Diana Shipping Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 29, 2025

There are 4 speakers on the call.

Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Diana Shipping Inc. Conference Call for the First Quarter twenty twenty five Financial Results. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. As a reminder, this conference is being recorded.

Operator

It's now my pleasure to turn the call over to Ms. Semiramis Paliou. Please go ahead.

Speaker 1

Thank you. Good morning, ladies and gentlemen, and welcome to Diana Shipping Inc. First quarter twenty twenty five financial results conference call. I'm Camira Missfalou, the CEO of the company, and it's my pleasure to present alongside our esteemed team Mr. Seifi Malgaroni, Director and President Mr.

Speaker 1

Ioannis Zafirakis, Director, Co CFO and Chief Strategy Officer Mr. Lesterica Patrijfon, Director Ms. Maria Deveco, CFO. Before we begin, I'd like to remind everyone to review the forward looking statements on Page four of the accompanying presentation. After a record year for drybulk volumes through 2024, the market seems to have taken a general breather.

Speaker 1

This can be attributed to the current global uncertainty, both economically as well as geopolitical. Even though industry segments, which are tariff sensitive such as container vessels are very volatile, the drybulk market has been dull and uninspiring so far year so far this year, sorry, except for a significant dip in February. The overall market levels are still historically healthy, but sentiment is clearly lacking even though cargo volumes are stable compared to the same period in 2024. Nowhere is this more evident than in the new building market where dry bulk vessels contracting so far this year has slumped to only 0.1% of the global fleet. Q1 was the second lowest quarterly contracting level on record.

Speaker 1

Only Q3 twenty sixteen was lower, but the higher rates and asset prices were a fraction of today's levels back then. Unfortunately, scrapping remains at historically low levels with only 16 vessels scrapped so far in 2025 for a measly 0.1% of the fleet. Meanwhile, the forward curve has become flat for all sizes. However, this has not stopped us from securing improved charter hires, especially in the Capesize segment. Turning to Slide five, let's review our company snapshot as of today.

Speaker 1

Diana Shipping Inc, founded in 1972 and listed on the New York Stock Exchange since 02/2005 operates a fleet of 37 dry bulk vessels, six of which are mortgage free. Our fleet has an average age of eleven point six years and a total deadweight capacity of approximately 4,100,000 tons. We anticipate the delivery of two methanol dual fuel newbuilding Kamsarmax dry bulk vessels at the end of twenty twenty seven and early twenty twenty eight respectively. Fleet utilization reached 99.6% for the first quarter of twenty twenty five, highlighting our effective vessel management strategy. As of the end of the first quarter, we employed nine seventy four individuals at sea and the shore.

Speaker 1

Financially, our net debt stands at 42% of market value, supported by $187,700,000 in cash reserves as of quarter end and total secured revenues of approximately $124,000,000 as of May 22. Moving on to slide six, let's go over the key highlights from the first quarter and recent developments. In February 2025, continuing the renewal and modernization of our fleet, we announced the sale of rotor vessel Altme for a purchase price of approximately US11.9 million dollars before commissions. She was delivered to her new owners in 03/13/2025. Furthermore, in March, we became a strategic partner with an 80% equity interest and invested in a newly established joint venture, Echogast Holdings AS.

Speaker 1

This joint venture has agreed to order two seven thousand five hundred cubic meters semi refrigerated LPG new buildings with an option for two additional vessels. Delivery of the first vessel is expected in the first quarter of twenty twenty seven and of the second vessel in the fourth quarter of twenty twenty seven. In April, we celebrated the company's twenty year anniversary of listing on the New York Stock Exchange with a closing bell ceremony and hosted an Investor Day in New York. The investor presentation is available on the company's website. As of May 22, the company has raised US25.6 million dollars from the exercise of 6,000,401 hundred and 14 warrants under the ongoing warrant program to purchase common shares for cash.

Speaker 1

Of course, 64,900,000.0 could be raised under the scope of the program if all outstanding warrants are exercised. As of 05/22/2025, we have also secured $86,800,000 of contracted revenues for 66% of the remaining ownership days of the year 2025 and have secured US36.5 million dollars of contracted revenue for 13 of the ownership days of the year 2026. Finally, we are pleased to declare a quarterly cash dividend of $01 per common share totaling approximately $1,200,000 Slide seven summarizes our recent chartering activity. Since our last earnings presentation, we have secured favorable time charters for nine vessels, one Ultramax vessel at a weighted average daily rate of 14,000 for two thirty two days, three Panamax, one Post Panamax and one Kantamax vessel at a weighted average daily rate of $11,764 for an average of two ninety nine days. Two new Newcastle vessels at $24,272 for an average of four ninety days.

Speaker 1

Slide eight highlights our disciplined chartering strategy. We focus on staggered medium to long term charters to avoid clustered maturities ensuring earnings visibility and resilience against market downturns. Now, I'll pass the floor to Maria for a more detailed financial analysis. Thank you, Samira.

Speaker 2

Okay. Going to slide nine. We can say that this first quarter of twenty twenty five was a good quarter for Guyana despite the negative market dynamics in the drybulk sector. Our time charter revenues for the first quarter were $54,900,000 decreased by about 5% compared to the $57,600,000 for the same quarter last year. This decrease was due to the decrease in the size of the fleet and an increase in drydock days rather than time charter rates as the average time charter rate that our vessels were fixed in the quarter was better than that of the same quarter last year, which we will see later in the presentation.

Speaker 2

For the same reasons, our adjusted EBITDA decreased to $23,300,000 compared to $24,900,000 in the first quarter of twenty twenty four, a decrease of 6%. Our adjusted EBITDA is calculated by deducting from our operating income, depreciation and amortization of deferred charges and the gain on sale of vessels. Our net income for the quarter increased to $3,000,000 compared to $2,100,000 for the same quarter in 2024, an increase that is mainly attributable to decreased interest and finance charges as a result of a combination of decreased average debt and decreased weighted average interest rates. Net income has also been affected by decreased losses from non operating activities recorded at share values. Earnings per common share diluted was $01 in the first quarter of twenty twenty five and remained unchanged compared to the same quarter of twenty twenty four.

Speaker 2

On the balance sheet side, our cash includes cash on hand and advanced time deposits maturing periods below three months included in cash and cash equivalents, deposits with maturities above three months excluded from cash and cash equivalents and restricted cash, non current, serving as compensating cash balance to secure our loan facilities. On 03/31/2025, our cash decreased to $187,700,000 compared to $207,200,000 as of 12/31/2024. In the quarter, we generated positive operating cash flows, which covered our breakeven costs, which include operating costs and debt service, but cash decreased due to the repurchase of our common shares in January 2025 in a tender offer under which we repurchased 11,400,000.0 shares for $23,000,000 Long term debt and finance liabilities net of deferred financing costs decreased to $623,900,000 as of 03/31/2025 compared to $637,500,000 as of 12/31/2024, a decrease of around 2%, which reflects the steady quarterly amortization of our indebtedness. Going to Slide 10. In this slide, we presented you the financial and other data, which affected revenues, our time charter equivalent rate and the daily operating expenses rate for the periods in review.

Speaker 2

The average number of vessels was 37.8 in the first quarter of twenty twenty five compared to 39.7 average vessels in the first quarter of twenty twenty four and decreased due to the sale of the vessel like PIMI early in March and the sale of two more vessels in the first and third quarters of twenty twenty four. This decrease in the size of the fleet is also reflected in the decreased ownership available and operating days of the fleet, which used to calculate time charter equivalent rates, daily OpEx and utilization. Our time charter equivalent, which is defined as our revenues less voyage expenses divided by the available days was $50,739 per day for the first quarter of twenty twenty five compared to $15,051 per day in the first quarter of twenty twenty four, an increase of 5%, reflecting the better rate achieved in the quarter compared to the same quarter last year. It is important to note that this increased time charter equivalent rate is the result of our consistent and disciplined commercial strategy rather than market conditions, a strategy that is designed to leverage market volatility, deliver a more resilient performance across cycles and stable earnings.

Speaker 2

Fleet utilization for the quarter also increased to 99.6% compared to 99.1% in the same quarter last year as a result of less of higher days. Vessel operating expenses decreased in absolute numbers by 4% due to the decrease in the average number of vessels, but the daily operating expenses increased by 2% to $5,866 per day compared to $5,775 per day during the same period in 2024. The company actively and consistently monitors its expenses and tries to maintain its costs at optimal levels without compromising the quality of its fleet and its operations. Slide 11 presents our current debt profile. This slide shows how the company has prudently and proactively designed its financing strategy, having a mix of variable and fixed rate debt instruments.

Speaker 2

Variable rate instruments consist of secured loan agreements fixed at term software plus a margin. Fixed rate instruments consist of an unsecured bond for sale and leaseback agreements at very favorable fixed rates and an interest rate swap under which we receive their software and pay fixed. We have a fixed annual debt amortization of $47,100,000 without any maturities or balloons until 2029 when our bond becomes due. This steady amortization provides good visibility of our debt service costs, reduces debt in a predictable manner, allows better management of the company's liquidity, strengthens our balance sheet and reduces the company's credit risk profile. As of 03/31/2025 in Slide 12, you can see that our breakeven rate was $16,218 per day.

Speaker 2

As of 05/22/2025, we have fixed 66% of the ownership days for the remainder of 2025 and expect to generate $86,800,000 of revenues at an average time charter rate of $15,806 per day. For 2026, we have fixed 13% of the ownership days and expect to generate $36,500,000 of revenues at an average time charter rate of $20,363 per day. On top of our contracted revenues, we have calculated the revenues that we could generate for the unfixed days of 2025 and 2026 by using the FFA rate presented in this slide. Based on these assumptions, we have estimated that for the remainder of 2025, we could generate revenues of $123,600,000 on aggregate at an average time charter rate of $14,911 per day. And for 2026, we could generate revenues of $190,700,000 on aggregate at an average time charter rate of $14,118 per day.

Speaker 2

Although it appears that the estimated revenues may not be adequate to cover our breakeven rate going forward, by taking into account that current FSA rates are not particularly strong due to negative market conditions in the drybulk sector, increased volatility and uncertainty, we believe that through our chartering strategy, we could capture any market upside going forward by fixing vessels at one year time charter rates for short to medium term periods. Also, we believe that the company is well positioned, having strong balance sheet and predictable cash flows to navigate through the cycles even if market conditions do not improve. And slide 13. This slide presents our dividend payout since the third quarter of twenty twenty one, which has rewarded our shareholders with quarterly distributions of both cash and shares. Consistent with this payout, we have declared another dividend of $01 per share, increasing our cumulative dividend paid since 2021 to $2.67 per common share.

Speaker 2

Thank you for listening to this presentation. And now I will pass the call to Stacy, who will continue with the drybulk market overview.

Speaker 3

Thank you, Maria, and welcome to the participants of this quarterly earnings call of Diana Shipping Inc. Looking briefly at the market, it is troublesome to note that as if the market did not have enough factors creating volatility such as geopolitical, economic uncertainty and supply issues, we now have the addition of tariffs and trade restrictions introduced by President Donald Trump between The U. S. And practically all its trading partners. The effect on spot and time charter rates has been generally negative so far.

Speaker 3

Sentiment has certainly taken a downturn as a result of such huge uncertainty about the future. As of May 27, the twelve month time charter rates for Capes stood at about $19,000 per day for a scrubber fitted ship after reaching a high of $35,000 a day in March 2024. TamsraMax rates stood at $10,750 a day in May with a high of $21,000 per day in March of last year. Similarly, Ultramax time charter rates have dropped from $19,500 a day in February of last year to $11,400 per day only on the May 27. Some recent good news on the tariffs front is the trade deal reached between The U.

Speaker 3

S. And The U. K, which even though leaves plenty of details to be agreed, provides for lower tariffs for steel and 10% tariffs for cars. More recently, it appears that China and The U. S.

Speaker 3

Are making progress on leaving behind them the ridiculously high tariffs announced a few weeks ago and are settling for tariffs of 51% on average for Chinese imports to The U. S. And 10% baseline Chinese tariffs on U. S. Exports with an effective average of 32.6%.

Speaker 3

Moving to the next slide on our macroeconomic developments now. In view of recent tariff announcements and the risk of a trade war developing, the IMF has trimmed the 2025 growth rate estimates for China, India, The U. S. And the Euro Area by between 0.20.5%. So, based on these predictions, China is expected to grow by 4% this year and at the same rate in 2026.

Speaker 3

India is expected to show a GDP growth of 6.2% this year and 6.3% in 2026. In The U. S, the economy is expected to grow by 1.8% this year and by 1.7 in 2026. Most importantly though, world GDP growth is expected to be 2.8% this year and just 3% in 2026. Nevertheless, Chinese GDP grew by 5.4% during the first quarter of twenty twenty five, driven by robust consumer demand and increased industrial production.

Speaker 3

Escalating trade tensions with The U. S. And headwinds in the property market create huge challenges going forward. Slight encouragement comes from the fact that revised measures announced in mid April by the USTR reduce in scope the number of vessels and port calls that will be impacted versus the previous proposals. We need not go into greater detail in this short presentation, but we'll just mention that the effect on the Diana fleet and its charters of such measures in their current form will be relatively minor.

Speaker 3

Going for a brief now commodities update. According to Comodo Research, steel output at large and medium sized steel mills in China is up 5% so far this year, while stockpiles of flat and construction steel have been going down over the last two months. Indian steel production has also risen this year by about 9% on a year on year basis. However, there is considerable overall weakness on steel output outside of China and India, which is bound to create a headwind for the dry bulk area markets. Global iron ore trade is expected to fall by 1% this year with Chinese demand dropping, while steel production trends remain soft in most key economies outside China and India.

Speaker 3

World seaborne volumes are expected to drop to 1,570,000,000 tons and for 2026 shipments are expected to be flat compared to this year. Global seaborne coking coal trade is expected by Clarkson to decline by 1% this year as macroeconomic headwinds put pressure on demand for steel in key economies. Chinese imports are expected to go down by 4% this year. Mainly due to softer Chinese demand, thermal coal shipments are expected by Clarksons to drop by 4% this year to just over 1,000,000,000 tons and drop by a further 2% in 2026. Chinese imports are expected to drop by 6% this year compared to 2024.

Speaker 3

Again, due to softer Chinese demand, seaborne grain trade is expected to drop by 2% in the twenty twenty four-twenty twenty five season. Strong stockpiling and high domestic output are cited as the main causes for this trend. In the coming trade year, starting next month, the trend is expected to reverse course. The USDA anticipates growth of between 46% for global corn, soybeans and wheat exports. Growth in soybean exports will be led by Brazil, where exports of this commodity alone are expected to reach 112,000,000 tons.

Speaker 3

According to Braemar, the greatest significance for shipping of these soybean projections would be first, the ever greater reliance on Brazil's port and supply chain infrastructure plus secondly, additional long fall Panamax trade from Brazil to China, Taiwan and Vietnam. Minor bulk trades are expected to remain stable this year and increase by 2% in 2026, reaching nearly 2,300,000,000.0 tons. Metals such as bauxite as well as minerals such as cement, pet coke and aggregates are anticipated to play a key role in achieving growth for shipments in this sector going forward. Moving now to our slide on fleet development. Looking at the order book, we stood at the March year at $107,200,000 deadweight representing 10.3% of the trading fleet.

Speaker 3

On the Handymax side, there were 28,600,000 deadweight on order equivalent to 11.5% of the fleet. On Panamax, Kamsarmaxes, the 35,900,000 deadweight on order represents 13.3% of the fleet and on Capes, the 32,100,000 deadweight on the order book are equivalent to just 8% of the trading fleet of Capes. Deliveries this year are projected by Clarksons to reach 38,000,000 deadweight followed by an increase to 42,000,000 deadweight in 2026. So far this year, the bulk carrier fleet has increased by 1.1% in deadweight terms with 135 ships delivered with an aggregate of 9,300,000 deadweight. Dry bulk contracting, as our CEO mentioned earlier, was very subdued during the first quarter of this year with just 14 vessels of a combined 1,400,000 deadweight reported orders, down 88% year on year on an annualized basis.

Speaker 3

As for demolitions, Clarksons expect these to reach 5,800,000 deadweight this year and about 8,600,000 in 2026. These figures will obviously depend on the state of the freight market for the rest of this year and sentiment based on anticipated future developments and earnings. A quick look at asset values and how they have developed. According to Clarksons, asset values in bulk shipping remain surprisingly robust compared to the end of twenty twenty four levels in the face of relative weakness seen in current and projected earnings. New building Cape resales are trading at around $76,000,000 about the same as the end of last year, while the price of a ten year old Cape has gone up from $43,000,000 at the end of last year to around $45,000,000 this month.

Speaker 3

Tamsermax resale prices have come down slightly to $38,500,000 since the end of last year, ten year old vessel values have remained steady at around $25,000,000 Prices for Ultramaxes have remained steady according to Clarksons on both the resale and ten year old vessel price levels. Resales are at around $37,000,000 and ten year old vessels are trading at around $23,500,000 On a twelve month basis, however, prices have eased off by about 10% on average from the firm levels seen around the middle of last year on the back of firm earnings and expectations. Let's look at the market outlook now. The overall market outlook according to Clarksons for 2025 is for a softer year than 2024 with the fleet expected to grow by a reasonably modest 3% year on year, but demand on track to fall this year due to several headwinds. However, even slower speeds, greater off hire time due to special surveys and dry docking, as well as pockets of port congestion could not limit the downside.

Speaker 3

Red Sea rerouting is expected to continue in 2025 with arrivals in the Gulf Of Aden still 70% below 2023 levels. On the demand side, seaborne dry bulk trade according to Clarksons is expected to drop by 1% this year with a more modest decline of 0.4% projected in ton miles, supported by firm growth in long haul bauxite shipments from Guinea, reduced market share for short haul Indian iron ore shipments to China and expectations for growth in South American grain exports promoted by fresh Chinese caps on U. S. Grain, assuming of course these materialize. Comodo Research expressed some concern, which we share as regards Chinese steam coal imports going forward.

Speaker 3

For as long as coal derived electricity remains in contraction, which was 7% year to date, and domestic coal production continues to surge, it is obvious that Chinese coal imports will go down. This is not good news for the dry bulk carrier market if it continues for several quarters. Bremer agreed with this forecast and state that China's coal import requirements will do much to determine vessel demand across the Panamax and SupramaxUltramax sectors. According to Commodore Research, there is no other trade that can increase sufficiently to compensate a year on year contraction in global coal trade imports. Looking out to 2026, Clarksons predict another year of softer earnings for bulk carriers with fleet projected to grow by 3% year on year and trade growth being determined by prevailing macroeconomic conditions at the time, which are not sufficiently positive to justify much optimism.

Speaker 3

However, we need to wait for more developments on the macroeconomic front, which will affect demand next year. Turning to the last slide of this presentation, analysts quoted in this short presentation mentioned several factors which they expect will influence the short and medium term future of the dry bulk carrier market. We summarize the most important points. On the positive side, we see strong Brazilian soybean as well as other grains crop season. The commencement later this year of iron ore shipments from Simandou in Guinea, revised measures announced in mid April by the USTR, reducing the number of vessels and port calls that will be impacted by them Red Sea rerouting expected to continue for the rest of the year gradual resolution of conflicts affecting Ukraine and Israel, to reconstruction and finally, lifting of sanctions against Syria, leading to the reconstruction of Syria itself.

Speaker 3

On the negative side, worldwide lower steel production outside India and China, Protectionist measures with high tariffs leading to trade wars, bulk carrier fleet growth outpacing demand growth for twenty twenty five-twenty twenty six except for the Cape sector large increases of hydropower output in India and China anticipated long term reduction in coal imports by China, and finally weaker world GDP growth if tariffs don't settle soon at reasonable levels. On this note, I will pass the call to our CEO, Severin Myspallo to present the most important financial highlights from the first quarter of this year as well as some takeaway points from this earnings call. Thank you for your attention.

Speaker 1

Thank you, Stacy. So before we conclude today's presentation, I'd like to highlight our ongoing ESG initiatives. So Diana Shipping Inc. Is committed to promoting eco friendly technologies and modernizing our fleet, transparently sharing emission data to ensure accountability, and amongst other things, building on partnerships and collaborations to advance our sustainability goals. So moving on to Slide 19.

Speaker 1

In summary, Diana Shipping Inc. Stands on a strong foundation built on over fifty years of industry experience and twenty years of the New York Stock Exchange. A seasoned management team adapt to addressing industry challenges, strong stakeholder relationships and a disciplined strategic approach, a solid balance sheet with a strong cash position and a countercyclical mindset, and ongoing fleet modernization efforts, a focus on rewarding our shareholders when possible under robust ESG strategy. So thank you for joining us today. We now look forward to addressing your questions during the Q and A session.

Operator

Thank you. We'll now be conducting a question and answer session. We have reached the end of our question and answer session. I'd to turn the floor back over to management for any further or closing comments.

Speaker 1

Thank you very much for joining us today at Diana's first quarter twenty twenty five financial results. We look forward to presenting to you again in the next quarter. Thank you for joining.

Operator

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.

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Key Takeaways

  • First quarter time charter revenues fell 5% year-over-year to $54.9 million and adjusted EBITDA declined 6% to $23.3 million, despite net income rising to $3.0 million on lower finance costs.
  • The company maintains a strong balance sheet with net debt at 42% of market value, $187.7 million in cash reserves, and no debt maturities until 2029 under a steady $47.1 million annual amortization schedule.
  • Diana Shipping has fixed 66% of remaining 2025 days at an average rate of $15,806/day and secured improved Capesize charters including Newcastlemax fixtures at $24,272/day.
  • Fleet modernization continues with orders for two methanol dual-fuel Kamsarmax vessels for 2027–28 delivery and an 80% stake in an LPG joint venture to acquire two 7,500 m³ semi-refrigerated LPG newbuildings.
  • The board declared a $0.01 per share quarterly cash dividend and repurchased $23 million of common shares in January, raising total dividends to $2.67 per share since 2021.
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Earnings Conference Call
Diana Shipping Q1 2025
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