of this presentation. This has been a financially strong year and a fantastic fourth quarter. Market conditions remained robust during the last quarter and contributed to making 2021 the best year in the dry bulk market since 2008. Throughout last year, we took advantage of the favorable market conditions, and we were able to increase our profitability, further strengthen our balance sheet, reduce our cash flow breakeven points and lock in positive cash flows, which have allowed us to initiate what we believe to be a sustainable quarterly dividend based on the current market conditions. Now let's turn to Page 4, Slide 4. I will review with you the company's snapshot as of today. Further to the consummation of the OceanPal spinoff, which resulted in the disposal of three of our older vessels, undertaking delivery of our recent acquisition, the motor vessel Leonidas PC last week. We find ourselves owning and operating 34 vessels in the water with a carrying capacity of approximately 4.4 million deadweight tonnes, four vessels of which remain unmortgaged. We expect our fleet to grow by one vessel by the end of this quarter after we take delivery of our previously announced resale newbuild Capesize acquisition, the motor vessel, Florida. Our fleet utilization has remained at very high levels, coming in at 99.1% for the full year 2021 as compared to 97.9% for 2020. Thirty-two vessels in our fleet are managed in-house by Diana Shipping Services and two vessels are managed via a 50-50 joint venture, Diana Wilhelmsen Management Limited. At the end of the fourth quarter, we employed 819 personnel at sea and ashore. Moving on now to Slide 5. I will go over the highlights of the fourth quarter and recent developments. More specifically, in late November of last year, we completed the spin-off transaction of OceanPal Inc., which we believe rewarded and created value for our shareholders. As previously disclosed, OceanPal acquired three of our oldest vessels and began trading on the NASDAQ capital market as a separate and independent company. In December, we successfully concluded our tender offer and repurchased approximately 3.5 million common shares at a price of $4.25 per share. We believe that this action represents once again a strong vote of confidence for the long-term prospects of our company. Also in December, we agreed to purchase a modern Japanese-built resale newbuilding Capesize vessel. The vessel will be named Florida, and we expect her to be delivered to us in late March. This vessel is being built under very high standards with the latest environmental and technological specifications. This acquisition is another step forward for the renewal of our fleet. In January of this year, we received approval for the listing of our USD 125 million senior secured bond in the Oslo Stock Exchange. The listing became effective in February. Also in February, we took delivery of our 2011 Japanese built Kamsarmax vessel, the motor vessel Leonidas P.C., and she has already begun trading profitably in our fleet. The strong profitability and positive cash flow generation in the fourth quarter has enabled us to declare an increased cash dividend for the fourth quarter of $0.20 per share. This is double the cash dividend we paid last quarter and demonstrates our ability to pay very attractive dividends under the current market conditions. Our Board will continue evaluating those conditions for the declaration of potential additional dividends for the quarters to come. Lastly, our consistent chartering strategy has allowed us to have currently secured approximately USD 184 million of contracted revenues for full year 2022 with 62% contract coverage and USD 25.6 million of contracted revenues for 2023 with 8% contracted coverage. Ioannis will provide later on a more detailed analysis of our cash flow generation potential based on the current market environment. Turning now to the financial highlights of the fourth quarter of 2021, on Slide 6. We find ourselves, as of December 31, 2021, with a cash and cash equivalents position of USD 126.8 million, including restricted cash, as against USD 82.9 million as of December 31, 2020. Our debt, net of deferred financing costs, stood at USD 423.7 million at the end of the fourth quarter of 2021 as against USD 420.3 million at the end of 2020. Our time charter revenues for the quarter, for the fourth quarter of 2021, amounted to USD 68.8 million as against USD 42.7 million for the fourth quarter of 2020. Lastly, our earnings per share for the fourth quarter of 2021 came in at $0.48 versus a loss of $0.10 per share for the same period of 2020. Ioannis will go over this as well as the full year numbers in more detail further on in the presentation. Moving on to Slide 7. We 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 robust chartering market and have secured attractive time charters for 13 vessels of our fleet. More specifically, we chartered five Panamax to Post-Panamax vessels at a weighted average daily rate of USD 21,176 and for a remaining average period of 348 days per vessel. We have also chartered eight Capesize vessels at a weighted average rate of $25,038 per day for a remaining average period of 369 days. It should be noted that the fourth quarter's fixtures were of a significantly longer duration than the ones of the third quarter. We intend to keep chartering our vessels in a similar way, by staggering maturities, locking in cash flows and positioning us in a manner that allows us to continue to participate in the market in a balanced way. Ioannis will provide more insight on this when he goes over our employment strategy in more detail later on during the presentation. And I now turn it over to him to go over the financials in more detail.

Ioannis Zafirakis, CFO and Chief Strategy Officer

Thank you, Semiramis. I'm happy to discuss Diana’s operational results for the fourth quarter and year-end December 31, 2021. For the quarter ended December 31, 2021, we reported a net income for common stockholders of $39.7 million, which equates to $0.51 per basic share or $0.48 per diluted share. This includes a $15.3 million gain from the spin-off of OceanPal, accounting for $0.18 per diluted share. Our time charter revenues increased from $42.7 million in the fourth quarter of 2020 to $68.8 million in the fourth quarter of 2021, reflecting a 61% increase, despite a reduction in the number of vessels in our fleet due to our chartering strategy and rising charter rates. We reduced our voyage expenses by $800,000 this quarter compared to $3 million for the same quarter in 2020. This quarter, we experienced a gain on bunkers of $2.8 million, in contrast to a $200,000 loss last year. Our vessel operating expenses decreased by about 19% to $18.2 million from $22.4 million last year, also attributed to having fewer vessels. We successfully decreased operating expenses on a per-vessel basis. Our general and administrative expenses rose to $8.1 million from $7 million in the same quarter last year, mainly due to higher costs associated with restricted stock awards and legal and audit fees, partially offset by lower payroll costs. Interest and finance costs increased this quarter due to higher average debt and increased amortization of financing fees from loan refinancings. During the quarter, the company completed the spinoff of OceanPal and three subsidiaries managing older vessels in our fleet. This transaction allowed us to capitalize on increased market values of the vessels, realizing a $15.3 million gain, which reduced the average days of the fleet and provided value to our shareholders through the distribution of OceanPal shares as dividends. Looking at the year-end figures, net income for common stockholders reached $51.6 million, or $0.64 per basic share and $0.61 per diluted share, including the earlier mentioned gain from the spinoff. Time charter revenues grew to $214 million in 2021, up from $169.7 million last year for similar reasons previously discussed. Voyage expenses fell to $5.6 million from $13.5 million in 2020, owing to last year’s $3.7 million bunker loss improving to a gain this year. Aggregate general and administrative expenses saw a decrease to $29.2 million from $32.8 million in 2020, primarily due to accelerated vesting of restricted stock grants to board members in 2020, along with lower payroll costs and D&O insurance. Interest and financing costs were $20.2 million, down from $21 million last year, reflecting decreased average debt and interest rates, albeit partially offset by higher amortization of financing charges from loans this year. As of December 31, 2021, our cash and cash equivalents, along with restricted cash, amounted to $126.8 million, with only $16.5 million being restricted, down from $82.9 million total on December 31, 2020. This improvement is attributed to increased cash flow from operations, vessel sales, and refinancing agreements made in 2021. Consequently, long-term debt, net of deferred financing costs, was $423.7 million compared to $420.3 million as of December 31, 2020. Vessels, net decreased to $643.5 million from $716.2 million last year due to the sale of four vessels and contributing three vessels to OceanPal. As of December 31, 2020, we agreed to sell three vessels that were delivered to their new owners in the first quarter of 2021. Additionally, in the first quarter of 2021, we agreed to sell the Naias, which was delivered to its owners in July 2021. In November 2021, we completed the spin-off of OceanPal with the contribution of three vessels, which led to fewer ownership days during the reported quarter and year 2021 compared to the same periods last year. Fleet utilization for the fourth quarter of 2021 remained consistent with last year at 99.1%. The favorable market conditions in 2021 caused our daily time charter equivalent rate for the fourth quarter to almost double compared to the previous year, rising to $21,364 from $10,940. Simultaneously, we reduced our daily operating expenses for the fourth quarter to $5,657 from $6,089 for the same quarter of 2020, reflecting a 7% decrease due to lower average crew costs, insurances, and operating expenses. Fleet utilization increased in 2021 to 99.1% from 97.9% in 2020, attributed to fewer off-hire days. The daily time charter equivalent rate for 2021 rose to $15,759 from $10,910 last year for similar reasons outlined earlier. We also improved our daily operating expenses for the year, which decreased by 3% to $5,596 compared to $5,750 last year, primarily due to lower expenses for spares, repairs, and operating costs. Regarding our debt amortization profile, I want to highlight our three loan refinancing agreements: one with ABN AMRO for $91 million completed in May 2021, which refinanced five existing loans; another with Nordea for a $125 million bond in June 2021 to refinance part of our $100 million bond, which we fully repurchased in September 2021; and a third loan agreement with Nordea aimed at extending loan maturities to future periods. This enhances our capacity for dividend payments to shareholders. Under the current debt amortization structure, we anticipate the first balloon payment in the third quarter of 2023. This structure has evidently bolstered our balance sheet and market position. Our breakeven rate as of December 31, which encompasses all our expenses, stood at $13,991 per vessel per day. Comparing this with the average daily time charter rate we expect to achieve from fixed agreements until February 22, 2022, it's clear that the average rate will cover our costs and yield net income from operations. We have fixed 38% of our 2022 revenues, equating to $184 million, and the average contract duration has now slightly exceeded a year, compared to being under a year previously. The already secured days cover our cash flow breakeven; any additional fixed agreements for 2022 will effectively be free cash flow. This provides assurance regarding our capacity for dividends in 2022. Our Board of Directors in the upcoming quarters will be well-positioned to declare substantial dividends for our shareholders. Now, I’ll pass the presentation to Stacey Margaronis for the market overview, as we do each quarter.

Stacey Margaronis, President

Thank you, Ioannis. One can certainly not criticize the dry bulk market for not providing sufficient excitement over the last year or so to investors, shipping analysts, shipping bankers and all involved in this sector of shipping. Apart from the booming container sector, the dry bulk sector must certainly take second place as regards the recent, at least, volatility among various sectors of shipping. We would, therefore, like to start this last section of our presentation with two slides depicting the dry bulk indices versus the 12-month time charter rates of large bulkers. So in Slides 17 and 18, they help us reconfirm the much greater volatility affecting the spot market compared to the volatility we have witnessed over the last few quarters in the 12-month time charter rates for large bulkers. For example, the Capesize 12-month time charter rate moved from about $36,000 a day in the early part of last October to $24,000 a day in January of this year. In comparison, the spot Baltic Cape Index went from a high of 10,485, equivalent to about $87,000 per day, 5TC average in October last year to a low of 702 in January of this year, the equivalent of $5,826 per day on the 5TC average. As Clarksons point out, Capesize spot earnings averaged a mere $8,000 per day during January and the first half of February this year. It has always been known that spot trading large bulk carriers was not for the faint-hearted, but we feel it is interesting to see this extreme volatility expressed in concrete numbers. These oscillations and violent fluctuations at Diana's chartering strategy, which has been described several times in the past, seeks to smooth out over time. On the next Slide, 19, we look at the main demand driver for the bulk shipping industry, which is global GDP growth. Unfortunately, the IMF has been downsizing GDP growth estimates over the last few months. For example, world GDP is expected to increase 4.4% this year, down from the previous forecast of 5%. The forecast is still a 3.8% growth for 2023. For China, the GDP growth forecast has come down to 4.8% from 5.6% for 2022 and stands at 5.2% for 2023. In the United States, the economy is expected to grow by 4% this year, down from 5.2% estimate and 2.6% in 2023. As for the Euro area, GDP growth is expected to come in at 3.9% this year and 2.5% for 2023. According to Braemar, the IMF has cited several key reasons behind their latest downward revisions. Firstly, the new COVID-19 variant, Omicron, with the introduction of mobility restrictions and consequent lower economic activity. This has coincided with a period of high energy prices and continued supply chain disruptions, resulting in higher inflation than previously expected. Lastly, the depressed Chinese real estate sector and slower recovery of private consumption have capped growth prospects. All these are bound to affect slightly the demand increase forecast for the transportation of dry bulk commodities. More importantly, however, as Braemar points out, the war in Ukraine may have a broad-based negative impact on the dry bulk market with ports in the Black Sea halting operations for an undetermined period of time. We have already started to see some initial negative effects on trade in that area. Turning to steel production. According to Maersk Broker, global production of steel reached 1.95 billion tonnes in 2021, which was up 4% from the prior year. Chinese steel production dropped 3% last year, while according to Banchero Costa, steel production outside China increased by 14% year-on-year in 2021. According to Clarksons, given the existing restrictions in China on crude steel output, Chinese iron ore imports are expected to remain under pressure this year. Turning to iron ore on Slide 19. On a worldwide basis, iron ore imports are projected to increase by 1% this year and remain steady during 2023. According to Clarksons, Chinese seaborne iron ore imports are currently projected to decline by a further 1% in 2022 after dropping by 3% in 2021. As regards to coking coal, global coking coal trade is initially projected to grow by around 4% in the full year 2022 as steel demand and production look set to continue to grow steadily in key regions around the globe. Growth of about 3% is projected for 2023. For steam coal, worldwide demand is currently projected by Clarksons to grow by 1% this year with lower economic growth and rising domestic production in China, where government policy seems to provide limited support for imports of this commodity. Chinese seaborne thermal coal imports are initially projected to decline by 13% this year, even though, as Clarksons pointed out, this outcome is by no means certain. According to Commodore Research, a positive for coal imports in China is that hydropower electricity production has continued to fall on a year-on-year basis. However, electricity production from other renewable sources, such as wind power production, solar and even nuclear energy has been increasing steadily. In Slides 19 and 20, we can look at the overall coal trade and mention that Howe Robinson believed that with price pressure building up on all energy sources during 2021, coal prices of both thermal and coking coal went up dramatically. After a decade of low prices and declining investment in the coal industry, supply has tightened. This was made worse by labor shortages, heavy rains and limited access to heavy machinery, which made it impossible for miners to maintain previous volumes of coal exports. Even Europe, where coal consumption has been strongly discouraged for years, increased its coal imports, which even at $261 per tonne, remain well below the equivalent gas prices. This difference will widen even further in favor of coal with the anticipated increase in gas prices following Russia's invasion of Ukraine. Main exporters of coal worldwide in 2021 were Australia with 31%; Indonesia, 28%; and Russia, 15% of exports. In view of the imminent trade sanctions, Russia's coal exports to Europe and the West as well as elsewhere in the world will probably have to be replaced by coal from other exporters, including South Africa. Therefore, a combination of tight supply and high prices may, according to Howe Robinson, limit coal's positive impact on the dry bulk trade in 2022. Let's turn to grain imports now. According to Clarksons, the overall global seaborne grain trade is projected to grow by about 3.7% this year and by a further 2.2% in 2023. Uncertainty prevails due to several factors, not least of which is the developing Ukraine-Russia situation. In this respect, it is interesting to note that according to Clarksons, from the 542 million total grain exports expected to be shipped in 2022, 50 million tonnes are expected to come from Ukraine and a further 46.6 million tonnes from Russia. A conservative assumption would be that a large part of these exports will not happen and will be replaced with cargo from other exporting areas, mainly in North and South America. During the first quarter of 2022, most of the soybean exports to China coming from North and South America will now come solely from the U.S. due to soybean crop damage caused by adverse weather conditions affecting primarily Brazil. On Slide 21, we can look at the dry bulk order book and supply side issue. According to Banchero Costa, in 2021, there were just 353 dry bulk carriers delivered with an aggregate capacity of 35.8 million deadweight. This was down about 25% in deadweight terms compared to 2020. In 2022, the expectation is for about 332 units of 28.26 million deadweight to join the bulk carrier fleet after accounting for slippage and cancellations. From these deliveries, about 52 are expected to be Capes and VLOCs with a dead weight of about 10.5 million deadweight. According to Banchero Costa, net fleet growth in 2021 came in at about 4% year-on-year. Net fleet growth in 2022 is expected to be 2% with a further small increase of 1% to take place in 2023. The order book for Capesize bulk carriers remains modest. According to Clarksons, there are 26.4 million deadweight of Capesize and post Capes on order, representing 7% of the dry bulk fleet. Most of these ships will be delivered this year and next, approximately 11 million deadweight each year according to Banchero Costa. There are 19.2 million deadweight worth of Panamaxes on order, which is about 8.1% of the total Panamax fleet. About 9.3 million deadweight will be delivered this year and 10.5 million in 2023. The order book for smaller bulkers is even lower, giving a total bulk carrier fleet newbuilding order book of 64.1 million deadweight, equivalent to only 6.8% of the total bulk carrier fleet. Looking quickly at congestion. As mentioned, congestion in ports around the world is keeping about 36% of the active fleet tied up, waiting to lower discharge. Two weeks ago, congestion increased by 84 vessels in only one week, and that was only at major Australian and South American loading ports as well as Chinese discharging ports. The pre-COVID-19 average from 2016 to 2019 stood at around 30% of the active fleet. According to Clarksons, looking at the green transition, about 35% of vessels on order measured by GRT are set to use alternative fuels, primarily LNG. LPG fuel is dominant for new LPG carriers, while there have been several orders for methanol-fueled container ships, although there remains a great deal of uncertainty over timing and technology choices. The fueling transition is expected to be a key driver for fleet renewal and new building interest at shipyards over the coming years. Diana's forthcoming addition to the fleet, the Japanese newbuilding Capesize vessel, Florida, will be fueled by low sulfur fuel and powered by Tier 3 main engine and auxiliary engines as regards sulfur oxide emissions and nitrogen oxide emissions. Turning to the outlook now for our industry. We agree with Commodore Research that it is encouraging to see that in 2021, ordering activity stayed well below the highs seen in 2013 and 2014, even as spot rates have been faring much better than they did then. We also agree with Clarksons that the outlook for the dry bulk carrier market in 2022 remains positive even if full-year earnings could fall short of 2021's extremely healthy levels. Similar views are expressed by Commodore Research on bulk carrier rates, at least for this year. The IMF predictions for lower growth this year come to pass. It is likely that seasonality will certainly help boost the dry bulk market in the short and medium term, but there is no guarantee that 2022, as a whole, will fare as well as last year. Fundamentals appear fairly balanced with the projected 2.5% growth in bulk carrier tonne-mile demand against a projected fleet growth of 2.1% for 2022. For next year, supply is expected to grow by between 0.3% and 1% depending on scrapping forecasts, slippage and other factors. Congestion, as mentioned earlier on in this presentation, stood in mid-February close to a record 36% of the total fleet, and this might continue providing support going forward. As usual, future dry bulk carrier earnings will depend on developments in supply and demand. These are particularly important now after the market has been through a period of fine balance between supply and demand for several quarters prior to 2021. As a result of this period of stability, significant strength or weakness in rates surfaces even with relatively minor changes in supply/demand balance. This is what we have been witnessing in 2021 and the early part of this year. At this point, I will pass the call to our CEO, again, Semiramis Paliou, for a summary of the highlights of this presentation.

Semiramis Paliou, CEO

Thank you, Stacey. So before we open this call up to the Question-and-Answer Session, I would like to sum up what I believe to be the most important point. The company has produced solid returns, has a strong balance sheet and continues to take advantage of the robust market while maintaining a low cash flow breakeven point. We remain committed to our disciplined and balanced strategy and its value is clearly demonstrated and appreciated even more so under the current volatile geopolitical environment. We are focused on finding creative ways to potentially grow and renew our fleet in a conservative manner. And last but not least, we are very pleased to be able to pay out a higher quarterly dividend, and we aim to continue paying out future dividends should market conditions allow us. Now I will turn it over to the operator to commence the Q&A session.

Operator, Operator

Our first question is from Randy Giveans of Jefferies.

Randy Giveans, Analyst

I guess first question around the dividend and capital allocation there, increasing it from $0.10 to $0.20 above our expectations there. So what went into making that decision? And how will you balance further dividend payments with share repurchases in the coming quarters?

Ioannis Zafirakis, CFO and Chief Strategy Officer

I think the $0.20 decision can easily be seen based on our fixed income for 2022 and some of 2023. In the current environment, I think, the generation of free cash flow is such that everyone can see that the ability to pay $0.20 this quarter and even something higher over the next quarter is there easily. As regards to the purchasing of the tender offer, buying back shares or doing something else with the money, of course, that will depend on the price of our stock and whether there is clear value or we are clearly undervalued. We still have that option to do a lot of things there. But I personally strongly believe that the period has come where the stock price will appreciate and be priced based on the yields that we are going to be providing, yields that I think everyone can see that it is sustainable for the quarters to come. So to respond to your question about the tender offerings, I don't think that it's going to be an option because I don't think that the pricing of our stock is going to be short, but we are going to do it.

Randy Giveans, Analyst

Yes, I think in the long run, that is certainly…

Ioannis Zafirakis, CFO and Chief Strategy Officer

Knowing me for many years, I'm never very optimistic. So whatever I'm saying now, you have to take into account.

Randy Giveans, Analyst

I guess just to clarify on the dividend, you mentioned that it could be even higher in the coming quarters. So is $0.20, was there something special about this quarter? Or is it fair to expect as long as the rates stay robust, that 20% dividend should be…

Ioannis Zafirakis, CFO and Chief Strategy Officer

That $0.20 is not derived from something especially of this quarter. It's not.

Randy Giveans, Analyst

Second question, just looking at the fleet strategy. Clearly, there's been a big uptick here in recent weeks on spot rates on the FFA curve. Are you seeing the same moves in the time charter market? And then with that, is the plan just to continue to extend 10 to 16 month charters as vessels become available.

Anastasios C. Margaronis, President

I will address that question first, and then Eleftherios may provide additional insights. It's important to note that as we enter more favorable markets, which is a possibility, we are likely to extend the charter period beyond what we have done previously. Additionally, we have already increased our hedging period; while it may not be extraordinary, we have revenue secured for over a year. Considering the current global situation, our strategy continues to show its value for our shareholders. If someone were to choose between today's environment being completely spot or completely fixed, it is clear they would prefer a hedging strategy like ours.

Eleftherios Papatrifon, COO

I think you've addressed most of the key points. Despite the recent volatility, the FFA curve is still indicating that Panamaxes and Capes will be priced in the mid- to high 20s range for the rest of the year, and in the high teens to low 20s for 2023. This suggests that we have the potential to replicate the recent successes we've achieved. Looking out over the next year, or possibly a year and a half, we may see even higher values if 2023 trends upward. Therefore, I believe we will continue with our current approach as we have for the past quarter.

Operator, Operator

Our next question is from Randy Giveans of Jefferies.

Randy Giveans, Analyst

I guess if no one else is asking questions, I'll ask one more. Just around Russia, Ukraine. I think Stacey had some comments around it in terms of the coal trade. But if you could also give some commentary around grains and maybe other exports out of the region and maybe the replacement of those cargoes from other regions into Western Europe? Or just a little more context around what you're seeing so far? Obviously, it's early, but anything you can share would be helpful.

Anastasios C. Margaronis, President

Well, to be honest, we have not heard of any canceled cargoes up to now. The numbers as of this afternoon indicate that there has been very little effect on ships loading grain from both Russia and Ukraine, or coal. One of our ships is currently loading a coal cargo and is expected to leave without incident and on time after going to anchorage early tomorrow. Apart from the recent reports of attacks on some cargo ships, both the Kerch Strait and the Sea of Azov have not caused delays in loading or discharging ships. The situation in Taman, where the Leto is loading at the mouth of the Sea of Azov, is completely stable and operations are proceeding normally. Unfortunately, we can't provide a definitive answer because we have no data apart from three reported attacks, two on bulk carriers and one on a tanker named the Nomura Queen, which is reportedly sinking. The other ships sustained damage, resulting in some loss of life. These reports come from reliable sources including the P&I Club and war risk insurance. Our master is exercising caution to avoid entering dangerous areas during naval drills, but we haven't received any specific warnings yet. Trade appears to be continuing as usual, except for these three attacks, which may lead to future restrictions for accessing some of these ports, although no such announcements have been made yet.

Ioannis Zafirakis, CFO and Chief Strategy Officer

Randy, you understand that usually this type of disruptions, they work in favor of the dry bulk market on the shipping in general. We have seen that in the past many times. Delaying changes of routes and so on and so forth.

Operator, Operator

There are no more questions at this time. I will now turn the call back to management for closing remarks.

Semiramis Paliou, CEO

Thank you all for joining us today, and we look forward to talking to you again in our next financial results call. Thank you very much.

Operator, Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.