Diana Shipping Inc.

Hello, and welcome to the Diana Shipping Inc. Third Quarter 2021 Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Ed Nebb, Investor Relations for Diana Shipping. Please go ahead, Ed.

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 attached to today's news release. Certain statements made during this conference call, which are not historical fact, are forward-looking statements as defined by the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections, or beliefs 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'll turn it over now to Semiramis.

Thank you, Ed. Good morning, ladies and gentlemen, and welcome to Diana Shipping Inc.' 's third quarter 2021 earnings call. My name is Samira Mispaliou, 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, we have Mr. Stacey Martogaronis, President of Diana Shipping. We have Mr. Ioannis Zafirakis, CFO and Chief Strategy Officer of Mr. Lefteris Papatrifon, Chief Operating Officer, and Ms. Maria Zeve, 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 two of this presentation. Turning to slide four, 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 Manolia. 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 five, 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 nine-month results since 2012. This strong profitability and positive cash flow generation has enabled us to introduce a cash dividend of 10 cents per share. As we have mentioned in the past, we would only start paying a dividend again when market conditions were such that would allow the dividend to be sustainable for a reasonable period of time. We feel that such conditions are right 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 the creation and subsequent spin-off of OceanPal. OceanPal will acquire three 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 one 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 Security and Exchange Commission. While the consummation of this spin-off has been delayed pending the effectiveness of the ocean pile registration statement filed with the SEC, we anticipate that it will be completed in the next couple of weeks with no changes to the terms that we have previously announced. As previously announced, in June of this year, we successfully issued a five-year, US$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 a price of 4.5 US dollars 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 97% contract coverage and $83.2 million of contracted revenues for 2022 with 27% contract coverage. Yanis 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 six, we find ourselves as of September 30th, 2021, with a cash and cash equivalence position of 146.2 million U.S. dollars, including restricted cash, as against 82.9 million U.S. dollars as of December 31, 2020. Our debt net of deferred financial costs stood at 434.7 million U.S. dollars at the end of the third quarter of 2021, as against 420 US dollars at the end of 2020. Our time charter revenues for the third quarter of 2021 amounted to 57.3 million US dollars as against 42.3 million US dollars for the third quarter of 2020. Lastly, our earnings per share for the third quarter of 2021 came in at 16 cents versus a loss of 17 cents per share for the same period of 2020. Yanis will go over these as well as the nine-month numbers in more detail further on in the presentation. Moving on to slide seven, 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 fleet. More specifically, We charted nine vessels in the Panamax to post-Panamax side at a weighted average daily rate of $25,858, and for a remaining average period of 336 days per vessel. 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 market remaining robust. We have also chartered two Cape-sized vessels at a weighted average rate of US$33,437 per day for a remaining average period of 148 days, an improvement from the US$25,957 we achieved as an average weighted daily rate for the last quarter's Cape-sized fixtures. We intend to continue chartering our vessels that will be re-delivered to us in a similar 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 Yanis to go over the third quarter 2021 financials in more detail.

Thank you, Semiramis, and good morning to all of you. I'm very pleased to be discussing today with you the Diana's operational results for the third quarter and the nine months ended September 30th, 2021. On slide number eight, you can see that during the quarter we recorded an net income attributed to Comor's shareholders of $13.3 million or 0.17 per share, per basic share or 0.16 per diluted share. Our time charter revenues increased from 42.3 million in the third quarter of 2020 to 57.3 million in the third quarter of 2021, such 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. Rivoya's expenses also decreased to only 0.7 million in the quarter compared to 2.9 for the same quarter of 2020, and that is mainly due to a 2.4 million gain from bankers compared to 0.5 million loss we had last year. Our 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 sales and also due to the decreased spares and repairs and other operating expenses. Of course, this decrease was partly offset by increased crew costs, insurances and 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 and finance costs increased in this quarter due to increased average interest rates and increased average debt compared to the same quarter last year, mainly due to our new 125 million bonds. In addition, the company incurred a loss of extinguishment of debt of $0.8 million due to the full repurchase of our 9.5% senior bond. Now, for the nine months ended September 30th, 2021, net income attributed to common stockholders amounted to $11.9 million, or $0.15 per basic share. or 0.14 per diluted share. Time chart 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 reasons we said earlier about the quarter. The voyage expenses decreased in the nine months ended September 30th, 2021 to 4.7 million compared to 10.5 million for the same period of 2020, and this is because of a gain of 3.1 million from bankers compared to 3.5 million loss that we had last year. Investment operating expenses were 56.6 million compared to 63.4 million for 2020. And, of course, again, this is attributed to the less ownership days together with the spares, repairs, and other operating expenses that we managed to decrease. Of course, we had some increased crew costs, insurances, and stores, and provisions. Again, general and administrative expenses decreased to $21.1 million compared to $25.7 million for 2020. And that was mainly due to the accelerated vesting of restricted stock shares of board members in 2020, and also due to the decreased payroll costs and D&O insurance. Interest and finance costs amounted to $15 million compared to $16.9 million last year due to the decreased average debt and interest rates. You see there the difference between the quarter and, in the quarter we had increased interest and finance costs. In the nine months we had a decreased 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 due to the refinancing agreements we entered into during this nine-month period, including the 91 million loan with ABN AMRO, the A375% unsecured senior born of 125 million nominal amount, the repurchase of 9.5% unsecured senior born, 100 million nominal amount of which 92 million were outstanding as of 31st of December 2020 and the refinancing of our loan 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 deferred financing costs to $434.7 million, compared to $420 million as of December 31st, 2020. Moving to some selected financial data, you can see that as of December 31st, 2020, we had 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 motor vessel NIAS, which was delivered to their owners in July 2021. All of these sales resulted in less ownership days during the reported quarter and 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 time charter rates resulted in the increase of our daily time charter equivalent rate to $17.143 compared to $10,735 per day for the third quarter last year. We managed again to bring down our daily operating expenses to 5.635 compared to 5.732 for the same quarter of 2022. And this is a decrease of 2%. Moving to the next slide. In the nine months ended September 30th, 2021, fleet utilization increased to 98.9 compared to 97 in 2022. The daily charter equivalent rate for the nine months in the September 30th, 2021 was $13,984 compared to $10,900 for the same period last year. Daily operating expenses for the nine months ended September 30th, 2021 slightly decreased 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, as we have already mentioned, that during these nine months period we concluded three loan refinancing agreements. One with ABN AMRO for 91 million, concluded in May 2021, to refinance five existing loans. The second with Nordea for 125 million, concluded in June 2021, to refinance part of our 100 million bond, which we repurchased in September 2021. And the third with Nordea. All of these agreements were made with the purpose of extending the maturities of our loans to future periods. As a result of that, under the current debt amortization profile, we expect to pay the first balloon payment in the third quarter of 2023. We believe that the well thought process to create the current debt amortization profile, have strengthened the company's balance sheet and our position in the market. These together with, if we move to the next slide, with our break-even, you can see that as of September 30th, 2021, our break-even rate, which includes all of our expenses, stood at $13.948 per vessel per day. If compared with the average daily time charter that we expect to achieve from our time charter agreement, already fixed until November 10, 2021, it is evident that the average rate we will get from this agreement will cover our costs and result to net income from operations. Looking at the next slide, we have a better of what is happening and if we calculate the revenues for the remaining unfixed dates for 2021 and 2022 at current FFA rates that have dropped a lot recently. Assuming that these rates will continue to be at the same level in the coming months, as our pressures open for fixture, we would expect to achieve revenues of 38.2 million for the period from November 10, 2021 to the end of the year, and another $263.5 million for 2022. At these levels, we would exceed our expenses by $13.9 million or $8,000 per vessel per day in excess of the break-even for 2021. And $91 million, or $7,300 per vessel per day, in excess of our rate even for 2022, resulting in bulk periods to net income from operations. So you can see that in this scenario that over and above to the 140 plus million dollars that we have aside, the company has the ability to create another 90 million dollars in 2022, enhancing our options and our ability to pay quarterly dividends. Thank you for your attention. And now I turn the call to Stacey Margaronis for the usual market analysis that everybody expects to hear.

Thank you, Yanni. I hope I haven't become boring through 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 effects they are supposed to have without external distortions, with the exception, of course, of sentiment. The Baltic dry index started the third quarter at 3,038, 3,338, I beg your pardon, reached a high of 5,650 on October 7th. Yesterday, November 16th, it closed at 2,591. The Baltic Cape Index moved 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 ride 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 points out, they do remain at healthy levels by historical standards. According to Clarkson's Plateau, the Baltic Cape size 5TC average rate for 2020 was $13,070 per day. By early November this year, it had increased by over 150% to around $33,000 a day. As for Panamaxes, the average Baltic 5TC rate went from $9,918 per day in 2020 to about $27,000 per day at early November 2021. So 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 Bremer, to decline in October by 6.5% compared to September. On a year-on-year basis, the decline will be around 3.4%. Shipping analysts expect that the bottom will be found as soon as more of the spot tonnage has been cleared and owners surrender to weaker bids for their tonnage. It appears that we are not far off. from that point in the cycle. If you move to slide now 17, as regards global GDP growth, the IMF latest forecast is for 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 of raw commodities to China. The U.S. economy is projected by the IMF to grow by about 6% this year and about 5.2% by 2022. This growth figure has been revised sharply upwards recently to incorporate projected high infrastructure spending and a stronger vaccine fueled a 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 report that the Chinese steel and iron ore prices have fallen to multi-month lows as of November 2nd due to production cuts, power issues, falling steel demand, and an oversupply of iron ore. According to Clarkson's benchmark, iron ore prices in China fell to about $96 a ton, which is down 40% from their October record. According to Banquero 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 rising since July, amid concern that production cuts will be needed to meet China's 2021 crude steel targets. Thermal coal prices corrected in early November to about $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 had not been updated when this slide was printed. Gibsons are forecasting global steel production for the first nine months in 2021 to be 1.461 billion tons, or 7.8% higher than the same period last year. On an annualized basis, Gibsons predict that in 2022, world steel output will increase by a further 2.2% compared to this year and come in at just under 1.9 billion tons. In the meantime, total steel output in China during the first nine 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 nine 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 deadweight worth of capes on order, representing about 7.4% of the total trading fleet. About 11 million deadweight of these orders are scheduled for delivery in 2022. As regards Panamaxes, there were 18.1 million deadweight on order at the beginning of November, representing 7.7% of the world trading fleet. About 8 million deadweight 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 trading fleet. This remains very close to the 30-year low point seen during the last couple of quarters. According to Fernley, the limited yard slot availability Uncertainty with regard 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 that have in the past ignited excessive ordering. According to Fernley's, about 229 dry bulk vessels have been ordered year-to-date, representing an aggregate of 23 million deadweight. Out of this total, 60 orders were for Cape's Newcastle Maxis and 72 for Panamax's Campsite Maxis. According to Clarkson's Plateau, the Cape Side Newcastle fleet will increase by 4.3% this year and by 2.7% in 2022. For Panamax and post-Panamax ships, the increase are predicted to be 3.2% this year and 3.3% in 2022. A quick look at congestion. According to Hal 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, 114 capes and 220 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. How 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 that global congestion soaked up about 5% of the world fleet from active service. Scrapping, another factor affecting supply. Clarkson expects that only 5.8 million deadweight worth of bulkers will be scrapped this year while Banquero Costa predicts a higher 8.64 million deadweight to be scrapped. About 12.8 million deadweight are anticipated to go to the scrapyards 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 out-competed buyers from Pakistan and Bangladesh and are offering in excess of $600 per lightweight ton for good scrap quality tonnage. As regards now environmental regulations, a brief mention to these, Bremer reminds us Shipping is scheduled to be added to the European Union's Emissions Trading Scheme, ETS, as of January 1st, 2023. As a general point, we need to mention here that a large number of vessels will find it necessary to operate at lower speeds from January 1st, 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 the 2022. Now, on the supply-demand balance, according to Clarkson, 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 to be 2%, potentially outpacing fleet expansion of about 1.5%. The iron ore trade 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 Fernley that there are some positive factors for dry 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 trades, record volumes of grain trades, 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 will 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 agree with Gibsons in their summary forecast. They expect rates to stabilize shortly and return to more fundamental supply and demand principles. However, they consider a return to the level seen in September and October a bit unlikely. Short-term imbalances triggered by weather or pandemic-related events, could bring about a 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 Cape-sized owners for the remainder of this year and into 2022. The trend will be supported by the strength in the dry bulk sector as a whole. I'll now pass the call to our CEO again, Samira Mispalou, for a summary of the highlights of our company's strategy. Thank you.

Thank you, Stacey. So before we move on to the question and answer session, I would like to sum up by pointing out the following. We are taking advantage of the strong market and have continued strengthening our balance sheet that we believe will enable the seamless continuous operation of our company. Our low cash flow break-even point in conjunction with a higher rate have resulted in us 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 making a decision of paying future dividends. 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 cycles. Now I turn over to the operator to commence the Q&A session.

Thank you. And now we're conducting a question and answer session. If you'd like to be placed in the question queue, 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions. Our first question today is coming from Randy Gibbons from Jefferies. Your line is now live.

Howdy, Team Diana. How's it going?

Hi, Randy. Hi, Andy.

Hey, so I guess starting here with some of the return of capital to shareholders, just if you can give a little more color commentary on why you decided to spin off the three older vessels instead of kind of what you've done in the past, right, selling them and 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?

The reason why we decided to do it that way, it has to do with the following reasons. First of all, we explain why we are considering this to be the right period to initiate activity. we see the fundamentals being there and the ability of the company to have a dividend in a sustainable manner. Now, instead of selling the vessels and paying a big dividend for all the periods that 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 rid of the older vessels and try 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 try to satisfy all of these voices and all of these shareholders, and even you, as analysts, that sometimes you are considering Diana Shipping as being very conservative, but even the way of doing business. So the thinking process behind Ocean Valid 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 more sexy, if I can call it like this. So for those people that they don't want to participate in this kind of play, They are free to sell their shares and take the dividend 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 a one-off dividend payment and this is why we introduced the 10 cents. Ten cents means $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 hours that this is a very manageable level and very manageable dividend to keep paying for the quarters to come. I don't know whether I've answered your question, but that's the way we have thought about it, and we think that it's a good idea. You are used to hear good ideas, don't you?

Every day I do. Okay, that's fair. Secondly, looking at your chartering business and strategy there, Following the recent drop 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 then I guess more strategically, now that rates have softened, are you more likely to operate in the spot market or maybe sign short-term charters instead of locking away for longer durations?

No, you know very well that we don't take decisions based on what is happening in the market. We have to continue our hedging strategy and you will see us fixing either for a year or two years or even a bit longer than this. We have to keep the hedging period the way we are today as we speak. We have a slide that we can show you. Today, as we speak, the average period of our charter is one year. We intend to keep it at least so much and then even increase it 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 called to see and say this is too much or too little. And you saw us recently before the drop in the market, the recent drop, that we fixed the investment for $22,000. And everyone was saying for two years and for a year, a year and a half, yes. And everyone was saying to us, what did you do? The market is picking up. It works both ways. We think that our strategy... is the most prudent 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.

Got it. Yeah, yeah, yeah. That's there. Good deal. Well, that's my two questions. Thank you so much.

Thank you, Benny. Thank you. Our next question today is coming from Ben Mullen from Steeple. Your line is now live.

Yeah, hey. So I want to go back to the OceanPal question. And just in general, I'm curious, one of the things that stands out to me is that these are generally older, less expensive assets. So ultimately, this is going to be a very, very small company. And relative to the cost of filing costs and G&A and all of those kind of things, it seems like it might be somewhat inefficient to have it as a standalone vehicle. I mean, how do you think about that?

Well, your points are actually, as Yannis mentioned, one of the reasons why we created the company. I think having those older assets, having them made, and having a strategy which is period-minded produced some problems. Obviously, we wanted to charter, as Yannis said, for a year, two years, and then those older vessels were more challenging in order to accomplish that. putting them in a structure where it's more spot-oriented, especially when they're unlevered. These vessels, they're cash cows. They have a useful life. They're well-maintained. They're very productive for the time being. Obviously, we didn't make this company to remain as three 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 our shareholders enjoying the upside from that on the OceanPal level.

Okay. Well, or maybe another way to think about it is why only three? You know, obviously they're the oldest, but there are, you know, 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, wouldn't you think?

I think... I think if you've probably seen in the filing that we've carved out also another six of our oldest vessels that potentially could go down to Chambord. It has the right of first refusal. Obviously, once, you know, 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, we're going to give the right of first refusal a market valuation to acquire the vessels. There is... There is an inventory of potential assets that could go in that company, but at the same time, the company could independently go out and purchase additional assets from the market. It's going to have a different strategy. Maybe it's going to cater to a different investor set, and we're going to try to take advantage of that as well to grow that company in parallel.

Ben, we are here talking about Diana Shipping Inc., And the point about Diana Shipping Inc. is not what OceanPal is going to do. The point about Diana Shipping Inc. is the ability of the company to give a very nice dividend to our shareholders in the form of cash 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 a dividend on a quarterly basis, but also sometimes issue some shares, give them some shares of another company that is not going to be related, and they can do whatever they want with that. That ability and what we have created, of course, this is their prerogative, Ocean Pulse, to decide to buy and pay in kind for 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 OceanPal is going to do is for another company to worry about and for another company of you to analyze. Hopefully, you will be analyzing OceanPal. OceanPal is going to have their own way of doing business and probably will do fantastically as well as we do.

Okay. And then my second question, at the very end of the prepared remarks, there were some comments about fleet growth. And I know that you guys sort of take a position that the market is efficient, and so you can't really – you don't want to overthink timing the acquisition of assets and that sort of thing. That said, you know, both new building prices and secondhand prices are up pretty substantially in the last six months or so. When you talk about growth, is that something that you think about as being imminent or just sort of, you know – the company has the ability to grow should an opportunity arise.

Yes, as we have said in the past, we do not like the idea of expanding the fleet at 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 justifies the increased prices that you explained. The modernization can happen also by getting rid of the older donors, and also definitely it can happen in the next rebound of the market that, as we explained, expect to see by issuing shares and buying some assets with long-term employment and making the dividend capacity of the company even stronger, being a critical dividend per share basis for our shareholders.

Would you look at all that ordering?

Ordering is something that is not preferable to us. And the reason is the time for delivery of the vessel. Usually when you order a vessel, it takes around two years to get delivery. And waiting two years and see what the market is going to be at that time is a risk that we don't want to take and we don't take. If we could fix the vessel forward... If we could fix the vessel forward, of course, that would have been an option. But fixing forward takes a big discount. So we prefer the resale and the very modern vessel rather than anything else.

Okay. All right. That does it for me. I appreciate it. Thank you.

You're welcome.

Thank you. Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Magnus Fehr from H.C. Wainwright. Your line is now live.

Yeah, good afternoon, gentlemen. And I just had a couple of questions on follow-up on the chartering strategy. You know, you mentioned that it hasn't really changed, but with the volatility in the market, would you – comments a little bit if anything has changed among your clients with rates down I mean 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

I think, I mean, in terms of rates, yes, as Yannis mentioned earlier, you know, they have declined, just to give you an indication, SFA rates on average, you know, for this quarter and for 2022, they're probably down by about 20% vis-à-vis about two, three weeks ago. But that, you know, that being said, you know, the opportunities are there. I mean, albeit at lower numbers. So for us, as Yannis mentioned, it doesn't really change much things. Obviously, we would rather be fixing at higher than the lower numbers. But nevertheless, I think the presentation included the SFA rate that we mentioned, 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, et cetera, et cetera.

Magnus, you know us 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 a race. And we always reach the destination that we want to get into. So we do not deviate from our strategy and the disciplined way of doing business.

Okay, that's good to hear. And just a follow-up question on looking at the optics, just this thing coming down here as you've been selling assets, but also your GNA has been coming down. Can you comment at all if you're seeing any easing in accruing costs with the COVID-related, or is that something that may increase, or do you think it's going to stay the same going forward?

Okay. Unfortunately, I think we are content that we have reduced, let's say, our average OPEX on a daily basis, even though the number, the line item that you just mentioned, the crewing costs have gone up. There's inflationary pressures in crewing even without the COVID. And just because of COVID, we've seen the crew changes, the traveling and the diverting sometimes. in order to get them done. All the COVID-related issues, obviously, they have added additional expenses on that line item. So, I mean, we hope that starting in 2022, we're going to see those extra expenses come down, which means that we should be able to see reduced costs on that category. So, 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 GNA and, you know, our focus is to keep them as low as possible without really sacrificing the quality of our operations and basically the safety of our seafarers.

All right, very good. That's all I have. Thank you.

Magnus, if I may say the last thing, because personally I want to make sure that everybody understood during this call that the message is that we feel that we have entered a period where the yield that we can provide to our shareholders can be substantial. This is the message we want to pass across. And it can be substantial in the form of cash or assets.

All right. Thank you.

You're welcome.

Thank you.

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further closing comments.

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.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.