Diana Shipping Inc. (DSX) Q3 2018 Earnings Report, Transcript and Summary

Greetings and welcome to the Diana Shipping Inc. 2018 Third Quarter conference call. [Operator instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ed Nebb, Investor Relations Consultant. Thank you. You may begin.

Thanks, Michelle, and thanks to all of you for joining us for the Diana Shipping Inc. third-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, Chief Strategy Officer and Secretary; Ms. Semiramis Paliou, Chief Operating Officer; and Ms. Maria Dede, Chief Accounting Officer. Before management begins, let me briefly remind you of the safe harbor notice, which is attached to the bottom of today's news release. Certain statements made during this conference call, which are not historical fact, are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections or beliefs as to future events that may or may not prove to be accurate. And 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 with that, let me turn the call over to Mr. Simeon Palios, chairman and CEO.

Thank you, Ed. Good morning and thank you for joining us today to discuss the results of Diana Shipping Inc. for the third quarter of 2018. The company continued to strengthen its financial performance during the recent quarter. Our ongoing efforts to position the business for an improving industry cycle resulted in higher time charter revenues and significantly improved profitability. Also, we have continued to actively manage our fleet profile to optimize our mix of vessels and maintain our operational and financial flexibility. In addition, Diana Shipping Inc. recently commenced a self-tender that reflects our commitment to delivering -- to deliver shareholder value and our confidence in the company's prospects. With regard to our financial results, Diana Shipping Inc. reported net income of $14.8 million and net income attributed to common stockholders of $13.3 million for the third quarter of 2018. This represents a meaningful improvement over the net loss of $24.5 million and net -- a net loss attributed to common stockholders of $25.9 million reported in the third quarter of 2017. Time charter revenues rose to $61.5 million for the third quarter of 2018, compared to $43.9 million for the same period of 2017. The sharp growth in time charter revenues was due to the increased average time charter rates that we have achieved for our vessels during the quarter. With respect to the balance sheet, cash, cash equivalents, and restricted cash on September 30, 2018 were $202.1 million, a sharp increase from $65.8 million a year ago. Long-term debt net of deferred financing costs was relatively flat at $605.1 million while stockholders' equity increased to $639.5 million. Among our financing initiatives during the third quarter, the company closed a $100 million private replacement of senior unsecured bonds maturing in September 2023. This financing enables us to redeem all of the outstanding 8.5% senior notes due 2020 in the aggregate principal amount of approximately $63.25 million in late October. We are pleased with this receptivity to the private placement in the marketplace, which [indiscernible] the company to extend the duration of its financing and increase our financial flexibility. Other financing highlights in the third quarter included the signing of a term loan facility with BNP Paribas for up to $75 million with a maturity date of July 16, 2023 to refinance an existing debt with the bank of $130 million outstanding balance. We completed a drawdown of $75 million under this facility and repaid the balance from the previous loan with cash and cash equivalents. Also the company received the full and final repayment of the loan to Diana Containerships Inc. Just recently, on November 21, the company announced the commencement of a tender offer to purchase up to 4,166,666 shares or about 3.86% of our outstanding common stock at the price of $3.6 per share. The tender offer will expire at the end of the day 5 p.m. Eastern time on December 20, 2018 unless extended or withdrawn. The board of directors determined that repatriating the shares is in the company's best interest, given Diana Shipping Inc.'s cash position and stock price. Earlier this month, we announced agreements to sell two vessels, the 2001-built vessel Alcyon with the sale price of $7.45 million before commissions and the 2001-built vessel Triton for a sale price of $7.35 million before commissions. Both vessels are expected to be delivered to the buyers latest by January 7, 2019. We will continue to manage our fleet of 48 vessels in a responsible manner that promotes a balance of time charter maturities and produces a predictable revenue stream. Currently, our fixed revenue days are 99% for 2018 and 43% for 2019. Looking ahead to the balance of 2018, we are confident that the continued strategic management of our fleet and solid financial resources will enable the company to continue to benefit from improving conditions in the dry bulk marketplace. With that, I will now turn the call over to our President Stasi Margaronis for a perspective on industry conditions. He will then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide a more detailed financial overview. Thank you.

Thank you, Simeon. And once again, a warm welcome to the participants of this third-quarter conference call on Diana Shipping Inc. Just as a quick reference, I'd like to mention that according to the Clarksons bulker earnings of bulk carriers came at an average of $12,019 a day from January to August this year, which is up 25% year on year. The Baltic Dry Index started the year at 1,230, and today, closed at 1,217. The Baltic Panamax Index stood at 1,340 at the beginning of the year, and today, closed at 1,389. As for the Baltic Cape Index, it was 2,281 on January 2nd, and today, closed at 1,789. So let's turn first to a brief summary of macroeconomic news. According to the IMF, global growth for 2018 to '19 is projected to remain steady at 3.7% as per 2017 level, but its pace has been less vigorous than projected in April and it has become less balanced. Downside risks to global growth have risen in the past six months, and the potential for upside surprises has receded. Advanced economies are expected to grow by 2.4% this year and by 2.1% in 2019. As for developing economies, the IMF expects growth this year to be 4.7%, and the same is expected to be seen in 2019. Eurozone GDP growth is estimated by the IMF to be 2% this year and 1.9% next year. As for the United States, growth for this year is expected to be 2.9% and for next year, slightly lower at 2.5%. According to China's National Bureau of Statistics, the country's GDP growth slowed from 6.7% during the second quarter of this year to 6.5% during the third quarter. For the year as a whole, GDP growth is estimated by the IMF to be 6.6%. For 2019, GDP growth is expected to fall to 6.2%. In China again, according to Commodore Research, the Central Bank cut the required reserve ratio for most Chinese banks by 1%, effective on October 15. Overall, cutting the reserve ratio is a common strategy used to stimulate the market, increase liquidity, and boost sentiment. The Chinese government remains committed to further stimulate the Chinese economy, partially in response to the ongoing trade war. This will be through very large domestic infrastructure and railway projects as we have seen in the past. All the above macroeconomic statistics and forecasts indicate that economic growth should, barring unforeseen events, underpin demand for bulk carriers through at least the end of next year. Looking quickly at the supply side statistics now. According to Braemar, after taking into consideration anticipated scrapping and slippage forecast, overall bulk carrier capacity should increase by 2.5% in 2018 and 3.3% in 2019 and by 4% in 2020. According to banchero costa, the fleet of Capes and VLOC is expected to grow by 3% the next year and in 2020 while the Panamax and Post Panamax fleet is expected to grow by 3% in 2019 and only 2% in 2020. According to Commodore Research, the Capesize fleet has seen only 34 vessels added so far to the fleet. This, together with strong iron ore exports, should support Capesize vessels rates going forward. Turning to demand now. As banchero costa point out, dry bulk seaborne trade is dominated by the steel industry and the power sector. As such, about two thirds of all cargo volumes are either iron ore or coal. Much of the rest is made up of steel products, scrap, bauxite, grains, soybeans, fertilizers, and other products. According to Clarksons, after expanding by 4.2% in 2017, global seaborne dry bulk trade is currently projected to grow by 2.6% in full-year 2018 and by 3.2% in ton miles. This demand is expected to outstrip the anticipated supply expansion of 2.7% this year. Looking to 2019 now, Clarksons expect fleet growth to remain moderate at around 2.8%. I'd like to point out that Braemar's estimate is 3.3% with demand increasing by 3.1% in terms of ton miles. This leads Clarksons to state that fundamentals in the bulk carrier sector are projected to be broadly balanced next year, a view to which we concur. Scrapping now. According to Clarksons, against the backdrop of slightly firmer shipping market, bulk carrier demolition has been extremely limited during the first nine months of this year with only 44 units with a combined carrying capacity of 3.1 million deadweight reported sold for scrap. According to Braemar, scrapping this year will reach a near 5 million deadweight, which if realized will be the lowest level in absolute terms since 2007. For comparison purposes, a total of 227 bulk carriers were scrapped in 2017 with a total capacity of 7.3 million deadweight. The average age of ships sold for demolition so far this year has gone up to 28.4 years old from 24.6 last year. This is not surprising considering improved vessel earnings. Let's have a look at steel now. According to Howe Robinson, world crude steel production was 1.347 billion tons during the first nine months of 2018, up by 4.7% compared to the same period in 2017. According to Gibson Shipbrokers, World Steel has produced its short-term steel outlook. It pays particular attention to China and identifies a deceleration of steel demand toward the end of this year and into 2019. This identifies the decelerating world economy and the ongoing trade friction with the USA is creating downside risks. World Steel expects global demand growth in 2018 to be 2.1%, and in 2019 to be just 1.4%. Let's look at iron ore now and the effects on that commodity as a result of steel trends. According to banchero costa, China's iron ore imports during the first nine months of 2018 were down 1.7% year on year to 803.5 million tons even as Chinese steel production surged and domestic iron ore output continued to fall. Domestic iron ore output over the same period fell by a drastic 40% year on year as environmental and safety restrictions intensified. The lower levels of iron ore imports could also reflect the combination of less ore required in steelmaking due to the usage of higher-grade ore and some port inventory drawdown, also said to be of the higher-quality ore, mainly bought during periods of price weakness. According to Clarksons, Chinese seaborne iron ore imports are projected to remain steady in full-year 2018, reflecting rising scrap use by steel mills and reduced demand for low-quality ore as mentioned above. Overall, global seaborne iron ore trade is currently projected to grow by 0.9% in full-year 2018 to around 1.5 billion tons, the slowest pace of growth since the early 2000s. This trade is projected to grow by around 1% in 2019 but downside risks remain. According to Commodore Research, the iron ore stock pile at the Chinese ports stood at 145.2 million metric tons at the end of October this year. Coking coal now trade. According to Clarksons, overall, seaborne coking coal trade is projected to grow by a firm 4.5% to reach 268 million tons in 2018 and maybe by a further 3% in 2019. It is worth noting that according to Clarksons, Indian seaborne coking coal imports are projected to grow by 13% in 2018 to reach 59 million tons while shipments to Vietnam, Brazil, Indonesia, and Taiwan are also expected to reach record levels. As for steam coal, according to Clarksons, China's seaborne steam coal imports are currently projected to grow by around 14% in full-year 2018. Chinese seaborne thermal coal imports are initially projected to remain relatively steady next year, although there are downside risks to this outlook. U.S. seaborne steel coal exports are projected to rise by 29% to reach 47 million tons in 2018 before easing slightly next year. Overall, total global imports are expected to increase 4% this year and reach 981 million tons and by a further 2% next year. Let's look at wheat, coarse grain, and soybean. Chinese soybean imports are expected, according to Clarksons, to drop by 11% this year to 85 million tons with total Chinese seaborne grain imports expected to fall by 9% to 106 million tons in 2018. Overall, global seaborne grain trade is expected to grow by just 1% in the 2018-'19 grain season, following an expansion of 6% the previous season. And total grain trade is expected to increase by 2% in the 2019 to 2020 season. A brief look at newbuilding deliveries. During 2018, newbuilding deliveries could, according to Braemar, reach 27.1 million deadweight. This, if it materializes, would be the lowest volume of deliveries in 10 years and 28% lower than in 2017, a year that was already light on newbuilding deliveries. Let's look at contracting now. According to Clarksons from January to September this year, a total of 58 Capes with a combined 12.4 billion deadweight were ordered, down 22% year on year on an annualized basis in terms of deadweight. Contracting in the Panamax sector through the end of September this year came in at 64 vessels of a combined 5.2 million deadweight, down 40% year on year in deadweight terms. On order books now. According to Clarksons, at the end of September, the bulk carrier order book of 82.6 million deadweight was the equivalent of 10% of the existing fleet. From this total, about 10.2 million deadweight are expected to be delivered from the end of September to the end of this year, 35 million deadweight during 2019 and the remaining 37.4 million deadweight from 2020 onwards. For reasons explained in this report, this is additional capacity that can easily be absorbed by the market if demand projections materialize. As you go to Capes, the order book of 47.1 million deadweight represents 14% of the existing fleet and the 19.2 million deadweight Panamax order book was equal to about 9% of the trading fleet. A brief look at tariffs. Retaliatory tariffs imposed by China on U.S. Soybean exports have left farmers in the U.S. searching for alternative markets for their record soybean crop. In the short term, the USDA sees the United States establishing a greater presence in other markets, such as the European Union, while a greater portion of Brazilian supply will be exported to China. Weather conditions in the European Union aided this flow of produce from the United States to Europe. This, in the view of USDA, should present a dramatic fall in U.S. exports. In the long-term, however, this might not be a feasible solution to the export problem created by these tariffs, assuming they are here to stay, which we all hope they will not. Let's finally turn to the outlook for our industry. Commodore Research remained bullish on the prospects of the Capesize market and expect more strength in Brazilian spot iron ore cargo volume through the end of the quarter and into early 2019. We expect to see strong iron ore import demand at least through the end of this year. According again to Commodore Research, going forward the next few months, we may set to see much lower grain exports, especially from Australia, than usually seen at this time of the year. This remains a troubling issue for them for upcoming Panamax prospects. To counterbalance this, Clarksons pointed out to several positive drivers, including the significant growth potential in coal imports into a range of Asian economies as we mentioned earlier on. In this environment, the Diana management team maintains the same views about the future course of the bulk carrier market as expressed in our most recent quarterly conference calls. This is that unless serious event take place down the road, leading to a distortion of the anticipated favorable balance of supply and demand, earnings and ship values should improve over the following quarters. A further strengthening of the balance sheet through efficient management of the company's capital structure will continue. Older ships will be sold and the board of directors will consider, in due course, the introduction of a dividend. I will now pass the call to our CFO Andreas Michalopoulos, who will provide us with the financial highlights of the third quarter and first nine months of 2018. Thank you.

Thank you, Stasi, and good morning. I'm pleased to be discussing today with you Diana's operational results for the third quarter and nine months ended September 30, 2018. Net income and net income attributed to the -- to common stockholders amounted to $14.8 million and $13.3 million, respectively. Earnings per common share was $0.13. Time charter revenues increased to $61.5 million compared to $43.9 million in the third-quarter 2017. The increase was due to the increased average time charter rate that we achieved through our vessels during the quarter. Ownership days were 4,600 in the third quarter of 2018, compared to 4,692 in the same quarter of 2017. Fleet utilization was 99.5%, compared to 97.9% for the same quarter of 2017, and the daily time charter equivalent rate was $12,975, compared to $8,947 for the same quarter of 2017. Voyage expenses were $1.8 million for the quarter, compared to $2.5 million for the same quarter 2017. The decrease in voyage expenses was due to a gain from bunkers of $1.6 million, compared to a loss of $0.2 million in the same quarter of 2017. Vessel operating expenses amounted to $22.8 million, compared to $22.7 million for the third quarter of 2017. The slight increase was due to increased stores, repairs, taxes, and environmental costs and was partly offset by decreases in all other operating expense categories. Daily operating expenses were $4,968 for the third quarter of 2018, compared to $4,837 for the same quarter of 2017, representing an increase of 3%. Depreciation and amortization of deferred charters amounted to $13.2 million. General and administrative expenses were $6.8 million, compared to $5.7 million in the same quarter last year. The increase was mainly due to increased payroll costs. Management fees to related party were $0.6 million, compared to $0.5 million for the same quarter last year due to the increased average number of vessels managed by Diana Wilhelmsen. Interest and finance costs amounted to $7.2 million, compared to $6.8 million in the same quarter of 2017. This increase was attributable to increased average interest rates in the quarter compared to the same quarter of 2017 and was partly offset by decreased average debt. Interest and other income amounted to $5.5 million, compared to $1.5 million for the same quarter last year. The increase was due to a $5 million additional premium paid under the long due from Diana Containerships Inc., which was repaid in full on July 23, 2018. For the nine months ended September 30, 2018, now, net income amounted to $13.7 million and net income attributed to common stockholders amounted to $9.3 million. Earnings per share was $0.09. Time charter revenues increased to $163.3 million, compared to $113 million for 2017. The increase was attributable to increased average time charter rates that we achieved for our vessels during the nine-month period, the increase in ownership days, and better fleet utilization compared to the same period in 2017. Ownership days for the nine months ended September 30, 2018 were 13,660, compared to 13,495 last year. Fleet utilization was 99.1%, compared to 98% for the same period in 2017. And the daily time charter equivalent was $11,736, compared to $8,088 for the same period in 2017. Voyage expenses were $4.7 million for the nine months ended September 30, 2018. Vessel operating expenses amounted to $70.3 million, compared to $66.3 million for 2017. The increase in operating expenses was due to the 1% increase in ownership days resulting from the enlargement of the fleet and increased costs in all operating expenses except for insurances and other. Daily operating expenses for the nine months ended September 30, 2018 were $5,150, compared to $4,916 for 2017, representing a 5% increase. Depreciation and amortization of deferred charges amounted to $39.2 million for 2018. General and administrative expenses increased to $20.5 million, compared to $18.2 million in the same period of 2017, mainly due to increased payroll costs. Management fees to related party were $1.8 million, compared to $1.3 million in 2017. An increase -- the increase was due to an increased average number of vessels managed by Diana Wilhelmsen during the period compared to the same period in 2017. Interest and finance costs amounted to $21.5 million, compared to $19.9 million in 2017. This increase was attributable to increased average interest rates compared to the same period last year while average debt is decreasing. Interest and other income amounted to $8 million, compared to $3 million in 2017. This increase was mainly due to the increase in interest income from Diana Containerships following the payment of the $5 million discount premium. Thank you for your attention. We would be pleased to respond to your questions now, and I will turn the call to the operator, who will instruct you as to the procedure for asking questions.

[Operator instructions] Our first question comes from the line of Fotis Giannakoulis with Morgan Stanley. Please proceed with your question.

I would like to go -- to ask about the share repurchase and also the repayment of your debt. What was the thinking process behind this decision? Why would you deploy the capital toward buying securities instead of buying assets? Does this say something about the level of asset prices or the level of your stock price? How do you view your capital allocation?

This is Ioannis speaking. First of all, we would have to go a step back and explain that from the beginning, we always wanted to create options for our company and that shows to you that we are always in a very strong position to decide what we can do with our strong balance sheet. Basically the share repurchase tender that we have in place shows to everybody that we are considering our ships as being priced publicly very cheaply and we decided to invest on those. Basically we are buying -- we are investing on our same company and we are considering the price paid as very attractive for the company to produce a very nice return for our shareholders. It's very simple.

And, Ioannis, I know that you are a student of the shipping cycles, and many times, you have talked about the sentiment and whether the market thinks that asset price -- I'm talking about the physical market, thinks that asset prices are high or low. What is your -- what does your analysis say right now about the level of asset prices based on where rates are and based on where the sentiment is? And you mentioned that your ships are priced below the optimal levels or the recommended levels from the public markets. What is happening from the private market? Would you be considering of selling some of your ships in the private market where you can achieve higher valuations?

First of all, let me start by saying that as regard the charters and the chartering environment, we are certainly somewhere in the middle of this phase of the cycle and we are considering that we are entering or if we are not at the upper part of the cycle. The values of the vessels have not moved similarly, but still we cannot say that this is 100% an opportunity to buy new vessels, and you know that we are not doing that. But certainly when there is a very big arbitrage and you are in the line of business articulating NAVs, etc., we don't do that officially. Buying back our stock, it poses as a very attractive opportunity. As regards your question about selling more of our vessels, certainly we will be doing that in a staggered manner and we will get rid of the older tonnage. And in case we are still valued lower than what we should have been doing, we will be selling and we will be buying back at a big discount. We will be taking advantage of the arbitrage as soon as it's going to be there.

Thank you, Ioannis. And asking -- jumping toward the macroenvironment, it seems that there's an extreme fear right now on anything that has to do with China. Have you seen any signs in -- of actual slowdown of Chinese demand? You -- Stasi, you mentioned about the forecast for iron ore and the steel-related demand that is not showing any high growth. To the contrary, it might shrink a little bit. Is this something that concerns you? Can the dry bulk market thrive without the strong steel industry in China? And can other commodities, minor commodities keep the supply/demand balance, let's say, for shipowners? And potentially, if you can also comment about the implications and the impact of IMO 2020 on dry bulk supply/demand?

A plethora of questions, I'll try and remember the first one, which has to do with China and the growth there affecting demand for commodities. The slowdown in the GDP growth in China is not a particular concerns to us at this stage and we have not witnessed any particular weakness in imports, which we can ascribe to a lower growth in GDP -- or anticipated lower growth in GDP. Now the demand for iron ore is growing much slower than it has been up till now. And there's no doubt, as we said earlier, that iron ore and coal are, by far, the most important commodities. And if we see those dropping by volume of transportation by a few percentage points, then the other commodity have to increase by a multiple of such a reduction in order to make up the lost -- for the lost demand for tonnage. So we sincerely hope we're not going to see significant drops in either of these two commodities, going to China or elsewhere for that matter as a result of steel production. Now steel, as we know, is the driving force for demand for these major commodities and underpins the demand for transportation for both coal, coking coal primarily, and iron ore. Now if we take into consideration the fears that we have been listening to over the last few years about steel production slowing, we should have had a bad market and the slower volume -- and lower volumes of trade in iron ore and coal for many years now, and we have not. The reason is that China, with infrastructure projects, keeps making up for any lost demand in the export market for its steel. That's our feeling, and we can see that reflected in numbers. So as long as they keep moving their economy and creating incentives the way they have been, the Chinese government, I mean, we have no fear that those two major commodities are going to create a problem in demand for dry bulkers. Where we do see a drop, as I mentioned earlier, is for imports in wheat, coarse grains, and soybeans into China. Now that is going to affect demand for Panamaxes. And in the event that demand for coal from other Asian nations, except China, doesn't make up for this reduction in demand for Panamaxes, we might be seeing some weakness on the Panamax side. Now as regards the IMO 2020 effects on demand, I'd like to pass this to my colleagues here, with whom we have discussed at length this issue, and we have formulated an opinion as to what is likely or most likely to happen post January 2020 as a result of implementation of these regulations by the IMO.

Basically, Fotis, you will -- I'll say it again, the same thing that we keep saying that talking only about the demand is a misleading way of looking at things because certainly nobody can deny that people are talking about the possibly decreased demand, but at the same time, you're seeing the supply shrinking and also you do not have this optimism about how fantastic the market is going to be in the next year. And therefore, we keep saying that all of these valid arguments about trade war, IMO regulations, etc., may lead to a much lower supply of vessels than the lower demand that everybody sees. And you may see increasing time charter rates and values for the vessels. So the mistake that we kept -- we keep doing throughout the year looking at one of the two or the three factors that are affecting our industry, the third one is sentiment, will lead us to the wrong results. So to cut the long story short, what we say is that from the moment the fear of something happening is higher than the actual fact, then the result may be exactly the opposite. And the IMO regulations, the only implementation they're going to have is either to use a cleaner fuel or to install scrubbers, and we will move on. That's it. It's very simple.

Thank you, Ioannis. On the IMO, I'm just trying to understand. If your fuel price goes up by $200 or $300 per ton because of the IMO 2020, do you -- don't you have to slow down your fleet? At what level of speed your fleet will be optimized? Is this going to create any notable effect, or the industry will keep operating at 12.5 knots, as it does today?

Slowing down is not the solution of the problem simply because there are technical reasons why you cannot slow down as much as you want, firstly. But secondly, everything depends on the time charter rates, whether this is going to become more economical for the charter or not. The slowing down story of the picture, we don't appreciate at all. We don't like what we are hearing because vessels didn't slow down when rates were at $4,000 per day and $3,000, and they're going to slow down now. I don't think that this is a possible scenario.

[Operator instructions] Our next question comes from the line of Randy Giveans with Jefferies. Please proceed with your question.

Just following up on Fotis' question there. Looking at the share repurchase, which I think is a good source of -- or a good use of cash there, what is the thought process behind a tender offer versus maybe a block trade or just buying it kind of at the market? And then how did you determine the size of the repurchase amount?

Well, we consider our options. As you can imagine, we felt that the tender offer was providing us the possibility to come up with exactly your second question, that is the size we wanted in a short period of time. So this is why we used that method versus some other, like the share buyback, whereby the share buyback takes forever to achieve what you want. That's for your first question. And in terms of the size, we felt that the good size for us was more or less the amount that we got from the sale of the two vessels that we announced a few weeks ago, that is motor vessel Triton and motor vessel Alcyon. That's $60 million dollars. And if you make up your numbers, it's that amount that we are using to buy back our stocks. So it's exactly in line with what Ioannis said. It's what we see as a very good use of our cash.

Well, segueing into that. So following these two vessels sales, you have four, I guess, Panamaxes around the same age, about 18 years of age. What are your fleet growth -- maybe renewal plans? Do you expect to sell those as well in the coming months? And then in terms of fleet growth, are you looking more at Capesizes or replacing those Panamaxes?

At the moment, we've said that considering the market where it is, we are going to sell part of the 17 vessels that we have unencumbered in a scattered manner. In a scattered manner that means that we sold two now, we're going to wait another couple of months to probably sell another two and go on like that, of course, everything else remaining equal, that is the market being where it is and better.

And then last question for me. You're still to -- you're still yet to make any announcements regarding the scrubber orders. You have a few of your Capesizes, Newcastlemaxes rolling off time charters in 2019, so why not maybe install some scrubbers on those next year? And is this something you're looking at doing?

Why not buying a windmill or buying a real estate float of land somewhere? It's a matter of an investment opportunity that we have to consider potential risk/reward and returns. People do not understand that scrubbers is not part of our business. Scrubbers is an investment that we have to make various assumptions to see whether this is something that is going to produce a nice risk/reward ratio for our use of cash. At the moment, we think buying back our stock has much better return possibilities than investing in scrubbers.

Is it an either/or decision?

No, but you have to understand that by buying scrubbers, you are asking us to invest enough in the future oil prices, clean vessels, dirty. And we have to make up our mind whether this is going to be an attractive investment opportunity. As simple as that. So people are getting confused as if a scrubber is a ballast water treatment investment where you have to do it compulsively, which it's not. It's an investment in order to enhance, possibly, your returns, accepting a specific risk by investing a specific amount. People should do their numbers and justify the risk that they are accepting in order to make a possibly -- a possible return. We have done that, our research now, and we do not see it now as an attractive opportunity, investment-wise.

I'll ask one more quick one. Is it more of a -- you don't think the spread will be large enough or long enough or do you question the fuel availability?

All of this together, all of the above, the difference between the two. The availability, how much the charterer is going to be giving you, technical issues operating the scrubber, availability as you said, of fuel around the world, all of the above. All of these are assumptions that someone should take in order to see a specific return if everything goes the way you expect. At the moment, we do not see this possible return as very attractive as an investment.

Thank you. There are no further questions at this time. I would like to turn the call back over to management for any closing remarks.