Q2 2021 Diana Shipping Inc Earnings Call
[music].
Greetings and welcome to the Diana shipping 2021 second quarter earnings Conference call.
At this time, all participants are on a listen only mode.
<unk> and answer session will follow the formal presentation. If you would like to ask a question you may do so by pressing star 1 on your telephone keypad.
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 your host Mr. At debt of Investor Relations. Thank you. Sir. Please go ahead.
Thank you Donna and thanks to all of you for joining us for the Diana Shipping Inc.
2021 second quarter conference call. The members of the management team who are with US today are Ms. Semiramis, <unk>, Chief Executive Officer, Mr. Anastasia <unk> President Mr. Yano suffer Ruckus, Chief Financial Officer, Chief Strategy Officer, Treasurer, and Secretary Mr. Alex City was part of the truth.
Phone, Chief operating Officer, and MS Maria Day Day, Chief Accounting Officer.
Before management begins their remarks, let me just remind you of the safe Harbor notice, which you can see are on todays news release certain statements made during the conference call, which are not historical fact are forward looking statements under the safe Harbor provisions of the private Securities Litigation Reform Act forward looking statements are based on.
Assumptions expectations projections or beliefs as to future events that may or may not prove to be accurate for a description of the risks uncertainties and other factors that may cause future results to differ from the forward looking statements. Please refer to the company's filings with the Securities and Exchange Commission.
And now without further delay it is my pleasure to turn the call over to MS. Semiramis, Paula <unk> Chief Executive Officer.
Thank you Ed good morning, ladies and gentlemen, and welcome to the Diana Shipping Inc. Second quarter 2021 earnings call on my.
As Ed mentioned <unk>, the company's CEO and it is a not on a privilege to be presenting to you today.
Let's turn to slide number 4 I would I would briefly update you on the company's snapshot as of today.
We currently have 36 vessels in the water with a carrying capacity of approximately 6.
6 million deadweight tons.
This is 1 vessel less from last quarter due to delivery of the motor vessel on my ask to her bias late last week we.
We expect our fleet to grow again by 1 vessels, though so we take delivery of our recent acquisition the motor vessels Magnolia are Japanese built 2011 come from espresso.
Our fleet utilization has remained at very high levels coming in at 99, 6% for the second quarter of 2021.
98, 6% for the first quarter.
Quarter over the year.
31 vessels of our fleet continued to be managed in house by Diana shipping services and 5 vessels are managed by our 50.50 joint venture with Williamson shift management at.
At the end of the second quarter, we employed 876 people.
Let's see I'm not sure.
Let's move on to slide number 5 I will go over the highlights of the second quarter on recent developments.
Market conditions have remained robust during the last quarter and continue being positive to the state.
Why do we have seen some volatility, especially in the SFA rates during this period.
Rates remain firm and are close to 10 year high for every dry bulk segment.
Stacy will expand further on the market dynamics on the market.
<unk> for the near to medium term further on in this call.
Specifically for our company in April we put in place an ATM program, which we view as a good tool to have them to use should specific market conditions exist.
As of today, we have not utilized the ATM program.
In June of this year, we successfully issued a 5 year 125 million U S dollars senior secured bonds on the ultra low sulfur change with a coupon of 8.3, 75% approximately $74 million of the proceeds were utilized for the repo.
Just on the majority of our existing 9.5% senior unsecured bonds and the remainder of the new bond proceeds will be used for the repurchase of the remaining old bonds in September and for general working purposes.
Within July we agreed to acquire the motor vessel Magnolia in 2011, Japanese built panamax vessels to 22 million U S dollars.
We anticipate taking delivery of a new acquisition by the end of February of next year.
Also last week the motor vessel was delivered to the new owners.
Nation of the 2 sale on purchase transactions has allowed us to maintain our fleet size and pack while at the same time, improving somewhat the average age of our fleet.
In July a tender offer was initiated to repurchase approximately 3 points to 33 million common shares at a price of $4.5 U S dollars per share.
As we have done in the past we are ready to put the use of on liquidity. When we feel that our shares are trading at levels that we consider attractive given the prevailing market fundamentals.
Also within July we concluded a supplemental agreement with Nordea to extend the existing loan maturity until 2024, while at the same time upsizing the facility by 460000 U S dollars as we stand we are very comfortable with our debt maturity profile and Janice will.
Go over this in more detail further on and on our call.
Lastly, our consistent chartering strategy has allowed us to have currently secured approximately $167 million of contracted revenues for full year 2021.
Turning to the financial highlights on the second quarter of 2021 on slide 6 we find ourselves as of June 30th 2021, with a cash and cash equivalents position of $155 million, including restricted cash as against $82.9.
Million U S dollars as of December 31, 2020.
Our debt net of deferred financing costs.
At 461.5 million U S dollars at the end of the second quarter of 2021 as against $423 million at the end of 2020.
Our time charter revenues for the second quarter of 2021 amounted to 47 million U S dollars as against 41 million U S dollars for the second quarter of 2020.
Last but not least the company this quarter, we turned to profitability posting a profit of 2 cents per share for the second quarter of 2021 versus a loss of 14 cents per share from the same period of 2020.
Again, Giannis will go overseas as well as the 6 month numbers in more detail further on in this call.
Moving on to slide 7 you find the summary of all of our recent chartering activity.
Once again, consistent with our conservative and disciplined chartering strategy, we have taken advantage of the improving chartering market and have secured attractive time charters for 8 vessels of our fleet.
More specifically.
We chartered 6 panamax to post Panamax vessels at a weighted average daily rate of 25693 U S dollars and free remaining average food on the 116 days per vessel.
This can be compared to the 16571 U S. Dollar weighted average daily rates, we achieved for the fifth just presented during our last earnings call.
Clear indication of the market improvement.
We have also charted 2 capesize vessels at a weighted average rate of 25957 U S dollars a day for our remaining average day rate of 234 days.
Again this is a significant improvement from the $18890.6 million, we achieved as on average weighted daily rates for last quarter's picture.
We will continue chartering out vessels that will be redelivered 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 continuously improved market in a balanced way as evidenced by the recent fixtures just presented.
I will now turn the call over to Jeremy to go over our second quarter 2021 financials in more detail.
Thank you Samira.
I'm very pleased to be discussing today with you all day.
Doug.
For this quarter and the 6 months ended June 30 of 2021.
You can see on this slide during the quarter, we recorded a net net income more.
$1.4 million.
But these zero point.
Zero 2 per share on.
Our time charter revenues increased from.
41 million in the second quarter of 2020 to 47 million in the second quarter on coupons in 'twenty 1.
And then Thats a that represents an increase of about 15%.
Despite the fact that we've.
We've had more questions in the preview.
Of course.
Yes of course, you understand that this thing could easily.
The increase from the Saturday.
But we have to put all our questions.
What we've had from the same quarter last year.
At the same time, the Voyeurs expenses we're.
We're at only $2.3 million compared to $3.8 million for the same quarter in 2020.
And that decrease is attributed to.
From game that we make from Banca expense compared to a low so that we've had.
1.6 million loans.
On this last year.
We have managed to decrease our operating expenses by 8% to $19.2 million.
<unk> 8 million last year.
And of course with these guys to do what we do.
Most number at all.
Now please.
At the same time, our general and administrative expenses increased from 7.2 million compared to $6.8 million for the same quarter last year.
Mainly because we've had an increased cost on.
It is pretty cool.
Interest and finance costs continued to decrease in this quarter.
And of course species contributes the board too.
The decreased interest today.
And then because these are all bad debt of ours.
If we look at the 6 months.
This numbers.
We've had a.
And net loss also viewed it took almost all of this so far at $1.4 million.
And that's a zero point zero to price yeah.
Sure.
The time charter revenues increased to $88.1 million compared to 87 to $84.7 million for the same period last year.
For the same reasons that we explained earlier.
Our voyage expenses decreased.
Sure.
The first half of 2021 compared to the same periods of 2020.
Again, because we had a 0.7 million gain from bank as compared to $2.9 million loss last year.
Before we get into operating expenses again, we're less 57.7 million programs 42 point them out on me than others.
But we've had in the first quarter of 2020.
Yes.
General and administrative expenses decreased to 30 to $15.9 million compared to $16.2 million in the first half of 2020.
And because the number in 2021 thing.
Due to accelerated investing of restricted shares.
On a board member.
You remember, what we said about that.
Our interest on finance costs amounted to $9.3 million compared to 2 endpoints.
So $12 million last year due to the decrease of the voice and also the interest rate decrease.
Looking at the balance sheet of ours.
You can see that our.
Our cash cash equivalent and that's pretty quick cash increased 255 million.
Compared to $82.9 million.
And that has to do with the refinancing on agreements we enter into the 6 months period of 2021, including the 91 million on Lone Wolf from my ABN Amro and they found it on 25 million refinancing of all of our 9.5% unsecured bonds.
The new issuance at the decrease coupon of $8.30.
37, 5%.
These transactions.
The increase in long term debt net of deferred.
The first line last caused by $41 million. However, it is worth mentioning.
Our net debt.
On the $315 million.
Looking up from.
Selected financial does that at all.
Yeah.
You probably are you on.
Whereas in 2020, we sold 2 vessels since I was off on December 31st 2020, we thought that getting from SATA 3.
Free vessels, which were delivered to their new on this in the first quarter of 2021.
Sales of these vessels without debt.
Ownership days during the reported quarter of 2021 compared to the same quarter last year.
Nevertheless.
Our fleet utilization improved to 99.6 day sample the second quarter of 2021 compared to 98, 3% for the same quarter last year.
Better utilization rates and time charter rates and exhausted the named day Greensville, followed daily time charter equivalent rate.
In 2000, 14.47 compared to $10.5 last year.
Daily operating expenses were 5.
5.6.
9 feet compared to 5.5.
5000 volume.
$5577 on the same quarter in 2020, mainly too.
Some minor increase in <unk> expenses.
In the first half of 2021 fleet utilization increased to 99.
When compared to 97 for the same period.
The daily time charter rate.
The equivalent for the first half of 2021 was $12.4000 compared to $10.9 for the same period last year.
Daily operating expenses slightly slightly decreased from 5005 on a 48 compared to $5.5 on a 93 for the same period last year, that's at scale and 1% decrease.
Now, let's go into more interest in staff looking at.
Sure.
Oh, we have much to make our province debt amortization profile based on what we have done recently as explained.
By our CEO.
We have 1 that creates the picture that you see here.
Being our desktop monetization and you can see clearly here how you can see our debt amortization profile is currently stands.
Especially what we have done recently would be.
Nordea supplemental agreement that we did then.
We basically exercise both of our old Suez, who bring our debt facility.
Yes.
On a maturing 2 years from now.
The interesting just to put some things in perspective looking at this.
Profile, assuming that in the next 3 years, where that doesn't mean gross.
$1000 on others for our vessels.
We would have generated free cash flow to repay the entire state of ours.
Sales in 2032.
If we were to fix all of our vessels had $16.8000 for the next 5 years.
We would have generated against the same amount.
Repaying all of our debt.
Uh huh.
If we move to the next slide.
You can see again, a similar slide to what we have explained in the previous quarter regarding our free cash flow breakeven, which we find very healthy.
And if you compare that with the <unk>.
Average daily time charter rate of fixed revenues for 2021, you can see that.
Especially for 2022.
Sure.
Well there is a lot of free cash flow.
I think the next slide.
Gives you.
A better picture then.
All ideal where we stand now as a company and based on the market conditions.
On the left hand side you can see.
For 2021 day remaining period for 2021, the ability of the company to generate based on BFA face around $42 million as a free cash flow and for 2022. The same exercise if we assume that balance cash flow.
Hey, Kevin.
He is the number that we gave you earlier and we fix our vessels photo on based on behalf of phage that exist today or recently, we continue on another $134 million.
For 2022.
On the right on site you can see that on a daily basis.
But I mean.
He is really interesting.
To understand where.
Well, we spent a day based on our cash position based on our debt position and also cash flow generating position.
I think there's going to be questions about that.
I'll leave it for now.
And I give the floor to Stacy to talk about the market.
Dry bulk market.
Thank you again I'll start with slide 17, the obvious place to look at the latest developments in the dry bulk carrier earnings in both the spot and period markets. They need to be placed in perspective by looking at the Baltic indices and how they have moved in during the last 2 or 3.
So so.
Present levels with low to be compared with the all time highs reached about 13 years ago.
On April 1st.
The first trading day of the second quarter.
The BVI stood at 2072 on.
Second yesterday closed at 3002 week.
The all time high of this index was 11793 on <unk>.
May 22008.
The Baltic Cape Index was at 2000 and 394 on April 1st.
Yesterday it closed at 4272.
This index reached the 19657 on June 6.2008.
On April 1st the Baltic Panamax index to debt to 2004 day before and yesterday closed at 3290.
All time high of this index was 11713 on October 32007.
At the beginning of the second quarter, the 5 PC routes for Capes.
$19853 a day.
Yesterday the rate was 35429 with the all time high being 233988.
And for country on Max is now the 5 time charter rate was at $22003.54 per day on April 1.
Well yesterday reached 29610 day.
All time high of 94977.
These statistics.
I may have been a bit too much detailed on help to remind us how far we are at present from the all time high of nearly 13 years ago, which wherever it does not mean debt those are the levels, we will witness before the market turns itself again.
It does help us remember that the earnings even though our peering.
To be at profitable levels. They certainly are they are nowhere near their all time high.
Looking at slide now 18.
And soon with 15 to 19.
Look at the prices of commodities.
I'd like to mention a global GDP growth has been driving up commodity demand for at least the last 20 years.
And impressive.
Compound average growth rates for all major commodity shipping bulk has helped to increase demand for bulk carrier tonnage and have underpinned. The recent increase in earnings.
GDP growth in China is expected to be 8.4% this year and 5.6% in 2022.
In the United States GDP is expected to grow by 6.4% this year and by 3.5% next.
In Europe growth is estimated to be 4.4% this year and 3.8% in 2022.
Where GDP growth figures are 6.5% for this year and estimated at 4.4% for 2022.
According to the latest reports issued by Clarksons bulker ton mile demand is projected to grow by 4.3% this year and should be compared with an estimated 3.3% growth in the fleet during the same period.
Demand in 2022 is expected to grow by 2.2%.
Supply is anticipated to increase by EMEA at 1%.
Looking at iron ore.
Its predicted worldwide iron ore volumes expected to grow by around 4% this year and a further 1% in 2022.
While volumes look set to continue strengthening year on year growth is expected to slow somewhat during the second half of this year compared to the record volume seen the same period in 2020.
As regards the Chinese iron ore prices, which we will look at the next slide these have increased by 38% year to date according to Clarksons the.
Chinese government. According to Clarksons have shown concern over the rapid increase in commodity price.
In this regard to cool off steel demand the government cancelled exports tax rebates in April and steel mills are producing steel also from scrap that's partly replacing.
Pensive iron ore requirement.
Likewise, the Chinese government is utilizing according to Commodore research the reserves of every type of bulk commodity including cold in an effort to alleviate commodity shortages caused to a certain extent by steep price increases.
Coking coal now we have shipments expected to grow by 6% this year after dropping by 7% in 2020.
This is mainly due to the effects of the pandemic.
China's ban on imports of coal from Australia have led to increases of shipments from Australia, India, Japan, Korea, and Taiwan, which in some cases has led to increases in ton mile demand.
Coking coal prices have increased according to Howe Robinson.
100% since this time last year.
On thermal coal.
Regards thermal coal after a steep drop of 10% in 2020 shipments are expected by Clarksons to increase by 4% in 2021 with volume, reaching 956 million tons.
Shipments are expected to grow by another 1% in 2022.
In this respect it's worth mentioning some statistics from Commodore research.
The Indian power plants coal stockpile.
Standard, 43% below last year's levels and are just enough to meet 13 days of demand.
Clarksons reported Australian thermal coal prices have increased 38% year to date and according to Howe Robinson prices are up 214% from this time last year.
In China. The government is using as mentioned earlier coal reserves to help alleviate cold another commodity shortages.
As a result of all this it is safe to conclude that more call. It needed to meet current demand and also to rebuild stockpiles for the future.
Looking at the longer term picture coal consumption as opposed to drop from current levels by 20% until 2030.
We agree with Clarksons seaborne coal trade might outperform this because of growing demand from our markets in southeast Asia and China. However.
It doesn't look likely that seaborne coal trade peaked in 2019 and upcoming years may well market turning point.
Has the post pandemic rebound starts giving way to a longer term softening in demand.
On grains now.
According to Clarksons seaborne grain trade during 2021 season is expected to grow by 4.5%. This year and reached 534 million tonnes clarksons predict a further increase of 2% in 2022.
Chinese seaborne grain imports were up 50% during the first 5 months from this year during the same period, United States grain exports were up 50% as well.
In line with the commodity price trends.
Clarksons reported U S corn prices have gone up 37% year to date.
In U S wheat prices are up 6% over the same period.
Moving on to the supply now shipping industry on slide 20.
According to <unk> Costa in 2021, net of slippage and cancellations or about 348 bulk or is that expected to be delivered with a total capacity of $34.1 million deadweight.
According to Clarksons the bulk carrier order book now stands at 626 ships.
With a total of $53.7 million deadweight the lowest level in comments turn since 2003.
And that is less than 6% of the current shipping capacity the lowest percentage since 1991.
Interesting to note that Clarksons point out that the order book stood at 85%. So the trading fleet following the onset of the financial crisis.
The fleet of vessels between 65080 thousand deadweight has actually shrunk in size during the first 5 months of this year. According to <unk> Costa and so because the fleet of ships between 120000 and 190000 debt.
This reluctance to place new building on this partly reflects continued uncertainty over fuel and technology choices against the background of an increasingly strict environmental and regulatory agenda.
Even though 16% of tonnage ordered this year is LNG capable there is no clear winner to date in terms of alternative fuel choices to Boyd.
From the worldwide shipping order book to day, 42% in the CGT terms is accounted for by LNG carriers and.
And 39% by container ships.
Therefore, a mere 19% of the order book is represented for all other types of vessels combined.
Looking quickly at scrapping.
Even though AG is only 1 factor in the decision making process to scrap the vessel. It is worth noting that 23% of Panamaxes and 11% of Capes are over 15 years in age.
Clarksons expect that about 7.7 million deadweight weighted for bunkers will be scrapped this year.
And about $12.2 million deadweight in 2022.
Even though <unk> care of course, they estimate about double that capacity will be scrapped. This year, we consider this as being over optimistic if earnings remain at current levels.
Or move higher.
Yes.
Finally, the outlook of the industry.
We have the same view as we expressed in our last quarterly presentation as regard to the outlook of the bulk carrier interest in.
In summary, nothing has happened to make us change our agreement with the view expressed by Howe Robinson in their monthly report in.
In short, we believe that world GDP growth, we followed a 2005.2021 trends and lead to sharp increases in seaborne cargo volume.
This may lead to increases of about 6.7% for 2021 and 4.3% in 2022.
Higher volumes than the Clarksons estimate referred to above.
Therefore, we remain optimistic about the longevity of the goods bulk carrier market.
We are witnessing today is pleasant scenario could be ruined by an abrupt drop in demand due to factors unrelated to shipping.
Or a sharp increase in new building orders.
As we mentioned earlier on.
Yards do not have much capacity to offer to dry bulk new building.
Which in any event they do not like too much because of the low profit margin compared to other types of ships.
Thank you.
Our semiramis who'll give us also the.
Closing comments of this presentation.
Thank you Stacy takeaways. Thank you before we move on to the questions and answer session I would like to sum up the key points as follows.
As it has been the case across all market cycles. The company has maintained a robust balance sheet that serves as a guarantee from the seamless continuous operation of the company.
Recent moves have reduced even further the cash flow breakeven points as compared to recent from here and in conjunction with the prevailing positive dry bulk market. It allows the company to generate even stronger free cash flows.
The company is in the fortunate position that conditions are ripe to entertain a potential fleet growth fleet renewal and on dividend distribution.
Lastly, we remain committed in maintaining the disciplined strategy that has been implemented since inception, which has allowed and should continue to support shareholder value generation throughout the various margin cycle.
Now I will turn the call over to the operator to commence the question and answer session.
Thank you.
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Our first question is coming from Randy given.
Jefferies. Please go ahead.
The team Diana How's it going.
Alright, well thank you Randy.
Excellent alright.
I guess first question you know the S&P market for secondhand ships very robust right now you recently announced the acquisition of a 2011 built camps from Max but not until February of 2022, So I guess why that vessel and why such a delay in delivery and then are you evaluating any further.
Potential sales or acquisitions.
Okay.
Yeah.
The benches that we have done the hi, this is guidance.
Hey.
We I think the.
The most important part for us is to feel comfortable with the vessels that we were buying.
They're not on logo.
Sure.
Nice vs shutdowns.
I've had to do the quality and the <unk>.
Type of vessel.
And also for US taking important steps forward delivery. It is not something that we do usually but.
We feel very comfortable with the way, we have kids or these could be existing charters.
So to cut the low quality source. There is on why we bought this vessel it has to do with the quality of that vessel.
And also I want you to understand that this doesn't mean that we would start.
A buying spree or stop buying vessels.
Texas was 1 off.
We had a.
Extra amount we have there is extra mining from the new bond issuance and we think that was 1 of the good ways to utilize this amount.
That's fair and then I guess speaking of another good way to utilize the amount.
The tender offer obviously I think that was a great decision any updates around that expiring here in about 2 weeks. How did you maybe come up with the $4.50 share price and then the $3.3 million share them out.
Again.
This is a very important point for us.
First of all you understand that we are there.
On 1 day, we are trading close to our Navy going trying to go above a navy and suddenly for the reason that we don't understand all of this is the dry bulk shipping focused with a drop of 25%, 20% and we are there to take advantage of these abnormalities and this is why.
Why we acted quickly and we put that tender offer into the market to buy a quarter, an accomplishment, which we consider to be very attractive.
As for our spoke of course for you as an analyst you have.
Your calculation on regarding the NAV per share and Youll see clearly that.
There is a big discount so if we find any sales to buy this.
Our numbers.
We consider that to be another good use another would be utilization of.
On Monday that we have upside.
The big Big cities that we as a company we have the ability to do whatever is most appropriate at any time in the cycle and this is what we have created we have created a company that we have that go up very quickly and take advantage.
Of all the scenarios that exist at any time.
Sure No no I, certainly applaud that decision you're showing your nimbleness and taking advantage of what we think is a.
Kind of unforeseen pullback here. So congrats again good luck. Thank you.
Thank you Youre welcome.
Thank you. Our next question is coming from Omar <unk> of Clarksons Securities. Please go ahead.
Yes. Thank you.
Yeah honestly I just wanted to follow up maybe on on Randy's question, just regarding bad debt cancer Max It sounds like there's something specific perhaps about that shift that makes it worthwhile to.
Late call it 6 or 7 months and then any other color you can give us to what makes it.
What makes it vessel standout relative Philadelphia is out there.
Hi, Omar this is <unk>. The difference is about 6 or 7 months, because if you are going to go out there and then tried to buy a similar vessel. If we could find 1 with prompt delivery the delivery would probably be September October November of this year So vs.
Extra time periods that we weighted there was only maybe a quarter or maybe 3 months on top of.
<unk> I think that the.
The value of the price that we agreed to was much lower than what we would have paid people who have got these specific vessels with a prompt delivery could give you. An example of an estimate would probably value got vessels with the October delivery of $25 million, so rather than paying.
Yeah.
In front of that extra $3 million, we also have to weigh and pay for medium lift with her for February delivery. So it was what Jan just mentioned is the most important we're finding that itasca reduces up on these bills Thompson amongst vessel will have similar vessels in our fleet, we noticed they trade very well, we're very fuel efficient <unk>.
A lot of modifications for revenue will be upcoming.
The rules that are coming up.
<unk> thousand 3 coupled with us so we view that it's better to save the 3 million rather was going on based.
Based on product and then trying to get at.
Sounds good.
On a market for the next 6 months all Marty you understand that the only difference offer forward delivery is not what you pay is that east coast.
Chartering that vessel about that vastly different otherwise if you were to.
To take delivery on the vessel closer you would have paid for it.
So the only reason that we have taken is to that.
The average time on February when we're going to take delivery, where the market is going to be and whether it's going to be at a level that is going to justify the $22 million of it.
But even for that we have taken our 3 questions from case.
This extreme scenario happens by having kids without existing processes these kind of areas.
It's another vessel opening at.
At the beginning of 2022.
Yes, hi, Jonathan that color yes.
Yes, so it just sounds like good quality vessel a ship that you have operated vessels similar too.
Thus no what youre getting.
Is there any any concern at all that you know.
I appreciate you mentioning it's only 3 months or so from a normal S&P deal.
Is there any concern that you know as you get closer to that February delivery date that maybe the seller decides that asset values have gone up too much on they'd rather renegotiate is there any risk to that that you see.
We have.
<unk>.
Mmm shine the tariff there are definite.
These cannot really helpful <unk>.
If it happens of course, you have grounds for arbitration.
We have a contract.
Usually I have never seen it myself.
So the sellers are very serious.
I mean, we're very I mean, it's volume of MRC interconnect with market and a good margin.
Especially the specific sales.
The big jump on these counterparties. So you know I have been my low.
Keith during shipping seen this happened very very rarely, but I do remember.
Net it cost the person remaking on the contract more than he was ever hoping to make by taking the ship at a higher price.
So I don't think anybody would seriously consider that.
Got it thank you.
And maybe just.
A question, obviously, you know Diana long standing approach to.
Deploying your vessels on on.
1 year contract 2 year and 3 years when available.
<unk> seen a lot of.
At least from our side, we've noticed a lot of 12 months time charters, but we haven't really seen much in terms of duration going beyond that.
Are you beginning to see any inquiry there we've seen the market stay fairly strong here you know 6.7 months into the year.
Are you seeing any inquiry getting into that 2 year and 3 year range and is that something that's attractive to you.
I think it's a matter of how we as a fair I mean, all of those all of those inquiries will be based on the FFA curve to model of how the FFA curve flattens and we are in the outer years. So.
Okay.
So we are definitely probably 1 of the companies that were seriously entertain going from Vela for 2 or 3 year charters as low lows.
Flattening.
Behaves a little bit better a lot better.
Right.
So I think there is.
If you go out that are not can push on appropriate will again at 2 or 3 years, where we might look like it but we are getting to the point that I think maybe sooner rather than later.
Right.
On the rates that would be appealing for us.
<unk>.
For more than a year.
Yes.
Thanks.
If you ask for a 3 year charter you will find it. The question is what type of risk profile.
You won't have accepting a number that doesn't look.
Look on it.
But you have seen us from the past, but from the moment.
We would decide to expand to the hedging period of hours, we'll do.
Do it without hesitation.
Yes, it sounds like yeah. It definitely sounds like there are opportunities, but maybe let the liquidity in the market come first no no need to push it.
Very good alright, thanks, guys.
I would love to have mentioned that I think is an opportune time for me to say, but yes, and this applies to all of our strategy.
We strongly believe that there would be a point soon in the market well.
The sand demand to the how sustainable is this upside is going to be is going to be much clear, we're going to have a clear view about the good market was coming and this is why you have seen us disciplined in a disciplined manner of waiting before we release all of our weapons.
The company in the market.
We're seeing that.
Waiting we have done a good job and we.
Randy.
And set to go.
Soon because market conditions are going to be the optimum.
For us to do what we have what we must do for the sake of our shareholders.
Understood. Thank you.
Welcome.
Once again, ladies and gentlemen, if you would like to register a question. Please press star 1 on your telephone keypad at this time.
Our next question is coming from Ben Nolan of Stifel. Please go ahead.
Thanks.
I have a few I'll start actually I'll start maybe honest with.
Where you just ended with Omar.
And tying into stasis comments in his prepared remarks sort of outlining a degree of optimism that attaches to the market.
On past, John as you've been sort of always been efficient market proponent and.
Debt effectively the market.
Evaluate.
Are they the positives and negatives.
And.
Equitably prices things, but.
But you know.
Clearly you sound more bullish and you're on.
And maybe the market or do you expect the market to improve and Mike the FFA curve.
To improve it maybe can you outline why you are sort of <unk>.
Taking a.
And maybe a more aggressive stance or why you feel like maybe the market isn't necessarily.
<unk> pricing in.
On the debt.
Fundamentals.
So.
I think now we have.
The appropriate.
Our balance sheet.
The appropriate size as a company.
To be able to have this disciplined approach and way.
Are we seeing that based on what we see in the market in the short term debt. This is the only thing that someone can see.
We think that soon is going to come the time, where we can.
Do what we know how to do properly in order to create value for our shareholders and.
That will give us the opportunity to make the best out of.
What we have been.
Waiting in a discipline manner, I keep saying that because I've seen other companies.
They allow us to do things.
For the dust settles I think now it is more clear what is happening in the market.
We're going to see the remaining of the year stronger in the next year, beginning very strong and that would be the best time, we think for us.
To utilize our balance sheet and the best way possible for our shareholders.
I cannot.
Give you an assurance about what is going to happen or what we will do but we havent taken that decision, but the only thing that it is shipping as we have demonstrated recently that we have balance options ahead of us to do.
What we will consider to be the most appropriate risk reward ratio for our shareholders.
Okay, well, let me approach it in a different way.
You, even there sounds like you believe that the market is going to be going higher.
Hey curve for next year is lower than where we are currently.
Decent amount on very low what do you think the market is missing.
The market.
On the market is missing.
Debt.
See the challenges that they had a kit.
The.
Okay.
Estimated.
The actual problems that exist in the market. They have created the environment, where the market is overreacting on those and when you have a novelty options through a problem you created.
Opportunity. This is our belief, we think that the emissions issues the financing issues.
The bank getting issues they have been on the real because there is nobody option in the market that has kept supply at very low levels and provided the demand stays where it is or improves a bit we're going to achieve that the company, we're going to see the market going even higher.
Yeah.
People are very relaxing.
Looking at the problems, but they don't understand that.
<unk> has been already another reaction to those problems.
Okay.
And then and then just following and I apologize for the these macro questions I, usually don't like to ask them, but I thought it was an interesting time.
Stacy you outline sort of where things were in 2008 and for all of you and US debt have were there at that time. It was a it was a whole lot of fun, but I never thought we'd get back to those kind of levels again.
Is there anything in the current supply and demand dynamic that either gives you. Some hope that maybe it's possible or is it.
Is that maybe a little bit too.
Too optimistic of a.
Or.
It's unlikely that we would see that sort of a scenario again.
Well to say that it's likely will.
It will make us be over optimistic and very aggressive, which we traditionally never R and never have been but.
But it is possible.
And I can envisage a scenario for example.
Where demand continues going up not in the explosive way that it did.
In 2008.
But in a very healthy manner and suddenly realize that even if we wanted to build ships.
We can build them for the next 3 years.
For the reasons that I outlined briefly earlier on.
In other words lots of containers lots of LNG is being built.
Et cetera et cetera. So.
If we see that we cannot really meet demand.
As we have mentioned in particular the Yankees because you mentioned this in previous conference calls you don't need an enormous shortage of ships.
To have rates going up by a lot.
So if we see a persistent.
Shortage of bulk carriers and psychology moves.
You're right that action, we could conceivably see numbers over the orders that we saw back in 2008.
We're not saying, it's likely but if scenario that I outlined.
Bringing us close to those figures yet.
Okay, Great and then last just record keeping from me I believe that.
You mentioned that you hadn't had not been active under the ATM program is that correct and if so what was.
The share count was a few million shares higher.
How should we think about the share count.
Or is the basis for the share count prior to the tender offer on that.
So balance hasn't changed.
It's probably the best thing.
The vesting of <unk>.
Oh no.
Pardon me.
Hello.
It's the same number.
On that maybe this quarter.
Okay.
Alright, I'll check my numbers there. Thanks.
Okay, you're welcome.
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Were showing no additional questions at this time I would like to turn the floor back over to management for closing comments.
Thank you all for joining US today, we look forward to talking to you again.
Next earnings call. Thank you very much.
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Okay.
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