Diana Shipping Inc. Q1 2010 Earnings Call Transcript

Diana Shipping Inc. Q1 2010 Earnings Call Transcript
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Diana Shipping Inc. (DSX)

Q1 2010 Earnings Call

May 26, 2010 9:00 AM ET

Executives

Edward Nebb – Investor Relations Advisor

Simeon Palios – Chairman and CEO

Stacey Margaronis – President

Andreas Michalopoulos – Chief Financial Officer

Ioannis Zafirakis – EVP and Secretary

Analysts

John Chappell – JPMorgan

Justin Yagerman – Deutsche Bank

Gregory Lewis – Credit Suisse

Scott Burk – Oppenheimer

Presentation

Operator

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Greetings, and welcome to the Diana Shipping Inc., 2010 First Quarter Conference Call. (Operator Instructions) As a remainder, this conference is been recorded.

It is now my pleasure to introduce your host Edward Nebb, Investor Relations Advisor for Diana Shipping. Thank you Mr. Nebb, you may begin.

Edward Nebb

Thanks very much Claudia. Welcome everyone to the Diana Shipping, Inc 2010 First Quarter Conference Call. The members of the Diana Shipping management team who are with us today include Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Executive Vice President and Secretary; and Ms. Maria Dede, Chief Accounting Officer.

Before management begins their remarks, let me briefly summarize the Safe Harbor notice, which you can see in its entirety in the news release we issued earlier today. Certain statements made during this conference call, which are not statements of historical fact are forward-looking statements and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on assumptions, expectations, projections, intentions, and beliefs as to future events that may not prove to be accurate.

For description of the risks, uncertainties, and other factors that may cause future results to differ materially from what is expressed or forecasted in our forward-looking statements, please refer to the company's filings with the Securities and Exchange Commission.

And with that, let me turn the call over to Mr. Simeon Palios, Chairman and Chief Executive Officer of Diana Shipping, Inc.

Simeon Palios

Thank you. Good morning and thank you for joining us today. We are pleased that the results of Diana Shipping for the first quarter of 2010 continued to reflect our profitable performance. The sound management of our fleet and the strength on our balance sheet. We have also made steady progress in implementing our strategy to build shareholder value through investments in our fleet.

In this regard, the following developments during the first quarter are particularly note worthy. In early March we took delivery of the newly built motor vessel New York and Capesize dry bulk carrier that has been chartered to Nippon Yusen Kaisha for a minimum 58 month to a maximum 62 month period at a gross rate of $48,000 per day.

We announced conference in April for the construction of two Newcastlemax dry bulk carriers, so of approximately 206,000 dead weight each for a contract price of $59 million per vessel.

We expect to take delivery of these vessels during the first half of 2012. These events followed our earlier announcement in January, 2010 for the delivery of a Panamax dry bulk carrier motor vessel Melite. This vessel was purchased at a price of $35.1 million.

As a result we have increased the size of the fleet to 22 vessels, last the two new biddings on order.

This clearly reflects our strategy or seeking to take advantage of market opportunities to expand our fleet in a disciplined and cost effective manner. As we have noticed in the past and depending on prevailing market conditions, we plan to continue this process over the next 20 months in order to build our capacity to generate consistent revenue and drive increasing shareholders value.

Now, I would like to point out some of the highlights of our first quarter performance. Then the members of our senior management team will review our market outlook and discuss the financial results in greater detail.

Net income was $28.8 million for the first quarter of 2010. Voyage and time charter revenues totaled $62.2 million. Our daily time charter equivalent rate was $31,982 for 2010 first quarter which covers daily vessel operating expenses by a cutter of nearly five times. Diana's balance sheet has remained strong. Our cash position was approximately $298 million at March 31st 2010.

We have continued to operate with a relatively low amount of leverage compared to our shipping company peers. Long term debt including the current portion of the end of the first quarter was $327.7 million, compared with stockholders equity of more than $1 billion. Our fleet employment strategy continues to promote consistent and predicable revenue streams. Approximately three quarters of our vessels are chartered for periods ranging from 2011 to 2015.

In conclusion, Diana shipping has performed well across a range of economic and industry requisitions and we have demonstrated our commitment to building shareholder value through the prudent management of our business, the focused and disciplined expansion to our fleet and our reauthorization of the share repurchase program.

With that, I will now turn the call over to our President, Stacey Margaronis. Thank you.

Stacey Margaronis

Thank you Simon and welcome to all who have joined us today in our latest quarterly conference call. The first quarter of this year started off with uncertainty for large bulk area earnings who developed in a volatile manner and lower but nevertheless on a very positive note. The Baltic dry index started the quarter at 3140 and finished at 2998. The bulk area Cape index began the year at 4197 and at the end of March to the 3425 while the Baltic Panamax Index went from 3823 to 3674 during the same period.

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