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spk07: Greetings and welcome to the Diana Shipping Incorporated's 2021 first quarter earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ed Nebb of Investor Relations. Thank you. You may begin.
spk05: Thank you, Daryl, and thanks to all of you for joining us today for the Diana Shipping Inc. first quarter conference call. The members of the management team who are with us today include Ms. Semiramis Paliu, Chief Executive Officer, Mr. Anastasios Margaronis, President, Mr. Yanis Zafirakis, Chief Financial Officer, Chief Strategy Officer, Treasurer, and Secretary, Mr. Eleftherios Chief Operating Officer, and Ms. Maria Dede, Chief Accounting Officer. Before management begins the remarks and presentation, let me briefly summarize the Safe Harbor Notice, which you can see in its entirety in today's news release and in the deck that has been provided. Certain statements made during this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act, and the forward-looking statements are based on assumptions, expectations, projections, and beliefs as to future events that may or may not prove to be accurate, and for a description of the risks, uncertainties, and other factors that may cause future results to differ materially from the forward-looking statements, please refer to the company's filings with the SEC. And now, with that, it is my pleasure to turn the call over to Ms. Semiramis Paliu, Chief Executive Officer.
spk01: Thank you, Ed. Good morning, ladies and gentlemen, and welcome to Diana Shipping Inc.' 's first quarter 2021 earnings call. My name is Emilia Mipalios, the company's CEO, and it is an honor and a privilege to be presenting to you today. As you have probably noticed already, we have altered somewhat the format of our earnings call by adding a slide presentation to accompany our presentation. As a result, We will reference the various slides as we go along, and we hope that you will be able to seamlessly follow. Turning to slide four, we thought that since this is the first time that we are presenting via slide presentation, it will be beneficial to provide a brief company summary. Diana Shipping Inc. is a pure dry bulk company that has been listed continuously on the New York Stock Exchange since 2005. We currently have 37 vessels in the water with a carrying capacity of approximately 4.7 million deadweight tons. We have focused on the largest dry bulk vessels with our fleet ranging in sizes from Panamax vessels to Newcastle maxes. As a result, we mainly carry major bulk cargoes and for 2020 we transported 35.2 million metric tons with iron ore being the main cargo we carried at 26.2 million metric tons. The majority of our fleet, 31 vessels, is managed in-house by Diana Shipping Services, and six vessels are managed by a 50-50 joint venture with Williamson Ship Management. We currently employ over 900 people at sea and the shore. Moving on to slide five, I will go over the highlights of the first quarter and recent developments. This has been a very interesting quarter characterized by the rapidly improving market conditions that haven't been seen for years. The anticipated Chinese lull expected between the months of January and February 2021 did not materialize. On the contrary, there was strong demand for raw material. The fiscal policies to stimulate global economic growth, the frenzy to refill depleted inventories, the ban on Australian coal imports to China, and the limited supply of new ships all seem to support the higher prices for commodities and transportation. More specifically for our company, within the first quarter, we implemented leadership changes to ensure the continued sound strategic management of the company. Our new management team is eager to continue on the path set by our founder and chairman, Mr. Simon Palios, following the guidelines and principles adopted at inception. At the same time, we will endeavor to prepare, navigate, and expand the company successfully in this area characterized by rapid and radical technological changes and innovation. Also within the quarter, We repurchased via tender offer 6 million of our common shares at a price of 2.5 US dollars per share. We view the timing as very opportune, as based on the market developments over the last few months, this move has proved to be immediately accretive to our shareholders. The market strength experienced during the course of last quarter, which resulted in increased asset values, allowed us to reach an agreement to sell one of our older vessels, the Voltovessel Nayak, at an attractive price of US$11.25 million gross. We are also pleased that during last quarter, Diana Shipping Services signed an agreement with American Bureau of Shipping to implement the ABS Environmental Monitor Digital Sustainability solution across 31 of the company's vessels managed by DSS. This is a cloud-based application that enables us to monitor and track overall fleet or vessel-specific environmental data in such categories as emissions, waste, and consumables. We believe that the data analysis and reporting features of this application will support more sustainable vessel operations for our fleet while helping us enhance environmental performance. Somewhat related to the above issue is the new 91 million sustainability-linked loan that we signed earlier this week. Although the primary reason for entering into this loan was to refinance earlier loan facilities maturing in 2022, we are particularly pleased that we have been able to work together with ABN to introduce a sustainability element into the loan. This displays even further our commitment in being proactive in this specific field. We are further fostering our long-term commitment to sustainability by establishing a sustainability committee at board level. Lastly, we have continued over the last quarter to tackle successfully the COVID-19 pandemic related operating challenges, such as crew changes and crew repatriations. procurement of provisions and spares, and handling scheduled and unscheduled repairs. I would like to take a moment to highlight the most important short-term challenge faced today in the shipping industry during the pandemic. That is the difficulties to repatriate our crew. Restrictions placed by ports, borders, local and international authorities Travel disruptions and suspension of flights have made it extremely challenging for our crew to return home and to their families. The lack of cooperation by a number of charterers in facilitating this issue is noteworthy. We consider the crew change and repatriation issue extremely important, not only due to the human element factor. It affects the safety of our crew. the safety of the ship and the cargo, and could potentially affect the global supply chain of goods. Regardless, the shipping industry has shown once again resilience and adaptability to unforeseen and unprecedented events. Turning to the financial highlights of the first quarter of 2021 on slide 6, we find ourselves as of March 31st, 2021, with a cash and cash equivalents position of $86 million, including restricted cash, as against $82.9 million as of December 31st, 2020. Our debt, net of deferred financial costs, stood at $411.4 million at the end of the first quarter of 2021, as against $420.3 million at the end of 2020. Our time charter revenues for the first quarter of 2021 amounted to $41.1 million, as against $43.8 million for the first quarter of 2020. Lastly, our earnings per share for the first quarter of 2021 came in at a loss per share of 3 cents, versus a loss of 1.21 US dollars per share for the same period of 2020. It should be noted that last year's figures included an impairment loss taken at the time. Our CFO, Ioannis Zafirakis, will go over these numbers in more detail further on in the presentation. Moving on to slide seven, we find a summary of all of our year-to-date chartering activities. consistent with our conservative and disciplined chartering strategy. We have taken advantage of the improving chartering market and have secured attractive time charters for 13 vessels of our fleet. More specifically, we charted seven Panamax to post-Panamax vessels at a weighted average daily rate of $16,571 for a remaining average period of 169 days per vessel. We have also charted six Cape-sized to Newcastle max vessels at a weighted average rate of $18,896 per day for a remaining average period of 244 days. We anticipate that we will continue chartering our vessels that will be re-delivered to us in a similar way, by staggering maturities, locking in cash flows and positioning us in a manner that will allow us to continue to participate in a potentially improving market in a balanced way. Slide eight provides an indication of the kind of cash flows that can be secured by our vessels that will be re-delivered from their current charters within the remaining of 2021. As a base, We use the already fixed time charter revenues of 72.1 million US dollars, which amount to a daily average contracted time charter rate of 16,136 US dollars per vessel. If we use the current FFA rates for fixing the vessels opening up within the remainder of 2021 for a one year period, we expect to generate an additional 83.5 million US dollars of time charter revenues that equate to an average fixed time charter daily rate of $21,899 per vessel. When we compare the sum of the fixed and unfixed revenues as against our break-even levels, we find ourselves with the possibility of generating approximately $53.3 million of free cash flow, equating to an average free cash flow margin of $6,438 per vessel per day over the remainder of the year. Again, this is presented in order to display the free cash flow generating capacity of our fleet in the current market. It should be noted that the actual results will be dependent on how the market performs for the rest of the year and on how exactly we fix our vessels in this period of time. I will turn over the call now to Ioannis to go over our first quarter 2021 financials in more detail.
spk03: Thank you, Semiramis. During that quarter, we recorded, as we have already shown to you, a net loss attributed to common stockholders of $2.7 million. That's 0.03 per share. As you can see in the slide, during the first quarter, three vessels that we had agreed to sell in 2022 were delivered to their buyers and we agreed to sell one additional vessel, the NIAS, expected to be delivered to the buyer later than July 30th, 2021. Following the sale of the vessels in 2020 and those completed in the quarter, ownership days were down to $3,434 compared to $3,801 for the same quarter in 2020. And this is why you see the lower revenues at $41.1 million compared to $43.8 million for the first quarter of 2020. also decreased compared to last year to $1.8 million compared to $3.7 million for the same quarter. And the decrease in voyage expenses was, hold on a second. The decrease in volume expenses was not only due to decreased commission on lower revenues, but also due to a gain of $0.5 million in bankers compared to a loss of $1.3 million in the same quarter. During the discussed quarter, our versus operating expenses decreased to $18.6 million compared 21.3, mainly due to the decrease in the number of vessels in the fleet, daily operating expenses. Also decreased to $5.4,000 compared to 5.6 for the same quarter in 2020, mainly due to decreased spares and repairs and other operating expenses. This decrease was offset by increased crew costs, insurance and supply and supplies of stores and provisions. Our general and administrative expenses decreased to $6.7 million compared to $9.6 million for the same quarter last year, mainly to decrease payroll costs. amounted to 4.6 compared to $6.4 million in the same quarter of 2020. This decrease was attributable to the increased interest expense due to decreased interest rates and decreased average debt compared to the same quarter of 2020. Looking at our balance sheet, you can see that our cash stood at 86 million and our total debt net of deferred costs stood at 411 million. That brought our net debt to only 327.8 million dollars. We have another slide for the selected financial and other data for you to look at. I think most of the things there are something that we have already said previously. But again, I want to mention the time charter equivalent and time charter rate that we achieved being $11,433 compared to $11,377 and the lower operating expenses that we had for this quarter. It is the first time that we are trying to give you an idea about our cash flow break event and you can see that based on the results of March 31st and based on the expected drive dockings that we are going to have for the remaining of the year, our cash flow break event stands at $12,350 approximately. which gives you a very good idea on the ability of the company, as our CEO just mentioned earlier, to generate free cash flow for the remaining of the year. I will now give the floor to Stacey Margaronis to discuss the drive bulk market outlook, the way we see things.
spk02: Thank you, Yanni. We definitely need to start our short presentation on the current state and future prospects of the dry bulk carrier market by looking at the Baltic Exchange dry bulk indices. The slide that we have here shows the last five-year levels of the above-mentioned indices, as well as the 12-month time chart rate for CAPEs and Panamaxes. We can look at some more detailed statistics to get a better idea of short- and long-term trends. On January 4th, which was the first trading day of 2021, the Baltic Dry Index stood at 1,374, and by May 19th, it had reached 2,801. This compares with an all-time high of 11,793 reached on May 20th, 2008, which was nearly exactly 13 years ago to the day. The Baltic Panamax Index started this year at 1,364, and closed on May 19th at 2,857. The all-time high for this index was 11,713, reached on October 30th, 2007. The Baltic Cape Index was at 2008 on January 4th and closed at 3,785 on May 19th. This compares with an all-time high for this index of 19,687, reached on June 5th, 2008, which once again was 13 years ago. Here we can add the Cape 5 time chart route average, which on January 4th stood at 16,656 per day, and on May 19th had reached 31,392 per day. The Panamax 5 time chart routes averaged at the beginning of the year at 12,272 per day, and on May 19th stood at 25,709 per day. For comparison purposes, it is worth noting that the all-time high for the slightly differently calculated Panamax 4TC routes was 94,977 in October 2007. And for the CAPEs, the 4TC average was 233,988 in June 2008. On the next slide, we're going to look at the key demand drivers. The macroeconomic statistics and how the world's GDP has been moving during the past 20 years or so can be looked at here compared with ton-mile growth of major bulk commodities. These are iron ore, grains and soybeans, coal, both thermal and coking, and we will also look at the combined volumes of minor bulk cargo such as sulfur, salt, cement, sugar, anthracite, alumina, fertilizers, bauxite, and others. According to the IMF and the OECD, world GDP is expected to grow by 6% this year, following a drop of 3.3% in 2020 due to the pandemic. This year, China is expected to grow by 8.4% after growing by 2.3% in 2020. During the first quarter of this year, China's gross domestic product grew by an impressive 18.3% year-on-year. The U.S. economy is expected to grow by 6.4% in 2021, while the euro area is anticipated to grow by 4.4% this year. According to Clarkson's overall global seaborne dry bulk trade is projected to grow by 4% in ton miles in 2021, against an underlying fleet growth of 2.8%, which we will discuss later on. Within this trade sector, iron ore shipments are currently expected to grow by about 3%, in 2021 compared to 2020 levels and reach 1.55 billion pounds. Small growth of a further 1% is expected for 2022. Clarkson's report that Chinese government regulations on emissions might lead to steel output curves later this year. Iron ore demand might be affected by these regulations, especially during the second half of this year. Global seaborne coking coal is currently projected by Clarkson to grow by around 6% this year. This will follow a 7% decline in 2020. Volumes in 2021 are expected to reach 266 million tonnes and 274 million tonnes in 2022, which will be a further 4% increase. At this point, it is worth pointing out that China's recent ban of imports of coal from Australia has led to an effective collapse of imports to under 1 million tons in January of this year. The shortfall has been made up by imports by land from Russia and Mongolia, as well as by increases in domestic production. Komodo research reported that Mongolia imports of coking coal have been coming under pressure due to the pandemic. This will most likely result in China needing to import more coking coal from much further seaborne-based exporters, including Canada and the United States. As regards thermal coal, Croxon's report that after a 10% decline in 2020 due to the effects of the COVID-19 pandemic on global trade, seaborne steam coal trade is currently expected to grow by about 5% this year and reach 965 million tons. For 2022, Croxon's are forecasting a small increase of another 1% on volumes. To place the Chinese coal demand in perspective, It is worth noting that, according to Comodo research, China recently announced that it will only start materially reducing coal consumption in 2026. After growing by 7% to reach 512 million tons in 2020, global seaborne grain trade is projected to grow by about 3% this year and another 3% in 2022. In this trade category, we need to monitor soybean shipments, which have been driving the grain market statistics for a while now. During the first quarter of this year, China imported 19.1 million tons of soybeans, which was up nearly 18% year on year. As much as 94% of this volume was shipped from the United States and 6% from Brazil. After a 2% decline in full year 2020, global seabourn mine of bulk trade is projected by Clarkson's to grow there around 4% this year and a further 3% in 2022. What is interesting to note in this slide is that according to Clarkson's, in spite of the sharp drop in global GDP growth in 2020, volumes of all bulk cargoes witnessed on average a very small drop in the rate of growth, which was still slightly positive, about half percent in ton miles, and just 1.6% negative in pure volumes during 2020. Next slide, we look at supply. On May 1st, 2021, the Cape Size Order Book stood at 20.6 million deadweight, representing about 5.6% of the global trading fleet. From these ships, half are scheduled for delivery this year, and 9.1 million deadweight are expected to be delivered in 2022. The Panamax Order Book consisted of 174 vessels with a combined deadweight of 14.5 million deadweight. This is the equivalent of 6.3% of the fleet by deadweight. From these new buildings, 6.5 million will be delivered this year and an expected 5.8 million in 2022. On an overall basis, on May 1st this year, there were 51.5 million deadweight worth of bulk carriers on order, representing 5.6% of the total global trading fleet. According to the head research of Simpson, Spence and Young, this is the lowest percentage figure seen in over 20 years. According to Clarkson, and as mentioned earlier on, the trading fleet is expected to grow by only 2.8% this year, with deliveries dropping to 35.4 million deadweight, down 28% year-on-year in deadweight terms. According to Banquero Costa and other shipping analysts, the trading fleet will grow by a mere 1% by the end of 2022 compared to this year. We will briefly mention certain conservative assumptions which have been made on scrapping, losses, and congestion for this year and next, which have been incorporated in the calculation of the fleet growth estimates mentioned above. On scrapping, Gloxon estimates that last year bulk carriers of about 15.3 million deadweight were scrapped. According to Banquero Costa, so far this year, only 4.69 million deadweight of bulk carriers have been scrapped. Around 11% of the trading fleet is over 20 years old, and a further 11%, is between 15 and 19 years old. At the other end of the age spectrum, 16% of the dry bulk fleet is less than five years old. At the moment, the situation in India remains extremely difficult. Rising COVID-19 cases are leading to the diversion of oxygen from scrapping facilities to hospitals. Consequently, recycling activity in that country has effectively ceased. Similar pressures are seen in Pakistan. Pancaro and Costa are optimistic on demolition statistics and estimate that during 2021, about 165 dry bulk vessels might be scrapped for a total of 14.1 million dead weight. For 2022 and 23, they predict even stronger demolition statistics due to the age profile structure and environmental regulations. From past experience, however, we believe that as we got scrapping for the rest of this year and beyond, Much will depend on the future course of the freight market and also sentiment. Congestion. To counterbalance this positive projection, Bremer raised the following warning flag. As queues in Brazil loading ports continue to fall and congestion is reduced in its usual seasonal pattern, congestion will be halved by July. As this happens and more ships open up in the Far East after discharging, we could see a temporary cooling off effect on the current strong freight market. As regards the outlook now, even though due to time restrictions we have not analyzed steel production in this presentation, it is worthwhile noting that according to Commodore research, the combination of steel and iron ore demand model for both China and the world at large remains one of several bullish elements poised to continue to support the dry bulk market going forward. How Robinson have analyzed the above-mentioned projections on GDP growth. They have observed that since 2009 financial recession, growth in dry bulk cargo shipments has outperformed growth in international trade as a whole. They present evidence showing that from 2005 to 2021, dry bulk cargo shipments have grown almost twice as fast as GDP growth. This is also confirmed in the key demand driver slide shown earlier on. The simulation results coming from their dry bulk model show a 6.7% increase in cargo volumes for 2021, followed by a further increase of 4.3% in 2022. If these projections are realized, the dry bulk market should be formed even better than the statistics presented earlier on would indicate.
spk01: Thank you, Stacey. Before we open it up to Q&A session, I would like to sum up as follows. As we have done in the first quarter, we will continue taking advantage of the current positive market fundamentals in striving to enhance shareholder value. We will retain our focus on generating positive free cash flow while at the same time strengthening our balance sheet. We are also maintaining our vigilance and keeping abreast of industry developments allowing us to take informed and educated decisions as the shipping industry evolves. And last but not least, we remain committed to our disciplined operational and financial strategy that we have implemented since inception, which has allowed us to navigate successfully through the various market cycles and now permits us to look into the future with optimism. Now I turn it over to the operator to commence the Q&A session.
spk07: Thank you. We will now be conducting the 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 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Randy Gibbons with Jefferies. Please proceed with your questions.
spk08: Howdy, team. Diana, how's it going?
spk01: Hi, Randy.
spk08: Hi, Randy.
spk01: We're doing well.
spk09: Excellent. Great. Yes. First off, so nice to see the slide deck. Certainly a great addition to the earnings call, so kudos on that. Now, looking at the business, obviously you've done a great job with asset sales, the tender offer. buying at $2.50. Share price is over $4 now. Share price has doubled to date. Congrats on that. So with the market outlook being so attractive, I guess what are your plans for your fleet in terms of sales and acquisitions? And then what are your plans for cash in terms of either further repurchases of shares or maybe a possible dividend later this year?
spk03: I'll take that question, and this is Yanis, Randy. You know that we have always tried to have a lot of options ahead of us, and this is exactly the absolute time that we can prove so. We have to consider the various options that we have, as you mentioned, either buying other vessels, buying back our stock, or paying a dividend. I can tell you that with the track record that we have and by the fact that everybody knows how we think, at the moment in looking at the current market environment, that seems like Diana could have the ability of paying a dividend in a sustainable manner for the next quarter or so. This is something that we will have to consider seriously, but we have not taken any decision to that effect as we speak. Of course, if we keep trading below NAV, you show the benefit of what we have done, and we may continue doing so as well. Buying other vessels is something that you know that we are doing, but we are doing after after trading above NAV and raising equity at above NAV, giving back to our shareholders value by doing that. So the answer to your question is that we don't have an answer. But what we have though is the ability to choose the right thing at the right time And you know that we always choose the right thing to do.
spk09: Agreed. Yeah, I think you certainly had that reputation. So I was just trying to get some insight into what would Diana do next.
spk03: Nice try.
spk09: All right. All right. Well, yeah, that's what I get paid for. Anyway, second question. In terms of chartering, let's talk about that. Obviously, the market has improved as well. So there's two ways to do this. Do you switch to more short-term charters or even spot? Or on the other hand, is there any new interest from charters for 18-month or even two-year time charters? Or is pretty much everything as is, six to 14 months, and just continue to roll those?
spk04: Hi, Randy. This is Lefteris. I think, Diana, we have been disciplined since early on, and basically we have proven that no matter how the market behaves, we will be disciplined in our approach and in how we charter our vessels, especially if nothing really changes, especially if we're not making acquisitions at specific numbers where you would need to go and charter out the vessels a little bit longer in order to minimize the risk of those acquisitions. So for the vessels that we have in our fleet right now, I think we will continue charting in the same manner, you know, start getting maturities, with maturities raising anywhere from six months. Sometimes you have to reposition the vessels. Sometimes we have an upcoming dry dock, that basically would mean that it's probably better for us to charter the vessel with a shorter duration in order to reposition it for the dry dock, or we could go even longer for a year or a little bit over a year. Now, going back to your question of if charters are there for longer periods, I think charters are always there for longer periods, and the question is if the owner's like the numbers that the charters are offering. I mean, we are entering into territory now. I mean, not everyone will be taking, you know, the two- and three-year period deals because, you know, some people are a little bit more aggressive than us, and they will always opt out of, you know, accepting a lower rate for a two- or three-year period rather than securing what sometimes it's a very attractive rate if you look at things historically going forward. I think... We haven't reached that level yet, but I think we might be getting close where at some point in time, not in the very far future, we might see charters offering, based on the FFA curve, obviously they're not doing it based on anything else, offering rates that could be attractive to lock in for the longer duration. But for the time being, the way we are thinking of things, it's exactly the way we presented it in our slide that Semiramis went over, where we are on average going to be chartering vessels somewhere at the region of one year, and then that obviously will provide us with excess cash flow as we speak.
spk09: Perfect. Good deal. Well, I won't keep asking questions, so I'll turn it over, but also I noticed the sustainability link loan. Congrats on that. All you're doing on the ESG front has not gone unnoticed, so keep up the great work. Thank you.
spk01: Thank you. Thank you.
spk07: Thank you. Our next question has come from the line of Greg Lewis with BTIG. Please proceed with your questions.
spk06: Yeah, hi. Thank you, and good afternoon, everybody. You know, I was hoping to kind of dig in a little bit with some questions around asset prices, and clearly asset prices are going higher. Giannis, you mentioned, you know, the fleet trading at a discount to NAV. You know, just kind of curious, you know, if you could kind of parcel out. There's been a nice runoff in asset prices. Obviously, everyone is watching steel prices go higher. You know, that in and of itself is probably helping lift asset prices. But is there any way to think about the strength balancing, the strength in the market and those increases in asset prices or increases in steel and maybe some of these inflationary environment in terms of, you know, the percentages or how you're thinking about those impacting and pushing asset prices higher.
spk03: You know, Greg, that there is always a lag between the charter rates going up and the values following. The sentiment plays a big part in that and also how people think that this upturn is going to be sustainable. We have seen an increase in the price, but certainly I think it's fair for someone to believe that we will see further increases in the charter rates and also as regards the prices of the vessels. Talking about the NAV. I would like to point out something that you, of course, the analysts can easily understand, but it's good for the sake of all the people that are listening in or reading the transcript to explain how well and what a good decision has been in the last two years to keep buying back our stock at the discount to NAV. If you were to make a very quick calculation on a... NAV on a per share basis, if you run the scenario that we have kept those vessels instead of selling them and not buying back our shares, and you try to find the NAV on a per share basis today, you would easily notice that it would have been lower by easily 30 cents in what you have in your calculations. So basically what we have done is that up to now we created value by taking advantage of the inefficiencies in the capital market for our shareholders. And that has also taken into account the increase in the prices of the vessels and the increase in our NAV. We keep saying that every time that we buy back our stock at a discount to NAV, we are investing more money in our vessels. So we are very happy with what we have done up to now. I think that there will be a point where we will have higher charter rates. Our ability to pay a dividend is going to be clear and there. And then we are going to be in a position to be trading at premiums to NAV. And again, you will see us buying at that time more versus with longer employment Strengthening the balance sheet is something that we always do, and that has proven to be the right recipe in order to make nice money in the shipping industry, risk-reward wise.
spk06: Yeah, no, absolutely. You know, I have a couple questions, but I'll reach out to you offline. Hey, thanks for the time, everybody.
spk02: Thank you. Thank you.
spk07: Thank you. Our next question comes from the line of Ben Nolan with Stifel. Please proceed with your questions.
spk10: Yeah, thanks. Good afternoon to all of you. I wanted to, well, I have a couple of things. Number one is, you know, obviously, as has been discussed, the order book is pretty low. But at the same time, we've seen increased freight rates. The secondhand asset values have appreciated significantly. I know it's not really in the Diana DNA, really, to be out ordering ships, and you might not want to do that right now anyway. But you guys have your ear to the ground, or certainly all of your neighbors are in the similar business as you are. Have you gotten any sense that there is any cracks in the discipline that we've that we've seen here lately with respect to ordering now that the cash flows are high?
spk04: I think we've seen. I mean, obviously, as rates move higher and higher, we'll see the cracks getting bigger and wider. We've seen some people going out there and ordering vessels. It hasn't really changed the picture that Stacey displayed a little bit earlier. I think a reason for that has been that a lot of orders have been made on the tanker space earlier on last year and more recently in the container space. I mean, we've seen huge orders on the container space in the billions of dollars. So that pretty much gives you an answer of what could potentially come in the dry bulk market if things get very heated. I mean, the container market is very heated and obviously that has led to a lot of ordering. People might say, you know, where are you going to find the orders? Obviously, you know, a lot of premier shipyards might not have any capacity for 2022 and maybe early 2023. But as we've seen in the past, you might see some second or third tier yards offering orders. capacity at that point in time. I mean, fortunately, we haven't seen it yet in our industry, but that doesn't mean that we are not going to see it sometime in the future.
spk03: Okay. Ben, sorry. I just want to ask what Leserich has said, that you know that we do not share the opinion of others that there is lack of yard, lack of financing, stuff like this. When the market is good and the revenues of the vessel justify the investment, you will see the order book coming in.
spk01: Also, Ben, if I could add, the fact that we don't have a clear picture of what the next technological solutions will be regarding fuel is a deterrent in order to put new orders at the moment. I think that is working in our favor at the moment.
spk10: Yeah, absolutely. And I guess And that's been talked about a lot. I guess the question is, at some point, does the concern over the technological changes and what's going to be needed in the future, is that overcome by the fact that the near-term cash flows are simply strong enough to justify the investment? We haven't seen it yet, but I guess, to your point, we could if people are convinced that they can make money. Good. Yeah, so I want to do this. You guys were sort of maybe one of, if maybe not the most, outspoken with respect to not installing scrubbers on your ships. Here we are almost a year and a half later, and for the better part of that time, it has proven to be probably a good idea. Things seem to be stabilized. I was curious, as you guys have consistent, special surveys coming up in dry docking. Any thoughts about maybe now that sort of things are settled a bit in installing scrubbers on your ships, or is there any demand by your charterers to do that?
spk03: We think that we have the opportunity because we have a better use of our free gas flow. And we think that by not investing in scrubbers, We can do a lot of other things, as we tried to explain earlier. I think our shareholders will be more happy seeing a dividend or seeing us buying more vessels or buying back our stock or whatever, rather than trying to play the oil price and invest in scrappers, trying to make some money through that investment. Up to now, our decision has proven to be correct. We keep saying to everybody that installing scrubbers is just an investment, that it is highly dependent on oil prices. This is not what we are here for. We are here to create value for our shareholders doing shipping and taking advantage of the capital market's inefficiencies. And up to now, we have done a good job.
spk10: Right now, I sort of thought that would be your answer. And lastly for me on, on, uh, on capital allocation, you mentioned it earlier about all of your options. I'm curious if you consider, I believe they, uh, the preferreds are callable soon. And at some point that those bonds are callable soon as the cash flows build, uh, any thoughts yet about sort of possibly calling those back or refinancing, uh, any of those things, um, you know, with probably a better cost of capital?
spk03: The preference that they are perpetual, they are perpetual for a reason. And at the moment, we have another option to repay the existing bond, which is maturing in 2023. Knowing as well, and this is why you do the question, is that we always are very proactive as regards to managing our cash flow. and our maturities. So the only thing I can say to you that it is in our radar to see what we may do with maturities in 2023, which is mainly the bond at that time. As you have noticed with the new facility that we did recently, we basically eliminated the maturities even for 2022. If you take into account the fact that there is an option in the Nordia loan to go to 2023 and even 2024. So basically, again, we have created the appropriate environment to have as better cash flow as possible for our shareholders.
spk10: Right. Okay. I appreciate it. That does it for me. I appreciate it. Thanks, guys.
spk07: You're welcome. Thank you. Our next question has come from the line of Omar Nocta with Clarkson Securities. Please proceed with your questions.
spk11: Hi, thank you. Hi, guys. Good afternoon. I just wanted to, you know, follow up on, you know, the previous topic or the main sort of discussion points of, you know, use of capital and your fleet makeup. You know, Yannis, you mentioned wanting to keep us guessing as to what your next moves are. But, you know... You know, over the past several years, you've been trading below NAV and you've sold ships, used the proceeds to buy stock and created value along that way. But you still do trade at a discount to NAV today. And so just wanted to maybe get your perspective. As you see things today, you're at a discount. Asset values have continued to push higher. Do you see Diana at this point continuing to be a seller today? or more just sitting back and collecting cash?
spk03: A seller of vessels, you are asking? Yes. A seller of vessels, it doesn't mean anything until we know what we are going to be doing with the money. So making a thing into cash and then think again, think again, an asset again, It makes no difference. But yes, we think that we have reached the point where there are a lot of things we can do with the vessels, with the older vessels of ours, and that may not be selling them. But I have tried really hard not to... to give you an idea on how we are thinking, but, uh, stay tuned. And, uh, we think that, uh, there are a lot of things we can do with, even with the vessels that we have, the older vessels of ours.
spk11: Okay. That's interesting. So I guess it's, um, I'm going to infer basically from your commentary that for now, the Diana is not interested in selling ships. Um, uh, uh, And I guess that was going to bring me to my, you know, sort of like a follow-up to that, which is, you know, market footprint and critical mass. You had 50 ships a few years ago. You're down to 36 after you sell the NIAS. Do you feel that, you know, with the fleet size of 36 ships, is that enough capacity to still feel very much involved in the game and very relevant in the business? Or could it even be smaller than that and you'd still feel comfortable?
spk04: This is Leferis. Hi, Omar. I think it's, you know, having a fleet of, you know, 35 vessels plus, it's definitely a fleet that has scale. Okay, not the 50 or 60 vessel fleet, but... It's still, you know, you're relevant. We're in the market. We have a very good name. Obviously, you know, we are going back to what Yannis said. Yes, we might be under NAB right now, but, you know, we are chasing it at this point in time with asset values going up on a daily basis. But our plan is to try to change that. And, you know, once we do and if it makes sense, we might look for ways to renew the fleet. But For the time being, you know, we are content with the fleet that we have. I mean, we still have scale. We still have size. We have our relationships, our chartering relationships, our relationships with various vendors and suppliers out there. So, you know, size should not really, I mean, that's my personal view and people might feel different. It should not be the end game. It's not, you know, if you are going to have 60, 70 or 100 vessels, you have to be profitable and you have to be there.
spk03: What is critical is the balance sheet more than the actual size of the flip. And you have seen that in the past. Having a sound balance sheet was a much better thing to have in a full cycle rather than a big flip. You know what I mean. I don't want to mention names.
spk11: It was pretty clear. Yeah, well, thank you and looking forward to seeing what you guys have up your sleeve. I'll leave it there.
spk01: Thank you.
spk07: Thank you. There are no further questions at this time. I would like to turn the call back over to management for any closing comments.
spk01: So thank you for joining us today, and we look forward to talking to you again at our next financial earnings call.
spk07: Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.
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