Diana Shipping Inc. (DSX) on Q3 2021 Results - Earnings Call Transcript
Operator: Hello, and welcome to the Diana Shipping Inc, Third Quarter 2021 conference call webcast. 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 turn the call over to Ed Nebb, Investor Relations for Diana Shipping. Please go ahead, Ed.
Ed Nebb : Thank you very much, Kevin. And thanks to all of you for joining us today for the third quarter conference call of Diana Shipping Inc. Before management begins their remarks, let me briefly remind you of the safe harbor provisions, which you can see the notice in attached to today's news release. Certain statements made during this conference call, which are not historical facts, are forward-looking statements as defined by the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections, or belief as to future events that may not prove to be accurate for a description of the risks, uncertainties, and other factors that may cause future results to differ from what is expressed in forward-looking statements, please refer to the Company's filings with the SEC. And now I'd like to introduce Mr. Simon Palios, Chairman, and Ms. Semiramis Palios, Chief Executive Officer. And I will turn it over now to Semiramis.
Semiramis Paliou : Thank you, Ed. Good morning, ladies and gentlemen and welcome to Diana Shipping Inc. third quarter 2021 earnings call. My name is Semiramis Paliou, the Company's CEO and this is an honor to have the opportunity to present to you today. Joining me this morning on the call, we have Mr. Stacey Margaronis, President of Diana Shipping, we have 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 presentation, which can be found on page 2 of this presentation. Turning to Slide 4, I will briefly update you on the Company's snapshot as of today. Not much has changed since our second quarter call as we continue owning and operating 36 vessels with a carrying capacity of approximately 4.6 million deadweight tons. However, we expect our fleet to grow by one vessel in the first quarter of next year after we take delivery of our announced acquisition, the motor vessel Magnolia. Our fleet utilization has remained at very high levels, coming in at 98.9% for the third quarter of 2021 as compared to 99.6% for the second quarter of the year. Moving on to slide 5, I will go over the highlights of the third quarter and recent developments. Market conditions remained robust during the last quarter and continue being positive to this date, although we have witnessed some volatility recently. This has resulted in the Company producing a strong third quarter and achieving the strongest 9 months results since 2012. This strong profitability and positive cash flow generation has enabled us to introduce a cash dividend of $0.10 per share. As we have mentioned in the past, we would only start paying a dividend again when market conditions with such, that would allow the dividend to be sustainable for a reasonable period of time. We feel that such conditions arrived currently, and as such, we have initiated the dividend. Together with the dividend, we announced a separate transaction that we believe rewards and at the same time creates value for our shareholders. This is a creation and subsequent spin-off of Ocean Pal. OceanPal will acquire 3 of our oldest vessels and will trade separately on the Nasdaq capital market under the ticker symbol OP. Every Diana Shipping Inc. shareholder will receive 1 share of OceanPal for every 10 Diana shares held on the record date. The specific spin-off structure, the rationale of the transaction, and the potential benefits for our shareholders are analyzed in detail in the OceanPal registration statement filed with the Securities and Exchange Commission. While the consummation of this spin-off has been delayed pending the effectiveness of the OceanPal registration statement filed with the SEC, we anticipate that it will be completed in the next couple of weeks with a no changes to the terms that we have previously announced. As previously announced in June of this year, we successfully issued a 5-year $125 million senior secured bond listed on the Oslo Stock Exchange. Within September, we utilized some of the bond proceeds to repurchase the remaining old bonds due in 2023. In August, we successfully concluded our tender offer and repurchased approximately $3.33 million common shares at the price of $4.5 per share. We believe that this return to our shareholders presented a strong vote of confidence for the long-term prospects of our Company. Lastly, our consistent chartering strategy has allowed us to have currently secured approximately $209 million of contracted revenues for the full year 2021 with a 97% contract coverage and $83.2 million of contracted revenues for 2022 with 27% contract coverage. Janice will provide later on a more detailed analysis of our cash flow generation potential based on the current market environment. One can also find on our website the Company's 2020 environmental, social, and governance report, which was released in October. Turning to the financial highlights of the third quarter of 2021 on slide 6, we find ourselves as of September 30, 2021 with a cash and cash equivalents position of $146.2 million, including restricted cash as against $82.9 million as of December 31st, 2020. Our debt net of deferred financial costs stood at $434.7 million at the end of the third quarter of 2021, as against $420.3 million at the end of 2020. Our time charter revenues for the third quarter of 2021 amounted to $57.3 million, as against to $42.3 million for the third quarter of 2020. Lastly, our earnings per share for the third quarter of 2021 came in at $0.16 versus a loss of $0.17 per share for the same period of 2020. Ioannis will go over this as well as the 9-month numbers in more detail further on in the presentation. Moving on to Slide 7, we find a summary of all our recent chartering activity. 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 11 vessels of our fleets. More specifically, we charted 9 vessels in the Panamax to post - Panamax side at the weighted average daily rate of $25,858 and for remaining average period of 336 days per vessels. This can be compared to the $25,693 weighted average daily rate we achieved for the fixtures presented during our last earnings call, an indication of the markets remaining robust. We have also target 2 Capesize vessels at the weighted average rate of $33,437 per day for a remaining average period of 148 days, an improvement from the $25,957 we achieved as an average weighted daily rate for the last quarter's Capesize fixtures. We intend to continue chartering our vessels that will be redelivered to us in a similar way by staggering maturities, locking in cash flows, and positioning the Company in a manner that will allow us to continue to participate in the market in a balanced way. I will now turn the call to Ioannis to go over to the third quarter 2021 financial in more detail.
Ioannis Zafirakis: Thank you Semiramis, and good morning to all of you. I'm very pleased to be discussing today with you the Diana Shipping Inc. financial results for the third quarter, then the nine months ended September 30, 2021. In slide number 8, you can see that during the quarter we recorded a net income of review for Comoros, so more additional $15.3 million or 0.17 per share or basic share, or 0.16 share. Our revenues increased from $42.3 million in the third quarter of 2020 to $57.3 million in the third quarter of 2021. That's an increase of about 35 %. Despite the reduction in the number of vessels in our fleet. This increase, of course, is attributed to the increase in the charter rates that we achieved for our vessels. The voyage expenses social decreased to only $0.7 million in the quarter compared to $2.9 million for the same quarter of 2020. And that is mainly due to $2.4 million gain from bankers compared to $0.5 million loss we had last year. Vessel operating expenses for the third quarter of 2021 decreased by about 12% to $18.8 million compared to $21.3 million last year. And of course, again, this is attributed to the fact that we have less vessels in our fleet following the recent sale and also due to the decreased spares and repairs and other operating expenses. Of course, this decrease was partially offset by increased crude costs, insurances in stores, and provisions. Our general and administrative expenses also decreased to $7.2 million compared to $9.5 million for the same quarter last year, mainly due to decreased payroll costs. Interest in finance costs increasing this quarter due to increased average interest rates and increased average debts compared to the same quarter last year, mainly due to our new $125 million bond. In addition, the Company incurred the loss of extinguishment of debt of $ 0.8 million due to the coal advantage of our 9.5% senior bond. Now, for the 9 months ended September 30th, 2021, Net Income attributed to the amounted to $11.9 million or 0.15 basic share or 0.14 per diluted share. Time charter revenues increased to $145.4 million compared to $127.1 million for the same period last year, and this is of course, for the same reason which has been above the quarter. The voyage expenses decreased in the 9 months ended September 30th, 2021, to $4.7 million compared to $10.5 million for the same period of 2020. And this is for the -- because of a gain of $3.1 million from bankers compared to $3.5 million loss that we had last year. The vessel operating expenses were $56.6 million compared to $63.4 million for 2020. And of course, again, this is attributed to the lessor ownership days together, we were sparing best another operating expenses that we managed to decrease. We've had some increases group for insurances, stores, and provisions. Again, generated an administrative expense decreased to $21.1 million compared to $25.7 million for 2020 and that was mainly due to the accelerated vesting on restricted stock shares of board members in 2020. And also due to the decrease payroll cost in the . Interest and finance cost amounted to $15 million compared to $16.9 million last year due to the decrease average debt in interest rates. You see that the decrease between the quarter and in the quarter, we have increase interest and finance costs in the 9 months we have a decrease amount. Going to the next slide. On the balance sheet, you can see that as of September 30th, 2021, our cash and cash equivalent and restricted cash increased to $146 million compared to the $82.9 that we had on December 31st, 2020. Of course, this is attributed to the refinancing agreement we into during this 9-month period, including the $91 million along ATM , the 75% percent unsecured senior born of another $25 million nominal amount expenses over 9.7 -- 9.5 million a million-nominal amount of which $92 million were outstanding as of December 31st, 2020. And the refinancing of how long we will not be under which we drew down an additional amount of $0.5 million. All of these things brought as of September 30th, 2021, brought long-term debt net of difference financing cost to $434.7 million, compared to $420 million as of December 31st, 2020. Moving to some select finances that other than fee, but that's what December 31st, 2020 we've had agreed to share 3 vessels, but they were delivered to their new owners in the first quarter of 2021. Additionally in the first quarter of 2021, we're going to sell? a model version we'd be ready to get on it? say in July of 2021. All of these sales have resulted in less ownership days during the report where for our current period of 2021 compared to the same periods last year. Nevertheless, we managed to improve the utilization of our fleet to 98.5% for the third quarter of 2021, compared to 97.3% for the same quarter last year. Better utilization rates and banks average resulted in the increase of our daily time charter equivalent rate to $17.143 compared with $10,735 per day for the third quarter last year. We might have set again to bring down our daily operating expenses to $5,335 compared to $5,732 for the same quarter of 2022. And this is a decrease of 2 %. Moving to the next slide in the 9 months ended September 30th, 2021, this utilization increased to 98.9 compared to 97 in 2022. The day equivalent for the 9 months ended September 30th, 2021 was $15,984 compared to $10,900 for the same period last year. Daily operating expenses for the 9 months ended September 30th, 2021, slightly decrease to $5,577 compared to $5,639 for the same period last year. That's a small decrease of 1 %. Now, moving to more interesting stuff. I would say that we're very proud that we have already mentioned that during this 9-month period, we've gone through the three loan refinancing agreements. One with ABN Amro for $91 million concluded in May 2021 to refinance 5 existing loans. The second with Nordea for $125 million concluded in June 2021 to refinance part of our 100 million bond which we had embedded in the September 2021, and the third was all of these agreements were made with a point of extending the maturities launched in future period. As a result, that amortization required and we expect to be the first Bond drain in the third quarter of 2023. We believe the process to create the current debt amortization profile have strengthened the company’s balance sheet and our positioning in the market. These together with -- if we move to the next slide, with our break even you can see that as of September 30, 2021, our break-even rate which include all of our expenses. have been going $948 per vessel per day. If you compared with the average daily time charter that we expect to achieve from our Time charter agreements already fixed until November 10, 2021. It represents that the average rate we will get from these agreements will cover our cost and result to net income probabilities. Looking at the next slide, we have a better idea of what is happening and it would have to create revenues for the remaining and fixed days for 2021 and 2022 at that they have droughts and losses recently. Assuming that these delays, we continue to be at the same level in the coming year -- month, as our vessels open for fixture, we would expect to achieve revenues of $58.2 million for the period of -- from my November 10, 2021 to the end of the year, and another &263.5 million for 2022. At this leverage we will see that our expenses by $13.9 million or $8,000 per vessel per day exist of the break even for 2021. And $91 million or 7.30,000 per vessel per day in excess of our break-even all for 2022, resulting in both areas to net income from operations. So, you can see that in this scenario, that over and about to $640 million plus totals that we have aside, the Company has the ability to create another $19 million in 2022. Advancing our options and our ability to pay quarterly dividends. Thank you all for your attention. And now I return the call to Stacey Margaronis for some -- for the usual market analysis that everybody expects.
Anastasios Margaronis : Thank you, Ioannis, for haven't become boring the years of mentioning what's happening with shipping but this particular quarter, the third quarter of this year, has seen the dry bulk market, reminding us all of the tremendous volatility which it has always been susceptible. This is indeed one of the characteristics of a healthy dry bulk market from the point of view of an industry where supply and demand have the effect they're supposed to have without external distortions, with the exception of course of sentiments. The Baltic Dry Index started the third quarter at $3,338, I beg your pardon. And reached a high of $5,650 on October 7th. Yesterday, November 16, we've closed at $2,591. The Baltic Cape Index move from $3,690 on July 1st to a high of $10,485, only to drop to $3,383 yesterday. The Baltic Panamax Index started the quarter at $4,237, closed yesterday at $2,675, having retreated from a high of $4,328 on October 25th. As witnessed from the wild drive of the indices. After shooting up to levels not seen since 2009, rates in all major dry bulk vessel sectors have come down well below their recent highs. Yet as Commodore Research point out, they do remain at healthy levels by historical standards. According to Clarkson’s plateau, the Baltic Capesize, 5TC average rates for 2020 was $13,070 per day. By early November this year is has increased by over 150% to around $33,000 a day. As for Panamaxes, the average voltage 5TC rate went from $9,918 per day in 2020 to about 27,000 per day at early November 2021.
Ioannis Zafirakis: The reasons for the recent weakness in rates are several. The most prominent are first the release of several vessels from congested ports primarily in China. And B secondly, a sharp slowdown in Australian iron ore shipments. These shipments are on track according to Braemar, to decline in October by 6.5% compared to September on a year-on-year basis, the decline we'd be around 3.4%. Shipping analysts expect that the bottom will be found as soon as more of the spot tonnage has been clear and owners surrender to weaker bids for their tonnage. It appears that we are not far off from that point in the cycle. If we move to Slide now
Anastasios Margaronis : 17. As we've got the global GDP growth, the IMF latest forecast is 4.9% growth this year, and around 5% for 2022. Chinese GDP growth is estimated to come in at 8% this year and 5.6% in 2022. Here, we need to take into consideration the fact that the Chinese growth has slowed sharply during the third quarter, something not shown in the overall annual estimated growth figure. This might have an effect on demand during the fourth quarter for the importation overall commodity to China. The US economy is projected by the IMF to grow by about 6% this year in about 5.2 2022. This growth figure has been revised as sharply upwards recently to incorporate projected high infrastructure spending and a stronger vaccine fuel the rebound in the first half of next year. The euro area is expected to grow by 5% this year, and by about 4.3% in 2022. On the next slide, we see Maersk Broker reports that the Chinese steel
Ioannis Zafirakis: and iron ore prices have fallen to multi month loss as of November 2nd due to production cut, power issues, falling steel demand, and an oversupply of iron ore. According to Clarkson’s benchmark iron ore prices in China fell to above $96 a ton, which is down 40% from their October record. According to Banchero Costa, iron ore stocks in China have risen to a 30-month high by the end of October, to 145 million tons. These inventories have been arising since July, amid concerns that production cuts will be needed to meet China's 2021 crude steel targets. Thermal coal prices corrected in early November to about a $140 per ton, down about 40% from the record reached in October. Unfortunately, our graph does not reflect fully this drop as well as that of other commodities because the database used to produce them have not been updated when this slide was printed. Gibson’s are forecasting global steel production for the first 9 months in 2021 to be 1.4 61 billion tons or 7.8% higher than the same period last year on an annualized basis, Gibson's predict that in 2022, world steel output will increase by a further 2.2% compared to this year. And coming up just under 1.9 billion tons. In the meantime, total steel output in China during the first 9 months of the year was 804 million tons up 2.6% compared to 2020. According to the same analysts, Chinese imports of thermal coal and lignite during the first 9 months of 2021 were down by nearly 20% compared to the same period in 2020. Moving on now to the next slide, and turning to supply issues. According to Clarkson’s at the beginning of this month, there were 27.7 million dead weight worth of Capes on order, representing about 7.4% of the total trading fleet. About 11 million dead weights of these orders are scheduled for delivery in 2022. As regards Panamaxes, they were $18.1 million dead weight on order at the beginning of November, representing 7.7% of the world trading fleet. About $8 million dead weight are scheduled for delivery in 2022. Overall, the bulk carrier order book has crept up slightly from last quarter to reach 6.8% of the
Anastasios Margaronis : trading fleet. This remains very close to the 30-year low point seen during the last couple of quarters. According to Fearnley's, that limited yard slot availability uncertainty with regards to upcoming environmental regulations and tight bank financing are the main factors contributing to keeping order placements at low levels. Despite earnings being at levels of having the past ignited, excessive ordering. According to Fearnley's about 229 dry bulk vessels have been ordered year-to-date, representing an aggregate of 23 million dead weight. Out of this total, 60 orders were for KIP'S Newcastle maxes, and 72 for Panamax Kamsarmax. According to Clarkson’s platform, the Capesize New Castle fleet will increase by 4.3% this year and by 2.7% in 2022. For Panamax and post-Panamax ships, the increase is predicted to be 3.2% this year and 3.3% in 2022. A quick look at congestion. According to Howe Robinson, congestion in China has been substantially greater than in recent years with a high of 640 vessels reached during the third quarter of this year, a 114 Capes and 220 Panamax, post-Panamaxes among these. Over the past month, there has been a sharp drop in Chinese congestion with a number of vessels returning to the supply chain. Howe Robinson ascribed part of this trend to the fact that 22% year-on-year fewer vessels arrived in China during the month of October. At its peak, it is estimated by Clarkson’s that global congestion soaked up about 5% of the world fleet from active service. Scrapping and other factor affecting supply. Clarkson’s expected only 5.8 million deadweight worth of bulkers will be scrapped this year. While Banchero Costa predicts a higher 8.64 million deadweight to be scrapped. About 12.8 million deadweights are anticipated to go to the scrap yards in 2022. If the market remains firm, we feel that the 2022 figure is a bit optimistic, unless several older units are forced to retire due to environmental regulations. As regards scrap prices, Clarkson’s report that Indian scrap buyers have recently outcompeted buyers from Pakistan and Bangladesh and are offering in excess of $600 per lightweight ton for good scrap quality tonnage. As regards in our environmental regulations a brief mentioned to thee, Braemar remind us that shipping is scheduled to be added to the European Union's emissions trading scheme, DTS, as of January 1st 2023. As a general point, we need to mention here, that the large number of vessels we find it necessary to operate at a lower speed from January first 2023 onwards, in order to comply with the latest emission regulations. This will certainly have an effect on tonnage supply compared to this year and 2022. Now the supply demand balance, according to Clarkson’s during 2021, global seaborne dry bulk volumes are projected to grow by 3.7% in tons. And a firm 4.6% in ton miles. At the other end of the equation, net fleet growth is expected to reach a modest 3.4% for the full year, 2021. For 2022, seaborne dry bulk trade growth is projected by Clarkson’s to be 2% potentially outpacing fleet expansion of about 1.5%. The iron ore trade is expected to grow by only 1% in 2022, grain trade by about 3% and coal trade as a whole by about 1.5%. So, what is the outlook for our industry? We agree with Fearnley that there are some positive factors will drive bulk shipping going into 2021 and some negative ones. Amongst the positives are the low supply growth. The increased market share from Brazil in iron ore trade, record volumes of grain trade, high commodity prices which support ton mile demand and a probable continuation of the Australia, China trade dispute which again on an overall basis is supportive of ton-mile demand. The negative factors are significant drop in China's infrastructure spending and general credit growth. The rise seen this year in energy prices and interest rates, and some similarities that we see to previous economic cycle peaks. Hopefully, the negative factors would not start having an adverse effect on the dry bulk market before the end of next year. As a general comment on the outlook of the bulk carrier industry, we agreed with Gibson's in their summer re-forecast we expected rates to stabilize shortly and return to more fundamental supply and demand principles. However, we consider a return to the levels seen in September and October a bit unlikely. Short-term imbalances triggered by weather or pandemic-related events could bring about the sudden hike in time charter rates. Fundamentally though, tonnage to cargo supply appears to be more favorable for Capes than it has been for several years now. Low fleet growth over the next two years will only accelerate the trend further. As much as environmentally, this might sound like an unwelcome development, strong demand for coal should bring healthy returns for Capesize owners for the remainder of this year into 2022. The trend will be supported by the strength in the dry bulk sector as a whole. I will now pass the call to our CEO again, A - Semiramis Paliou for the summary of the highlights of our Company's strategy. Thank you.
Semiramis Paliou : Thank you, Stacey. So, before we move on to this question-and-answer session, I would like to sum up by pointing out the following. We are taking advantage of the strong markets and have continued strengthening our balance sheet that we believe will enable seamless continuous operations of our Company. Our low cash flow break even points in conjunction with a high rate resulted enough generating positive cash flows that we consider sustainable for the medium-term. As such, we have proceeded with a dividend initiation and we will closely monitor our cash flow generation ability when deciding of paying future dividend. In addition, we find ourselves in the fortunate position that market conditions are such that we could potentially allow for fleet growth and renewal. Lastly, we remain committed in our disciplined and balanced strategy that should continue to allow us to generate shareholder value throughout the various market cycle. Now, I turn over to the Operator to commence the Q&A session.
Operator: Thank you. We'll now be conducting a question-and-answer session. If you'd like to be placed in the question queue, . One moment please, while we pool for questions. Our first question today is coming from Randy Giveans, from Jefferies. Your line is now live.
Randy Giveans : Howdy team Diana, how it's going?
Semiramis Paliou : Hi Randy.
Ioannis Zafirakis: Hi Randy.
Randy Giveans : Hey, so I guess starting here with some of the return of capital to shareholders, if you can give a little more color commentary on why you decided to spin off the 3 older vessels and instead of kind of what you've done in the past, right? Selling them and in tendering for shares. And then secondly, on the dividend, right? Great to see the dividend back at Diana. How did you come up with that $0.10 a share number?
Ioannis Zafirakis: Hi, Randy. This is Ioannis the reason why -- the reason why we decided to do it that way and it has to do with the following reasons. First of all, we -- the more -- we made said -- we explain why we are considering these to be the right period to initiate the dividend. We see the fundamentals being there and the ability of the Company to have a dividend in a sustainable manner. Now, instead of the sending the vessels and paying big dividend for all the period of people were expecting Diana to pay, we thought it was a better idea, instead of paying in cash to pay it in kind and also, satisfy all of these investors that they wanted Diana not to get the rid of the older vessels and tried to be a little bit more speculative on the way they charter their vessels. So, what we said internally let's create another Company and try to satisfy a completely separate Company not related to Diana and tried to satisfy all of these voices, and all these shareholders. And even you as analysts that sometimes you are considering Diana shipping and being very considerate on, but even the way of doing business. So, and the thinking process behind Ocean Paliou was to create another Company with the same kind of management team that, you know, as by now, and we are very experienced and to create something sexier, if I can call it like this. For those people that they don't want to participate in this kind of play. They are free to sell their shares and take dividends that they have been waiting for a long time to be produced. On the other hand, we wanted to make sure that people understand that this is not in the one of dividend payment and this is why we introduced the $0.10. $0.10 cents mean $9 million per quarter. Of course, we have to decide how much we're going to pay in the next quarter, but you can see from the free cash flow of ours that this is a very manageable level and very manageable dividend to keep paying for the quarters to come. I don't know whether that answers your question, but that's the way we have thought about it and we think that it's a good idea. And we -- you are used to hear good ideas from us
Randy Giveans : Every day I do. So, okay. That's fair. That is fair. And I guess secondly, kind of looking at your chartering business and strategy, following the recent drop in in spot rates and the FFA curve. How has that impacted the time charter market, what's the availability for longer-term time charters, and I guess more strategically now that rates have softened very more likely to operate in the spot market or maybe signed short-term charters instead of locking away for longer duration?
Ioannis Zafirakis: No, you know -- when -- we don't take decisions based on what is happening in the market, but we have to continue shedding strategy and you will see us fixing either for a year or 2 years, or even a bit longer than these, we have to keep the gauging period the way we are today as we speak, we have a slide that we can show you. Today as we speak the evidence period of charter one year. We intend to keep it at lease so much and then even increases without worrying about what the rate is. If it is $19,000 or $20,000 or $22,000 or $17,000, our strategy, you know very well, we are not coward to see and say, this is too much or too weak. And you saw us recently before the drop. We might get the recent drop that we fixed a vessel for $22,000, and everyone was saying for 2 years and for a year, a year and a half year. And everyone was saying to us, what did you do? The market was peaking up. It works both ways. We think that our strategy is the most proven one and at the end of the day, we are happy as I keep saying with the average of the market that we have managed to have since 2005.
Randy Giveans : Got it. Yeah, and that's there. Good deal. Well, that's my 2 questions. Thank you so much.
Semiramis Paliou : Thank you, Randy.
Operator: Our next question today is coming from Ben Nolan from Stifel. Your line is now live.
Ben Nolan : So, I wanted to go back to the OceanPal idea and just in general, am curious, one of the things that stands out to me is that these are generally older less expensive assets ultimately this is going to be very small Company. And relative to the cost of filing costs and G&A and all of those kinds of things. It seems like it might be somewhat inefficient to have it as sustained alone vehicle. And how do you think about that?
Anastasios Margaronis : Well, just as -- I mean, that -- your points are actually one, again has mentioned one of the reasons why we create that the Company. I think having those older assets, having them age and having a strategy which is period minded produced some problems, obviously we weren't due to target as Janice said, for a year, 2 years, and then those older vessels created -- were more challenging in order to accomplish that. Now putting them in a structure where it's more spot oriented, especially when they're un -levered, this vessel they're cash-cows, they have a useful life, their well-maintained. They're productive for the time being, and obviously we didn't make this Company to do remain at 3 vessels we're going to look for opportunities to that Company independently. But for the time being, we want to provide -- rather than selling the vessels, we want to provide the opportunity. We view it as an opportune time for those vessels to continue trading, creating and providing positive cash flows. And then our shareholders enjoying the upside from that -- on the OceanPal level.
Ben Nolan : Okay. Well -- or maybe another way to think about it is why only 3? Obviously, they're the oldest, but there's the next oldest behind that. Just trying to think through getting something that has some level of critical mass. I mean, it's subscale when you --
Anastasios Margaronis : I think if you've probably seen in the filing that we've carved out also another 6 of our oldest vessels that potentially could go down to -- It has a right of first refusal, obviously, once -- that doesn't mean that we've as a Diana we've decided that we're going to dispose of them right now. But if we, do you were going to give that a market valuation to our client, studies an inventory of both potential assets that could go in that Company. But at the same time, there is also as a Company could independently go out and purchase additional assets from the market, which is going to have a different strategy maybe it's going to cater to different investors shifts and we're going to try to take advantage of that as well to grow the Company in parallel.
Ioannis Zafirakis: Ben, we are here talking about Diana Shipping Inc. And the point about Diana Shipping Inc is not is going to do. The point about Diana Shipping Inc, is their ability of the Company to give a very nice dividend to our shareholders in the form of costs or in the form of assets. And in the form of shares. So basically, what the Board of Directors of Diana Shipping Inc decided to do is to show to our shareholders that this Company has the ability to pay dividend on a quarterly basis, but also sometimes if used some shares -- give them some shares of other companies that we're not going to be related and they can do whatever they want with that. That ability and that what we have created. Of course, this is their prerogative also in part to decide to buy and pay in kind some of our older assets. But nevertheless, our shareholders should see as we speak, what the dividend capacity in one form or the other is of Diana Shipping Inc. And whatever is going to do for another Company to worry about and for another Company of you to analyze. Hopefully you will be analyzing what imbalance there. Our sand file is going to have their own way of doing business improve fantastic as well as we do
Ben Nolan : Okay. And then my second question is very end of the prepared remarks, there were some comments about fleet growth and I know that you guys are sort of take a position that the market is efficient. And so, you can't really -- don't want to overthink timing the acquisition of assets and that sort of thing, that said, both new building prices and second-hand prices are up pretty substantially in the last 6 months or so. When you talk about growth, is that something that you think about is being eminent or just sort of the Company has the ability to grow should an opportunity arise.
Ioannis Zafirakis: Yes. We have said in the past, we will not like the idea of expanding the fleet that the upper part of the cycle. But from the moment, we can make sure that we have the necessary equity and capital aside to do so. We may do something either by raising equity and buying more assets. But nevertheless, if you were to see us buying assets and modernizing the fleet, that would be in a very careful manner with a long-term employment that justify the increased prices that you will explain. The modernization can happen also by getting rid of the older tonnage and also definitely can happen in the next rebound of the markets that we explained we expect to see by issuing shares and buying some assets with long-term employment than they're making the dividend capacity of Company even stronger, being dividends per-share basis for our sales.
Ben Nolan : Would you look at all ordering.
Ioannis Zafirakis: Ordering is something that is not preferable to us and the reason is the time for the delivery of the vessel. Usually when you order a vessel, it takes around 2 years to get the delivery and waiting 2 years and see what the market is going to be at that time is there a risk that we don't want to take and we don't take. If we could fix the vessel forward -- if we would fix the vessel forward, of course, that would have been in an option but fixing forward takes a big discount. So, we prefer the resale and do very modern vessels rather than anything else. Okay.
Ben Nolan : Alright. That does it for me. Appreciate it. Thank you.
Ioannis Zafirakis: You're welcome.
Semiramis Paliou : Thank you.
Operator: Thanks, guys. . Our next question is coming from Magnus Fyhr from H.C. Wainwright. Your line is now live.
Magnus Fyhr: Good afternoon, gentleman. And I just had a couple of questions on follow-up on the chartering strategy. You mentioned that it hasn't really changed, but with the volatility in the market, would you comment a little bit if anything has changed among your clients with rates sound. I would think that the appetite has declined a little bit or do you think still there's opportunities to do attractive charters near-term?
Anastasios Margaronis : I think in terms of rates, yes. As Ioannis mentioned earlier, they have declined just to give you an indication, FFA rates on average portfolio for this quarter and for 2022, they're probably down by about 20% this will be about 2-3 weeks ago. But that being said, the opportunities are there. I mean, albeit that lower numbers. So, for us, as Ioannis mentioned, doesn't really change much things. Obviously, we'd rather be fixing at higher than the low numbers. But nevertheless, I think the presentation included the FFA rates that we mentioned, be as the reduced rates. And even with those rates, even continuing with our strategy, our free cash flow generation is a very healthy one supporting operations, supporting potential dividends, etc.
Ioannis Zafirakis: Magnus you know very well since 2005 that we went public and we are disciplined enough not to get influenced about what is happening around us. And we keep saying that we are a shipping Company on the rise and we always reach the destination that we want to get into. So, we do not deviate from our strategy in the disciplined way of doing business.
Magnus Fyhr: Okay. That's good to hear. Just a follow-up question on -- looking at the OpEx, just the thing coming down here. You've been selling assets, but also your GNA has been coming down. Can you comment that all if you're seeing any easing in cruising cost it COVID-related or is that something that may increase or you think is going to stay the same going forward?
Anastasios Margaronis : Unfortunately, I think we content that we have reduced, let’s say, average OPEX on a daily basis, even though the numbers, the line item that you just mentioned, the credit costs have gone up. There are inflationary pressures, including even without the COVID. And just because of COVID, we have, we've seen the crude changes, the traveling and the divesting some times to get them done. All the COVID related issues obviously, they have added additional expenses on that line item. We hope that starting in 2022, we're going to see those excess expenses come down, which means that we should be able to see reduced caution in that category. In a nutshell -- obviously, we live in an inflationary environment that's probably going to affect all other line items. But if we are focusing on both OpEx and G&A and then our focus is to keep them as low as possible without really sacrificing the quality of our operations. And the -- basically, the safety of our seafarers.
Magnus Fyhr: Very good. That's all I had. Thank you
Ioannis Zafirakis: Magnus if I may say the last thing because personally, I want to make sure that everybody understood that during this call that the message is that Diana Shipping Inc, we feel that we have entered a period where the yields that we can provide to our shareholders can be substantial. This is the message we want to pass across, and it can be substantiated in the form of cash or assets
Magnus Fyhr: Alright, thank you.
Ioannis Zafirakis: You’re welcome.
Semiramis Paliou : Thank you.
Operator: Thank you. We've reached end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.
Semiramis Paliou : Thank you all for joining us today. We look forward to talking to you again on our next financial earnings call. Thank you very much.
Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.
