Diana Shipping Inc. Q2 2010 Earnings Call Transcript

Diana Shipping Inc. Q2 2010 Earnings Call Transcript
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Diana Shipping Inc. (DSX)

Q2 2010 Earnings Call

August 05, 2010 9:00 am ET

Executives

Edward Nebb - IR

Simeon Palios - Chairman and CEO

Anastassis Margaronis - President

Andreas Michalopoulos - CFO

Ioannis Zafirakis - EVP

Maria Dede - CAO

Analysts

Jon Chappell - JPMorgan

Joshua Katzeff - Deutsche Bank

Gregory Lewis - Credit Suisse Group

Fotis Giannakoulis - Morgan Stanley

Doug Mavrinac - Jefferies & Co.

George Pickral - Stephens Inc.

Presentation

Operator

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Greetings and welcome to the Diana Shipping Incorporated 2010 second quarter conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Edward Nebb, IR advisor for Diana Shipping. Thank you, Mr. Nebb, you may begin.

Edward Nebb

Thank you very much Rob and thanks to all of you for joining us this morning for the company's 2010 second quarter conference call. The members of the Diana Shipping management team who are with us today are Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Anastassis 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 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. 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 a description of the risks, uncertainties, and other factors that may cause future results to differ materially from the forward-looking statements, please refer to the company's filings with the SEC.

And now without further adieu let me turn the call over to Mr. Simeon Palios, Chairman and Chief Executive Officer of Diana Shipping.

Simeon Palios

Thank you, Ed. Good morning and thank you for joining us today. I am pleased to report that Diana Shipping has continued to successfully navigate a volatile period for the dry bulk industry. We face an environment in which on the one hand the improvement in world economies should lead to greater demand for dry bulk shipping services. Yet on the other hand, the supply side of the industry is likely to face continued pressure on shipping rates and vessel values.

At this time, of a certain industry conditions we have reported increased revenues for the second quarter of 2010. Our ability to deliver this solid performance is a reflection of the strategies we have that should consistently throughout our history as a public company. Specifically, we have moved forward with efforts to grow our fleet, to build a consistent revenue stream and to maintain a prosperous balance sheet.

In particular, I would like to point out the following highlights of our second quarter financial results. Net income rose to US$33.9 million. Voyage and time charter revenues totaled US$68.7 million. Our average daily time charter equivalent rate was US$33,105 for the 2010 second quarter which covers daily vessels operating expenses by a quarter of five and half times.

Diana has maintained a healthy balance sheet which is reflected in a cash position of approximately US$298.2 million as of June 30, 2010. Also we continue to operate with a modest amount of leverage compared to our shipping company peers. Long-term debt including the current position was US$326.3 million at the end of the second quarter compared with shareholders equity of nearly US$1.1 billion.

The major contribution with the solid performance has been our fleet expansion strategy. The company's increase in revenues for the 2010 second quarter reflected the acquisitions of the investments, Houston, Melite and New York, all of which were added to the fleet between late 2009 and early 2010.

We also have continued to manage all of our vessels in a manner intended to produce trade and the revenues across the industry site. For example between June and July 2010 we announced time charter condos for high vessels; the Panamax vessels Dione, Oceanis, Nirefs and Calipso and the Capsize, Sideris GS. As a result of this activity, approximately 70% of our fleet is now charter for 2011.

Looking towards the future, we continue to be enthusiastic above our opportunities to make strategic investments in the expulsion of our fleet. By taking advantage of present market conditions, we have increased the size of the fleet to 22 vessels as well as to look after the much new billings on order for 2012 January.

We plan to continue this process in a focused and disciplined manner over the next 18 months subject to market conditions in order to further enhance our revenue stream capacity to generate consistent revenues and drive increasing shareholder value. We are confident that Diana Shipping remains well positioned to continue to build shareholders' value. We have a proven growth strategy, reliable cash flow and a solid balance sheet to support our initiatives.

With that, I will now turn the call over to our President, Stacy Margaronis for a perspective on industry conditions. We will then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide us a financial overview. Thank you.

Anastassis Margaronis

Thank you, Simeon and a warm welcome, to all who have joined us in this mid-summer conference call. The second quarter was certainly one which reminded us all that volatility is the name of the game in the dry bulk shipping industry. Those who regard the shipping as a daily cash flow business providing a nice steady dividend suitable for retirement or to consider more carefully their investment philosophy.

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