Q3 2021 Diana Shipping Inc Earnings Call
Hello, and welcome to the Diana Shipping, Inc. Third quarter 2021 conference call and webcast at this time all participants are in a listen only mode.
And answer session.
Session will follow the formal presentation. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Ed <unk> Investor Relations for Diana shipping. Please go ahead. 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 and attached to todays 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 Polyone, Chairman and MS. Semiramis, <unk>, Chief Executive Officer, and I will turn it over now to semiramis.
Thank you Ed good morning, ladies and gentlemen, and welcome to Diana shipping.
Shipping Inc third quarter.
One earnings call. My name is <unk> <unk>, 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. Stacy mentioned that only president of Diana shipping.
We have Mr. You're honest nothing I can <unk> CFO.
<unk> Chief strategy Officer.
Mr. Alistair do you feel about the refund chief operating officer, and there's many of them at 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 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.
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 acquisition the motor vessel Magnolia.
Our fleet utilization has remained at very high levels coming in at 98, 9% for the third quarter of 2021 as compared to 99 six.
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.
Conditions remained robust during the last quarter and continue being positive to the state. Although we have witnessed some volatility recently.
<unk> percent. This has resulted in the company producing a strong third quarter and achieving the strongest nine months result 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 own.
Not paying a dividend again when market conditions were such that would allow me.
Dividends should be sustainable for a reasonable period of time.
We feel that such conditions are right currently and as such we haven't missed the initiation of the dividend.
Together with the dividend, we announced a separate transaction.
These people rewards and at the same time creates value for our shareholders. This is a creation subsidy going spinoff of Ocean power.
Ocean Pal will acquire three of our oldest vessels and will trade separately on the NASDAQ capital market under the ticket the ticker symbol <unk>.
Every Diana shipping Inc. Shareholder will receive one share of Ocean power for every 10 Diana shares held on the record date.
The specific spinoff structure, the rationale of the transaction and the potential benefits for our shareholders are analyzed in detail in the ocean powder registration statement.
<unk> filed with the Securities and Exchange Commission.
While the consummation of the spin off has been delayed pending the effectiveness of the ocean power. The 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.
Previously announced in June of this year, we successfully issued a five year $125 million senior secured bond listed on the Oslo stock exchange within September we utilized some of the bond proceeds to repurchase the remaining old bonds due in 'twenty.
As for 'twenty three.
In August we successfully concluded our tender offer and we purchased approximately $3 33 million common shares at a price of $4 $5 per share. We believe that this return to our shareholders presented a strong vote of confidence for the long.
<unk> some prospect of our company.
Lastly, our consistent chartering strategy has allowed us to have currently secured approximately $209 million of contracted revenues for the full year 2021, with a 97% contract coverage and $83 2 million.
Long term owners of contracted revenues for 2022 with 27% contract coverage.
Janice will provide later on a more detailed analysis of our cash flow generation potential based on the current market environment.
One can also find on our website the company.
<unk> 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 equivalents position of one.
$246 2 million.
Mainly in U S dollars, including restricted cash as against $82 9 million U S dollars as of December 31, 20.
20.
Our debt net of deferred financial costs stood at 430.
$4 7 million U S dollars at the end of the third quarter of 2021 as against $423 million at the end of 2020.
Our time charter revenues for the third quarter of 2021 amounted to $57 3 million U S dollars as against 40.
$103 million 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.
Yeah, Amit who will go over these as well as the nine months number.
Two more detail further on in the presentation.
Moving onto slide seven we find the 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 market and have secured attractive.
Time charters for 11 vessels of our fleet.
More specifically, we chartered nine vessels in the Panamax to post Panamax side at a weighted average daily rate of 25858 U S dollars and for remaining average period of 336 day per vessel.
<unk> and can be compared to the 25693 U S dollars weighted average daily rate, we achieved for the fixtures presented during our last earnings call and indication of the market's remaining robust.
We have also charted two capesize vessels at a weighted average rate of 33.
437 U S dollars per day for our remaining average period of 148 days an improvement from the 25957 U S. Dollar we achieved at an average weighted daily rate for the last quarters Capesize fixtures.
We intend to continue chartering our vessels that.
This will be delivered to us in a similar way by staggering maturities locking in cash flows and push it to positioning the company in a manner that will allow us to continue to participate in the market in a balanced way.
Okay.
I will now turn the call to <unk> to go over the third quarter 2000, Twenty's one financial anymore.
We will be.
Thank you.
Good morning to all.
Have you.
Very pleased to be discussing today with you.
I'm not sure.
For the third quarter than in nine months.
Thank you.
You Wanna.
I'm sorry.
Thanks.
Okay.
Cool.
Almost all of them.
Got it.
That's all.
Sure.
Sure or zero point.
Yeah.
Our.
Time charter revenues increased from $42.
In the third quarter of 2022.
Kevin.
Good morning, Anthony.
Shannon.
The third quarter of 2021.
An increase of about 75%.
Despite.
And the number of vessels.
Thanks.
Leasing could each of course.
Good evening.
We achieved for all the questions.
<unk> expenses also decreased <unk> 7 million in the quarter compared to 2.9.
For the same quarter of 2020.
Our fleet and that is mainly due to a $2 4 million gain from bankers.
Two zero point $5 million loss, we thought last year.
Our version.
Operating expenses for the third quarter of 2021 decreased by about 4%.
$18 8 million compared to 20.
The $1 3 million last year.
Of course again, we see some pretty deep into the process.
Yes.
Our fleet.
Following the recent sale and also due to the decrease fasten repairs and.
Other operating expenses.
Of course.
Greece was partially.
Offset by increased crude costs insurances stores and provisions.
Okay.
Our agenda 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, increasing 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 more.
In addition, the company incurred a loss of extinguishment of debt.
0.8 million due to the full advantage of.
Our nine 5% senior bonds.
Now for the nine months ended September 32021.
Net income attributed to common stockholders amounted to $11 9 million or zero point.
Seen per basic share.
Four zero going 14 per diluted share.
Time charter revenues increased to $125 4 million compared to two.
$27 1 million for the same period last year.
And this is of course.
For the same reason, which has been about the quarter.
The voyage expenses decreased in the nine months ended September at doing that.
In 2021% to $4 7 million compared to.
$10 5 million for the same period of 2020.
And this is for the.
Cause of a gain of $3 1 million from bankers compared to $3 5 million loss that we had last year.
The vessel operating expenses were $56 6 million compared to $63 4 million or 2020.
And of course again this is under.
The review did to the lessor ownership days together with expansion and invest in other operating expenses that we manage to.
<unk> decreased.
Of course.
We've had some increased crew cost insurances stores and provisions.
Again general and administrative expenses.
<unk> decreased to $21 1 million compared to $25 7 million for 2020.
And.
That was mainly to be accelerated.
Due to the affinity of investing on restricted stocks.
Sure. So of board members in 2020 and also due to the decrease.
And of course, then D&O intuitive.
Interest and finance cost amounted to $15 million compared to $16 9 million last year due.
Due to the decreased average debt in.
And interest rates.
And you'll see there's a difference between the quarter and in the <unk>.
We had increased interest and finance cost in the nine months we have.
And we created a model.
Going to the next slide on the balance sheet, you can see that as of September 32021, our cash and cash equivalent and restricted cash increased to.
Quarter $146 million.
Compared to the 80 to 90 that we had on December 31st 2020.
Of course this is very muted.
You do the refinancing agreement we entered into.
During this nine month period, including the 91.
Hum along with ABN Amro.
The 375% unsecured senior board, Okay, another 25 million nominal amount of the repurchase over $9.
$5 million and nine 5% unsecured.
Okay, another million nominal amount of which $92 million of the warehouse.
Standing as of 30 <unk> of December 2020.
And then refinancing of our development with Nordea.
We drew down an additional amount of <unk> 5 million.
All of these things.
As of September 30 of 2021.
But.
Long term debt net of deferred financing cost to $434 7 million.
Compared to 420 meeting in October December 31st 2020.
Moving to some selected financials that Doug.
You can see that vessel December 31st 2020, we have agreed to sell three vessels.
<unk> delivered to their new owners through the first quarter of 2021.
Additionally, in the first quarter of 2021, and we're going to share.
Motto vessel.
Which was delivered to get on this change.
2021.
All of these phase.
Lessor ownership days during the reported quarter over quarter and the period of 2021 compared to the same periods.
Last year.
Nevertheless, we managed to improve.
Utilization of our fleet to 98 five.
And for the first quarter of 2021 compared to 97 three.
For the same quarter last year.
Better utilization rates and time charter rates.
Adjusted in the increase of our daily time charter equivalent rate two.
July one for free.
Compared to $10775.
For the third quarter last year.
We monitor again to bring down our daily operating expenses to 535 compared to fire.
732 for the same quarter of 2022.
This is a decrease of 2%.
Moving to the next slide in the nine months ended September 30 of 2021 fleet utilization increased.
To $98 nine.
97 in 2022.
The daily charter equivalent rate for the nine months ended September 32021 was $13 nine in 2000.
984, compared to $10 $95 billion for the same period last year.
Daily operating expenses for the nine months ended September 30 of 2021 slightly decreased to five five <unk> 77, compared to 5659 for the same period last year.
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 a good evening.
And with ABN amro for $91 million compared with the May two.
When do you want to refinance five existing loan.
With Nordea or 125 million recruited in June 2000, and <unk> biomass plant to follow on on the median bump, which we referred to in forward into February 2021.
And that said with Nokia.
Okay.
These agreements were made with the cancellation of extending the maturities of our announced in future periods.
I would say it is out there.
Example of that under the current debt amortization profile and we expect to be at first level of pain in the repair order of 2023.
We.
All of Us believe that.
The Gwen.
For us to create the kind of debt amortization profile.
Has strengthened the company's balance sheet.
Our position in that market.
Okay.
These together with.
If we move to.
The lag.
With our breakeven you can see that as of September 32021 breakeven rate, which include all of our expenses stood at 17 point.
I have had in a $48 per vessel per day.
If compared with the.
The daily time charter that we expect to achieve from our banks have been at very minimal royalty fees until November 10 2021.
It is evident that the average rate that we would get.
From these agreements will cover our caution, but adjusted net income from operations.
Looking at our next slide we have.
Yes.
Idea.
What is happening and if we calculate the leverage for the remaining in fixed days for 2021, and 2022, Scott and FFA rates that they have been off the lottery.
So recently.
Assuming that these rates will continue to be at the same level in the coming year months.
A lot of vessels opening for fixture, we would expect to achieve revenues of $58 2 million for the period of.
From November 10 2000.
At the end of the year.
And another $263 5 million for 2022.
At least leverage would exceed our expenses by $15 9 million or $8000.
As per vessel per day in excess of the breakeven for 2000.
But in 'twenty one.
And $91 million.
Or 730000 per vessel per day in excess of our breakeven for 2022.
Resulting in both periods to net income from operations.
So you can see that.
In this scenario.
Over and above 240 plus million dollars that we have upside.
The company has the ability to create another $90 million.
In 2022.
And <unk> seen.
Our options and our ability to pay quarterly dividend.
Thank you for your attention.
And now I turn the call into new States you might add on this.
For some for the year.
<unk> market dynamics is that everybody expects.
Yes.
Thank you Yanni Apple pie.
Having become boring through the years of mentioning what's happening with shipping.
This particular.
Quarter, the third quarter of this year.
In the dry bulk market reminding us.
All of the tremendous volatility, which has always been susceptible.
It is indeed, one of the characteristics of a healthy dry bulk market from the point of view of an industry, where supply and demand have the effect.
We're supposed to have without external distortions with the exception of course of sentiment.
The Baltic.
Arctic dry index started the third quarter at 338.
3338, I beg your pardon and reached a high of 5650 on October seven.
Yesterday November 16th at closed at 2591.
The Baltic Cape Index moved from 3690 from July one to a high of 10485.
Only to drop to 3383 yesterday.
The Baltic Panamax index started the quarter at 4237.
Closed yesterday.
2000, and 675, having retreated from Ohio for 328 on October 25th.
As witnessed from the wide variety of the indices after shooting up to levels not seen since 2009 right in all major.
Major dry bulk vessel sectors have come down well below the recent highs yet.
Commodore research pointed out they do remain at healthy levels by historical standards.
According to Clarksons plateau, the Baltic Capesize five Tc average rate for 2020 was 13000.
$70 per day.
By early November this year, it has increased by over 150% to around $33000 a day.
As for Panamaxes, the average Baltic five Tc rate went from $9918 per day in 2020 to about.
About 27000 per day.
At early November 2021.
So the reasons for the recent weakness in rates or several of the most prominent are first the release of several vessels from congested ports, primarily in China, and B Secondly, a sharp slowdown.
Down in Australia iron ore shipments.
These shipments are on track according to Braemar to decline in October by six 5% compared to September on a year on year basis, the decline will be around three 4%.
Shipping analysts expect that the bottom will be found as soon as more of the spot tonnage has.
<unk> been clear and owners surrender to weaker bids for their tonnage. It appears that we are not far off from that point in the cycle.
If you move to slide 17.
As it got global GDP growth the IMF latest forecast is for four 9% growth this year.
And around 5% for 2022.
Chinese GDP growth is estimated to come in at 8% this year and five 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 five two.
2022.
This growth figure has.
<unk> advisor 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 four 3% in 2022.
On the next slide.
We see Maersk broker reports 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 Clarksons benchmark iron ore prices in China fell to about $96, a ton which is down.
40% from their October record.
According to Bangalore across iron ore stocks in China has risen to a 30 month high by the end of October to 145 million tons.
These inventories have been rising since July amid concerns of 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.
Three <unk> 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 has not been updated when this slide was printed.
Gibsons are forecast in global steel production for the first nine months in 2021.
To be 146, 1 billion tons or seven 8% higher than the same period last year.
On an annualized basis Gibson predict that in 2022 world steel output will increase by a further two 2% compared to this year and coming have just.
One 9 billion tons.
In the meantime, total steel output in China. During the first nine months of the year was 804 million tons up two 6% compared to 2020.
According to the same analyst Chinese imports of thermal coal.
Beyond the weeknight 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 occur.
According to Clarksons at the beginning of this month.
And were $27 7 million deadweight worth of Capes on order, representing about seven 4% of the total trading fleet.
About 11 million deadweight of these orders are scheduled for delivery in 2022.
As regards Panamaxes they were $18 1 million deadweight on order at the beginning of.
November.
Presenting seven 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 six 8% of the trading fleet.
This remains very close.
The royalty year low point seen during the last couple of quarters.
According to currently limited yard slot availability.
Uncertainty with regards to upcoming environmental regulations and type 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 friendly'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 Capes.
New capsules, Max's and 72, four panamax camshaft Maxim.
According to Clarksons plateau, the Capesize, New Castle fleet will increase by four 3% this year and by two 7% in 2022.
For Panamax and post Panamax ships the increase.
Predictor.
<unk> to be three 2% this year and three 3% in 2022.
A quick look at congestion.
According to Howe Robinson congestion in China has been substantially greater than in recent years with a high of 640 vessels.
Reached during the third.
Quarter of this year and 114, Capes and 220 Panamax post Panamax is 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.
Paul Robinson ascribed part of good trends to the fact that 22% year.
Year fewer vessel arrived in China during the month of October.
At its peak it is estimated by Clarksons, the global congestion soaked up about 5% of the World fleet from active service.
Scrapping another factor affecting supply.
<unk> expect that only $5 8 million deadweight were for bunkers will be scrapped this year, while banks are of course the prolexic.
<unk> 864 million deadweight to be scrapped.
About $12 8 million deadweight or anticipated to go to the scrap yards in 2022.
If the market.
Clarksons firm, we feel that the 2022 figure is a bit optimistic and led several older units are forced to retire due to environmental regulations.
As regards scrap prices Clarksons report that Indian scrap buyers have recently have completed buyers from Pakistan, and Bangladesh and our offering in.
It remains $600 per lightweight ton.
For good scrap quality tonnage.
As regards now environmental regulations, a brief mention to the Braemar reminds us that.
Shipping is scheduled to be added to the European Union's emissions trading scheme.
<unk> EPS as of January one 2023.
As a general point, we need to mention here that the large number of vessels, we find it necessary to operate at lower speeds from January one 2023 onwards in order to comply with the latest emissions regulations.
This one.
<unk> have an effect on tonnage supply compared to this year and 2022.
Now on the supply demand balance.
According to Clarksons during 2021 global seaborne dry bulk volumes are projected to grow by three 7% in tons and a firm four 6% in.
Certain items at.
At the other end of the equation net fleet growth is expected to reach a modest three 4% for the full year 2021 for.
For 2022, seaborne dry bulk trade growth is projected by clarksons to be 2%.
Potentially outpacing fleet expansion.
<unk>.
One 5%.
The iron ore trade is expected to grow by only 1% in 2022 grain trade by about 3%.
And coal trade.
Coal by about one 5%.
So what is the outlook for our industry.
And Tom we agree with currently that there are some positive factors for dry bulk shipping going into 2021, and some negative ones.
Amongst deposit fees.
The low supply growth the increased market share from.
Brazil, and iron ore trades, a record volumes of grain trade.
High commodity prices, which support ton mile demand and.
And the probable continuation of the Australia, China trade dispute, which again on an overall basis is supportive of ton mile demand.
The negative factors a significant drop in China's infrastructure spending.
And general credit growth.
No.
<unk> seen this year in energy prices and interest rates and some similarity 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 Gibson's in their summary forecast, we expect rates to stabilize shortly and returned to more fundamental supply and demand principles. However, we consider a return to the levels seen in September.
Timber in 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.
For several years now.
Low fleet growth over the next two years will only accelerate that trend further.
As much as environmentally this might sound like an unwelcome development strong demand for coal should bring healthy returns for capesize owners for the remainder of this year.
2022.
The trend will be supported by the strength in the dry bulk sector as a whole.
I will now pass the call to our CEO again semiramis value for a summary of the highlights.
Our company has a strategy.
Thank you Stacy so before we move on to that.
A question and answer session I would like to come up by pointing out the following.
We're taking advantage of the strong market and have continued strengthening our balance sheet that we believe will enable seamless continued separation of our company.
Our low cash flow breakeven point in conjunction with a high rate.
Generating positive cash flows that we can say is that 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 dividend.
In addition, we find ourselves in the fortunate position.
<unk> 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 market cycle.
Okay.
Now I'll.
I'll turn it over to the operator to commence the Q&A session.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to leave your question from.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one one moment. Please while we poll for questions.
Our first question today is coming from Randy <unk> from Jefferies. Your line is now live.
Howdy team Diana How's it going.
Hi, Randy.
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 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 in tendering.
During for shares and then secondly on the dividend right great to see the dividend back of Diana.
How did you come up with that 10 cents a share number.
Okay.
Hi, Ravi this is John.
And why.
The reason why we decided to do it.
Wade.
It has to do with the following reasons first of all.
We.
The mall.
We have made.
We explained why we are considering this to be the right period to initiate that.
We see the fundamentals being there.
And the ability of the company to grow the dividend in a sustainable manner.
Now instead of selling the vessels.
And.
Paying them.
A big dividend for all of the videos that people were expecting them to pay.
We thought it was a better idea you said.
Those paying in cash to pay it in.
In kind and also satisfy all of these investors.
Wanted Diana.
Not to get rid of the older vessels and try to be a little bit more speculative.
And the way the charter vessels, so what we said.
There is another company and try to satisfy a completely separate company not related to Guyana and try to satisfy all of these voices and all of these shareholders and even the U.
As analysts.
Sure.
Sometimes youre considering Diana shipping is being very conservative in the way of doing business. So.
And the thinking process behind Austrian bodily fluids will create.
Another company.
We.
<unk>.
The same kind of management team that <unk>.
Bye now.
And we are very experienced and to create something more sexy fireworks and call it likely some show.
For those people that they don't want to participate.
In this call.
Ladies and free to shell.
Yes.
Take the dividends that we have been waiting for a long time to be produced on the <unk>.
And we wanted to make sure that people understand that this is not in one of our.
Dividend payment.
And this is why we introduced the 10 10.
<unk> means $90 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, but.
This is a very manageable level.
And very manageable.
Kind of dividend.
Dividend to keep paying for the quarters to come.
I don't know, whether a bus or answer your question, but.
That's the way, we thought about it and we're seeing that.
It's a good idea and.
You want to use.
Good ideas for months gone through.
Every day I do so okay. That's fair.
And I guess secondly, kind of looking at your your chartering business and strategy. There following the recent drop in spot rates and the FFA curve how is that.
That impacted the time charter market whats the availability for longer term time charters and then I guess more strategically now that rates have softened or are you more likely to operate in the spot market or maybe signed short term charters instead of locking away for longer durations.
So as you know very well.
I'll take a.
Don't take decisions based on what's happening in the market that we have to continue.
And our strategy and you.
You will see us fixing either for a year or two years, so even a bit longer than this.
We have to.
We will keep the hedging period to the way we are today.
As we speak.
We would.
We would hope.
The slides that we can show you.
Today as we speak the oven.
Period.
Got it.
One year.
And we tend to.
Keep it at least through March and then.
Even increase it without worrying about what the rate is if it is 19 or 20022 or 17.
Our strategy.
You know very well, we are not called who see the I would say this is too much or too.
And you saw us recently before the drop.
Is the market the recent drop that we fixed the vessel for $22000 and every.
One we're saying for two years in.
What moved for a year year, and a half years and everyone was saying to us.
Do the market speaking up on.
It works both ways.
That's not a strategy.
Crude environment at the end of the day, we're happy as I keep saying with the average of the market that we have minus.
Since 2005.
Got it yeah, yeah Sir.
Good deal well that's my two questions. Thank you so much.
Thank you Becky.
Thank you next question today comes from Ben Nolan from Stifel. Your line is now live.
Yeah, Hey, so I wanted to go back to the.
To the Ocean power.
Yeah.
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 very very small company and.
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 sustained alone vehicle I mean, how do you think about that.
Yeah.
Well just I mean.
Your points are actually well.
Again as mentioned in one.
Why wait we created the company I think.
Having those old debt assets, having been made.
Having a strategy which is period minded.
Produced some problems, obviously, we want to chocolate as Johnny said.
What a year two years and then those older vessels created.
Well.
Were more challenging in order towards on complex that Tom putting them in a structure, where it's more spot oriented.
Especially when they are unlevered.
Vessels that cask house, they have a useful life they are well maintained.
Get them productive for the time being.
Obviously, we didn't make this.
The rates were to remain a three vessels were going to look for opportunities with our company.
Independently.
But for the time being.
But we want to provide.
Rather than selling the vessels, we want to provide the opportunity we view it as an opportune time for those reps to configure trading creating.
And providing.
Positive cash flows and our shareholders enjoying the upside from that.
All via Ocean power level.
Well.
Maybe another way to think about it is is why only three.
Obviously, there are the oldest but there are.
There's the next oldest behind that just trying to think through what getting getting something that has some level of critical mass.
Subscale.
I think.
You've probably seen in the filing that we've carved out also another six of our oldest vessels the potential.
It could go down to push and pull it hasn't hypothetical future. Obviously once that doesn't mean that we have Diana we've decided that we're going to dispose of them right now, but if we do we're going to give that up.
Yes.
Our market valuation.
To our clients.
Yes.
<unk>.
Our.
There is an inventory of potential assets that could go in the company, but at the same time. There is also the company could do 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 go take advantage of that as well to.
To grow the company.
Ben we are here.
Talking about Diana shipping Inc.
And the point about Diana shipping Inc. Is not what portion pilot is going to do the.
The point about Diana shipping Inc.
The ability of the company from <unk>.
Very nice.
And to our shareholders.
Far more cost.
In the four of us.
And in the form of share so basically.
The board of directors of Diana Shipping, Inc decided to do is to so to.
Shareholders that this company has the ability to pay dividend.
On a quarterly basis, but also sometimes.
Issue some shares.
And giving them some set of another company that is not going to beauty.
They can do whatever they want with that that ability in that.
What we have created of course this is.
Has there been an inaugural devotion pilot, who decided to buy and pay in kind.
Some more some of our older assets, but nevertheless, our shareholders should see.
As we speak.
What the dividend.
Capacity in one form or the other ease of Diana shipping Inc.
<unk>.
Whatever Austrian parcel is going to do is for another company to worry about them for another company of you to analyze.
Hopefully you will be analyzing notional balance of our SEC filings.
That way.
Way of doing business and probably than we do.
Fantastically as weird as we've.
Okay.
And then my my second question.
At the very end of the prepared remarks, there were some comments about fleet growth.
Yeah.
And I know that you guys are sort of take a position that.
The market is efficient and so you can't really.
You don't Wanna overseeing timing the acquisition of assets in that sort of thing that said.
Both new building prices and second hand prices are up pretty substantially in the last six months.
Oh no.
When you talk about growth is that something that you think about us as being eminent or just sort of.
The company has the ability to grow should an opportunity arise.
Yes, so 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.
By raising equity and buying more assets, but nevertheless, if you were.
Where does she is buying assets and modernizing the fleet.
It would be in a very careful manner with a long term employment that justify the increased prices that you will explain the modernisation kind of happened also by getting a read on the origin.
And also definitely it kind of.
Happen in the next rebound of the market that we explained that we 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 accretive dividend.
Sure.
As for our shareholders.
Would you look at all of our ordering.
<unk> 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.
Base get delivery and waiting two years and see what the market is going to be over time is a risk that we don't want to take and we don't take it.
We could fix the vessel forward.
Yeah.
If we could.
Fix the vessel.
Yes.
Of course that would have been an option but.
Fixing forward takes a big discount so we prefer that he shades and you're very modern vessels rather than anything else.
Okay, Alright that does it for me I appreciate it thank you.
You're welcome. Thank you. Thank you.
As a reminder, Thats star one to be placed in the question queue. Our next question is coming from Magnus <unk> from H C. Wainwright. Your line is now live.
Okay.
Yes, good afternoon gentlemen.
I just had a couple of questions on follow up on the on.
On the chartering strategy.
You mentioned that it hasn't really changed but then with the volatility in the market would you.
Comment 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 is opportunities to do.
Attractive charters near term.
Okay.
I think I mean in terms of rates yes.
And as I mentioned earlier, you know they have declines just to give you an indication FFA rates on average.
For this quarter and for 2022.
We'll be down by about 20% vis a vis about two three weeks ago.
But that.
That being said.
The opportunities are there I mean I'll be at the lower numbers. So for US is again as mentioned it doesn't really change months things, obviously, we'd rather.
The probe with fixing at higher than the lower numbers, but nevertheless, I think the presentation included the FFA rate that we mentioned via the reduced rates and even with those rates even continue with our strategy.
Cash flow generation is a very healthy one supporting operations supporting potential dividends et cetera, et cetera market news for you.
You know us very well since 2005, we went public.
And we are disciplined enough.
Not to get information about what is happening around us.
And we keep saying that we had a shipping company.
On the race and we always leads to the destination that we want to get into.
So we do not deviate from.
Strategy in a disciplined way of doing business.
Okay, that's good to hear.
Just a follow up question on looking at the Opex, it's been coming down here at <unk> been selling assets, but also your G&A has been coming down.
Can you comment at all if youre seeing any easing in cruising cost with COVID-19 related or is that.
That may.
Increase or you think it's going to stay the same going forward.
Unfortunately, I think I think we are we are.
Our content that we have reduced let's.
But its opex on a daily basis, even though.
The number the line item that you just mentioned the crewing costs have gone up.
<unk> related pressures, improving even without the COVID-19.
And just because of Covid.
We have we've seen.
The crew changes.
Traveling.
<unk>.
And we are divesting some times to get them done.
All the COVID-19 related issues, obviously that how about that.
Total expenses on that line item, so I mean, we hope that.
Starting in 2022, we're going to see those excess expenses come down which means that.
We should be able to see reduced cost 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.
We are focusing on both.
Opex in.
And then.
Our focus is to keep them as low as possible without really.
Sacrificing the quality of our operations.
And.
Okay.
Basically the safety of our seafarers.
Alright, very good that's all I had thanks.
Yes.
If I may say the last thing because.
Question on the I want to make sure that.
Everybody understood that during this call.
The message is that Diana shipping Inc. We feel that we have entered a period, where the ease that we can provide.
So our shareholders can be substantial.
This is.
The message, we want to pass across and it can be substantiated in the form of cash or are.
Our asset.
Alright, thank you.
Yeah.
Youre welcome. Thank you.
Thank you we reached end of our question and answer session I would like to turn the floor back over to management for any further or 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.
Webcast you may disconnect your lines at this time and have a wonderful day, we thank you for your participation today.