Diana Shipping Inc. (DSX) Q1 2021 Earnings Report, Transcript and Summary

Greetings and welcome to the Diana Shipping, Inc.'s 2021 first quarter earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ed Nebb of Investor Relations. Thank you. You may begin.

Thank you Darryl and thanks to all of you for joining us today for the Diana Shipping, Inc. first quarter conference call. The members of the management team who are with us today include Ms. Semiramis Paliou, Chief Executive Officer, Mr. Anastasios Margaronis, President, Mr. Ioannis Zafirakis, Chief Financial Officer, Chief Strategy Officer, Treasurer and Secretary, Mr. Lefteris Papatrifon, Chief Operating Officer and Ms. Maria Dede, Chief Accounting Officer. Before management begins the remarks and presentation, let me just briefly summarize the Safe Harbor notice which you can see in its entirety in today's news release and in the deck that has been provided. Certain statements during this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act and the forward-looking statements are based on assumptions, expectations, projections and 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 SEC. And now with that, it is my pleasure to turn the call over to Ms. Semiramis Paliou, Chief Executive Officer.

Thank you Ed. Good morning ladies and gentlemen and welcome to Diana Shipping, Inc.'s first quarter 2021 earnings call. My name is Semiramis Paliou, the company's CEO and it is an honor and a privilege to be presenting to you today. As you have probably noticed already, we have altered somewhat the format of our earnings call by adding a slide presentation to accompany our presentation. As a result, we will reference the various slide as we go along and we hope that you will be able to seamlessly follow. Turning to slide four. We thought that as this is the first time that we are presenting via a slide presentation, it will be beneficial to provide a brief company summary. Diana Shipping Inc. is a pure dry bulk company that has been listed continuously on the New York Stock Exchange since 2005. We currently have 37 vessels in the water with a carrying capacity of approximately 4.7 million deadweight tonnage. We have focused on the largest dry bulk vessels with our fleet ranging in size Panamax vessels to Newcastlemaxes. As a result, we are mainly carrying major bulk cargos and for 2020, we transported 35.2 million metric tons with iron ore being the main cargo we carried at 26.2 million metric tons. The majority of our fleet, 31 vessels is managed in-house by Diana Shipping Services and six vessels are managed by a 50/50 joint venture with Wilhelmsen Ship Management. We currently employ over 900 people at sea and the shore. Moving on to slide five. I will go over the highlights of the first quarter and recent developments. This has been a very interesting quarter, characterized by the rapidly improving market conditions that haven't been seen for years. The anticipated Chinese lull expected between the month of January and February 2021 did not materialize. On the contrary, there was strong demand for raw materials. The fiscal policies to stimulate global economic growth, the frenzy to refill depleted inventory, the ban on Australian coal imports to China and the limited supply of new ships, all seem to support the higher prices for commodities and transportation, more specifically for our company. Within the first quarter, we implemented leadership changes to ensure the continued sound strategic management of the company. Our new management team is eager to continue on the path set by our Founder and Chairman, Mr. Simeon Palios, following the guidelines and principles adopted at inception. At the same time, we will endeavor to prepare, navigate and expand the company successfully in this area characterized by rapid and radical technological changes and innovations. Also within the quarter, we purchased via tender offers six million of our common shares at a price of $2.50 per share. We view the timing as very opportune. As based on the market developments over the last few months, this move has proved to be immediately accretive to our shareholders. The market strength and experience during the course of last quarter which resulted in increased asset values allowed us to reach an agreement to sell one of our older vessels, the motor vessel Naias, at an effective price of $11.25 million gross. We are also pleased that during last quarter, Diana Shipping Services signed an agreement with American Bureau of Shipping to implement the ABS Environmental Monitor digital sustainability solutions across 31 of the company's vessels managed by DSS. This is a cloud-based application that enables us to monitor and track overall fleet or vessel-specific environmental data in such categories as emissions, waste and consumables. We believe that the data analysis and reporting features of this application will support more sustainable vessel operations for our fleet while helping us enhance environmental performance. Somewhat related to the above issue is the new S$91 million sustainability linked loan which we signed earlier this week. Although the primary reason for entering into this loan was to refinance earlier loan facilities maturing in 2022, we are particularly pleased that we have been able to work together with ABN to introduce a sustainability element into the loan. This displays even further our commitment in being proactive in this specific field. We are further our long term commitment to sustainability by establishing a sustainability committee at Board level. Lastly, we have continued over the last quarter to tackle successfully the COVID-19 pandemic related operating challenges such as crew changes and crew repatriations, procurement of provisions and spares and handling scheduled and unscheduled repairs. I would like to take a moment to highlight the most important short term challenge faced today in the shipping industry during the pandemic, that is the difficulties to repatriate our crew. The restrictions placed by ports, borders, local and international authorities, travel disruptions and suspension of flights have made it extremely challenging for our crew to return home and to their families. The lack of cooperation by a number of charters in facilitating this issue is noteworthy. We consider the crew change and repatriation issue extremely important, not only due to the human element factor. It affects the safety of our crew, the safety of the ship and the cargo and could potentially affect the global supply chain of goods. Regardless, the shipping industry has shown once again resilience and adaptability to unforeseen and unprecedented event. Turning to the financial highlights of the first quarter of 2021 on slide six. We find ourselves as of March 31, 2021 with a cash and cash equivalents position of $86 million including restricted cash, as against $82.9 million as of December 31, 2020. Our debt, net of deferred financial costs, stood at $411.4 million at the end of the first quarter of 2021, as against $420.3 million at the end of 2020. Our time charter revenues for the first quarter of 221 amounted to $41.1 million, as against $43.8 million for the first quarter of 2020. Lastly, our earnings per share for the first quarter of 2021 came in at a loss per share of $0.3 versus a loss of $1.21 per share for the same period of 2020. It should be noted that last year's figures included an impairment lost taken at the time. Our CFO, Ioannis Zafirakis, will go over these numbers in more detail further on in the presentation. Moving on to slide seven, we find a summary of all of our year-to-date chartering activity, consistent with our conservative and disciplined chartering strategy. We have taken advantage of the improving chartering market and have secured attractive time charters for 13 vessels of our fleet. More specifically, we chartered seven Panamax to Post-Panamax vessels at a he weighted average daily rate of $16,571 for remaining average period of 169 days per vessel. We have also chartered six Capesize to Newcastlemax vessels at a weighted average rate of $18,896 per day for a meaning average period of 244 days. We anticipate that we will continue chartering our vessels that will be redelivered to us in a similar way, by staggering maturities, locking in cash flows and positioning us in a manner that will allow us to continue to participate in a potentially improving market in a balanced way. Slide eight provides an indication of the kind of cash flows that can be secured by our vessels that will be redelivered from their current charters within the remaining of 2021. As a base, we use the already fixed time charter revenues of $72.1 million which amounts to a daily average contracted time charter rates of $16,136 per vessel. If we use the current FFA rate for fixing the vessels opening up within the remainder of 2021 for a one- year period, we expect to generate an additional $83.5 million of time charter revenues that equates to an average six times charter daily rate of $21,899 per vessel. When we compared to some of the fixed and the unfixed revenues as against our breakeven level, we find ourselves with the possibility of generating approximately $53.3 million of free cash flow equating to an average free cash flow margin of $6,438 per vessel per day over the remainder of the year. Again, this is presented in order to display the free cash flow generating capacity of our fleet in the current market. It should be noted that the actual results will be dependent on how the market performs for the rest of the year and on how exactly we fix our vessels in this period of time. I will turn over the call now to Ioannis to go over our first quarter 2021 financials in more detail.

Thank you Semiramis. During the quarter, we recorded, as we have already shown to you, a net loss attributed to common stockholders of $2.7 million. That's $0.03 per share. As you can see in the slide, during the first quarter, three vessels that we had agreed to selling by 2022 were delivered to the buyers and we agreed to sell one additional vessel, the Naias, expected to be delivered to the buyer latest by July 30, 2021 Following the sale of the vessels in 2020 and those completed in the quarter, ownership days were down to 3,434, compared to 3,801 for the same quarter in 2020. This is why you see the lower revenues of $41.1 million compared to $43.8 for the first quarter of 2020. The voyage expenses also decreased compared to last year to $1.8 million compared to $3.7 million for the same quarter and the decrease in voyage expenses was not only due to decrease commission and lower revenues but also due to a gain of $0.5 million in bunkers compared to a loss of $1.3 millions in the same quarter. During the first quarter, our vessel operating expenses decreased to 418.6 million compared to $21.3 million, mainly due to the decrease in the number of vessels in the fleet. Daily operating expenses also decreased to $5,400 compared to $5,600 for the same quarter in 2020, mainly due to decreased spars and repairs and other operating expense. This decrease was offset by increased crew cost, insurances of supply and supplies of stock and provisions. Our general and administrative expenses decreased to $6.7 million compared to $9.6 million for the same quarter last year, mainly to decreased payroll cost. The interest and finance cost amounted to $4.6 million compared to $6.4 4 million in the same quarter of 2020. This decrease was attributable to the decreased interest expense due to decreased interest rates and decreased other debt compared to the same quarter of 2020. Looking at the balance sheet, you can see that our cost stood at $86 million and our total debt, net of deferred cost, stood at $411 million. That brought our net debt to only $327.8 million. We have another slide for the selected financial and other data for you to look at. I think most of the things are something that we have already said previously. But again, I want to stress or I want to mention the time charter equivalent and time charter rate that we achieved being $11,436 compared to $11,377 and the lower operating expenses that we had for this quarter. It is the first time that we are trying to going to give you an idea about our cash flow breakeven and you can see that based on the results of March 31 and based on the expected drydockings that we are going to have for the remaining of the year, our cash flow breakeven stands at $12,350 approximately which gives you a very good idea on the ability of the company, as our CEO has mentioned earlier, to generate free cash flow for the remaining of the year. I will now give the floor to Stasi Margaronis to discuss the dry carrier market outlook, the way we see things.

Thank you Ioannis. We definitely need to start our short presentation on the current state and future prospects of the dry carrier market by looking at the Baltic Exchange dry bulk indices. This slide that we have here shows that the last five years levels of the above mentioned indices as well as the 12 months time charter rates for Capes and Panamax. We can look at some more detailed statistics to get a better idea of short and long term trend. On January 4, which was the first trading day of 2021, the Baltic Dry Index stood at 1,374 and by May 19 it had reached 2,801. This compares with an all-time high of 11,793 reached on May 20, 2008 which was that nearly exactly 13 years ago to the day. The Baltic Panamax Index this year at 1,364 and closed on May 19, at 2,857. The all-time high for this index was 11,013 reached on October 30, 2007. The Baltic Cape Index was 2,008 on January 4 and closed at 3,785 on May 19. This compares with an all-time high for this index of 19,687 reached on June 5, 2008 which once again was 13 years ago. Here we can add the Cape 5 time charter route average, which on January 4 stood at 16,656 per day and on May 19 had reached 31,392 per day. The Panamax 5 time charter route averaged at the beginning of the year at 12,272 per day and on May 19 stood at 25,709 per day. For comparison purposes, it is worth noting that the all-time high for the slightly differently calculated Panamax 4 T/C routes was 94, 977 in October 2007 and for the Capes, the 4 T/C average was 233,988 in June 2008. On the next slide, we are going to look at the key demand drivers. The macroeconomic statistics and how well the GDP has been moving during the past 20 years or so can be looked at here compared with ton mile growth of major bulk commodities. These are iron ore, grains and soybeans, coal, both thermal and coking and we will also look at the combined volumes of minor bulk about cargo such sulfur, salt, cement, sugar, anthracite, alumina, fertilizers, bauxite and others. According to the IMF and the OECD, world GDP is expected to grow by 6% this year following a drop of 3.3% in 2020 due to the pandemic. This year, China is expected to grow by 8.4% after growing by 2.3% in 2020. During the first quarter of this year, China's gross domestic product grew by an impressive 18.3% year-on-year. The U.S. economy is expected to grow by 6.4% in 2021 while the Euro area is anticipated to grow by 4.4% this year. According to Clarksons, overall global seaborne dry bulk trade is projected to grow by 4% in ton miles in 2021 against an underlying fleet growth of 2.8% which we will discuss later on. Within this trade sector, iron ore shipments are currently expected to grow by about 3% in 2021 compared to 2020 levels and reach 1.55 billion tons. Small growth of a further 1% is expected for 2022. Clarksons reports that Chinese government regulations on emissions might lead to steel output curbs later this year. Iron ore demand might be affected by these regulations, especially during the second half of this year. Global seaborne coking coal is currently projected by Clarksons to grow by around 6% this year. This will follow a 7% decline in 2020. Volumes in 2021 are expected to reach 266 million tons and 274 million tons in 2022 which will be further 4% increase. At this point, it is worth pointing out that China's recent ban of imports of coal from Australia have led to an effective collapse of imports to under one million tons in January of this year. The shortfall call has been made up by imports by land from Russia and Mongolia as well as by increases in domestic production. Commodore Research reports that Mongolian imports of coking coal have been coming under pressure due to the pandemic. This will most likely result in China needing to import more coking coal from much further seaborne base exporters including Canada and the United States. As regards to thermal coal, Clarksons reports that after a 10% decline in 2020 due to the effects of the COVID-19 pandemic on global trade, seaborne steam coal trade is currently expected to grow by about 5% this year and reach 965 million tons. For 2022, Clarksons are forecasting a small increase of another 1% on volumes. To place the Chinese coal demand in perspective, it is worth noting that according to Commodore Research, China recently announced that it will only start materially reducing coal consumption in 2026. After growing by 7% to reach 512 million tons in 2020, global seaborne grain trade is projected to grow by about 3% this year and another 3% in 2022. In this trade category, we need to monitor soybean shipments which have been driving the grain market statistics for a while now. During the first quarter of this year, China imported 19.1 million tons of soybeans which was up nearly 18% year-on-year. As much as 94% of his volume were shipped from the United States and 6% from Brazil. After a 2% decline in full year 2020, global seaborne minor bulk trade is projected by Clarksons to grow there around 4% this year and a further 3% in 2022. What is interesting to note in this side is that according to Clarksons, in spite of the sharp drop in global GDP growth in 2020, volumes of all bulk cargos witnessed on average a very small drop in the rate of growth which was still slightly positive, about 0.5%, in ton miles and just 1.6% negative in pure volumes during 2020. Next slide, we look at the supply. On May 1, 2021, the Capesize order book stood at 20.6 million deadweight representing about 5.6% of the global trading fleet. From these ships, half are scheduled for delivery this year and 9.1 deadweight are expected to be delivered in 2022. The Panamax order book consisted of 174 vessels with a combined deadweight of 14.5 million deadweight. This is the equivalent of 6.3% of the fleet by deadweight. From these, newbuildings, 6.5 million will be delivered this year and an expected 5.8 million in 2022. On an overall basis, on May 1 this year, there were 51.5 million deadweight worth of bulk carriers on order representing 5.6% of the total global trading fleet, according to the head researcher of Simpson Spence Young, this is the lowest percentage figures seen in over 20 years. According to Clarksons and as mentioned earlier on, the trading fleet is expected to grow by only 2.8% this year with deliveries dropping to 35.4 million deadweight, down 28% year-on-year in deadweight terms. According to Banchero Costa and other shipping analysts, the trading fleet will grow by a mere 1% by the end of 2022 compared to this year. We will briefly mention certain conservative assumptions which have been made on scrapping, losses and congestion for this year and next, which have been incorporated in the calculations for the fleet growth estimates mentioned above. On scrapping, Clarksons estimates that last year bulk carriers were about 16.3 million deadweight for scrap. According to Banchero Costa, so far this year, only 4.69 million deadweight of bulk carriers have been scrapped. Around 11% of the trading fleet is over 20 years old and a further 11% is between 15 and 19 years old. At the other end of the age spectrum, 16% of the dry bulk fleet is less than five years old. At the moment, the situation in India remains extremely difficult. Rising COVID-19 cases are leading to the diversion of oxygen from scrapping facilities to hospitals. Consequently, recycling activity in that company has effectively ceased. Similar pressures are seen in Pakistan. Banchero Costa are optimistic on demolition statistics and estimate that during 2021, about 165 dry bulk vessels might be scrapped for a total of 14.1 million deadweight. For 2022 and 2023, they predict even stronger demolition statistics due to the age profile structure and environmental regulations. From past experience however, we believe that as we got scrapping for the rest of this year and beyond, much will depend on the future course of the freight market and also sentiment congestion. To counterbalance this positive projection, Braemar raised the following warning flag. As queues in Brazil loading ports continue to fall and congestion is reduced in its usual seasonal pattern, congestion will be halved by July. As this happens and more ships open up in the Far East after discharging, we could see a temporary cooling off effect on the current strong freight market. As regards the outlook now, even though due to time restrictions we have not analyzed steel production in this presentation. It is worthwhile noting that according to Commodore Research, the combination of steel and iron ore demand model for both China and the world at large remains one of several bullish elements poised to continue to support the dry bulk market going forward. Howe Robinson have analyzed the above-mentioned projections on GDP growth. They have observed that since 2009, financial recession, growth in dry bulk shipments has outperformed growth in international trade as a whole. They present evidence showing that from 2005 to 2021, dry bulk cargo shipments have grown almost twice as fast as GDP growth. It is also confirmed in the key demand driver slide shown earlier on. The simulation results coming from their dry bulk modal show a 6.7% increase in cargo volumes for 2021 followed by a further increase of 4.3% in 2022. If these projections are realized, the dry bulk market should perform even better than the statistics presented earlier on would indicate.

Thank you Stasi. Before we open it up to Q&A session, I would like to sum up as follows. As we have done in the first quarter, we will continue taking advantage of the current positive market fundamentals in striving to enhance shareholder value. We will retain our focus on generating positive free cash flow while at the same time strengthening our balance sheet. We are also maintaining our vigilance and keeping abreast of industry developments, allowing us to take informed and educated decisions as the shipping industry evolves. And last but not least, we remain committed to our disciplined operational and financial strategy that we have implemented since inception which has allowed us to navigate successfully through the various market cycles and now permits us to look into the future with optimism. Now I turn it over to the operator to commence the Q&A session.

[Operator Instructions]. Our first questions comes from the line of Randy Giveans with Jefferies. Please proceed with your questions.

How are the Team Diana? How is it going?

Hi Randy.

Hi Randy.

We are doing well. Thank you.

Excellent. Great. Yes. First off, so nice to see the slide deck. Certainly a great addition to the earnings call. So kudos on that. Now looking at the business, obviously you have done a great job with asset sales, the tender offer buying at $2.50, share price is over $4 now. Share price has doubled to-date. Congrats on that. So with the market outlook being so attractive, I guess what are your plans for your fleet in terms of sales and acquisitions? And then what are your plans for cash in terms of either further repurchases of shares or maybe a possible dividend later this year?

I will that question. And this is Ioannis, Randy. You know that we have always tried to have lot of options ahead of us and this is exactly the ideal time that we prove so. We have to consider the various options that we have. As you mentioned, either buying back our stock or paying a dividend. I can tell you that with the track record that we have and by the fact that everybody knows how we think, at the moment, in looking at the current the moment in looking at the current market environment that seems like Diana would have the ability of paying a dividend in a sustainable manner for the next quarters or so. This is something that we will have to consider seriously but we have not taken any decisions to that effect as we speak. Of course, we keep trading below NAV, you show the benefit of what we have done and we may continue doing so as well. Buying other vessels is something that you know that we are doing but we are doing after having, after trading above NAV and raising equity at the moment, it will giving back to our shareholders value by doing that. So the answer to your question is that we don't have an answer. But what have though is the ability to choose the right thing at the right time. And you know that we always choose the right thing to do.

Great. Yes. I think you certainly have that reputation. So I was just trying to get an insight into what would Diana do next.

Nice try.

All right. That's sort of good take-off. Anyway, second question in terms of chartering, let's talk about that. Obviously the market has improved as well. So there's two ways to do this. Do you switch to more short term charters or even spot? Or on the other hand, is there any new interest from charters for 18 months or even a two-year time charters? Or it's pretty much everything as is six to 14 months and just continue to roll those?

Hi Randy. This is Lefteris. I think at Diana, we have been disciplined since early on. And basically we have proven that no matter how the market behaves, we will be disciplined in our approach in how we charter our vessels, especially if nothing really changes, especially we are not making acquisitions at specific numbers where you would need to go and charter out the vessels a little bit longer in order to minimize that risk of those acquisitions. So for the vessels that we have in our fleet right now, I think we will continue chartering them in the same manner. Start getting maturities, with maturities ranging anywhere from six months, sometimes you have to reposition a vessel, sometimes we have an upcoming dry dock that basically would mean that it's probably better for us because our vessel with a shorter duration in order to reposition in it for the dry dock or we could go even longer for a year or a little bit over a year. Now going back to your question of, if charterers are there for longer periods? I think charterers are charterers are always there for longer periods. And the question is, if the owners like the numbers that the charterers are offering. I mean we are entering into territory now. I mean not everyone will be taking the two or three year period deals because some people are a little bit more aggressive than us and then they will always opt out of accepting a lower rate for two or three year period rather than securing what sometimes it's a very attractive rate if you look at the things historically going forward. I think we haven't reached that level yet but I think we might be getting close where at some point in time, not in the very far future, we might see charterers offering based on the FFA catalog. Basically they not doing it based on anything else, offering rates that could be attractive to lock in for the longer duration. But for the time being, the way we are thinking of things it's exactly the way we presented it in our slide that Semiramis went over where we are, on average, going to be chartering vessels somewhere with duration of one-year and then that obviously will provide us with excess cash flow as we speak.

Perfect. Good deal. Well, I won't keep asking questions. So I will turnover but also I noticed the sustainability linked loan. Congrats on that. All you are doing on the ESG front has not gone unnoticed. So keep up the great work. Thank you.

Thank you.

Thank you.

Thank you. Our next questions come from the line of Greg Lewis with BTIG. Please proceed with your questions.

Yes. Hi. Thank you and good afternoon everybody. I was hoping to kind of dig in a little bit with some questions around asset prices. And clearly, asset prices are going higher. Ioannis, you mentioned that they are fully trading at a discount to NAV. Just kind of curious, if you can kind of parcel out, there's been a nice run-up in asset prices. Obviously, everyone is watching steel prices go higher. That, in and of itself, is probably helping lift asset prices. But is there any way to think about the strength balancing, the strength in the market and those increases in asset prices are increases in steel and maybe some of these inflationary environment in terms of the percentages or how you are thinking about those impacting and pushing out the prices higher?

You know, Greg, that there is always a lag between charter rates going up and the values following. The sentiment plays a big part in that. And also how people think that these upturn is going to be sustainable. We have seen an increase in the price but certainly I thin it's fair for someone to believe that we will see further increases in the charter rates and also as regards to prices of the vessels. Talking about the NAV, I would like to point out something that you, of course, the analyst can easily understand but is good for the sake of all the people that are listening in or reading the transcript to explain how well and what a good decision has been the last two years to keep buying back our stock at the discount to NAV. If you were to make a very quick calculation and maybe on a per share basis, if you were under a scenario that we have kept those vessels instead of selling them and not buying back our shares and you try to find NAV on a per share basis today, you would easily notice that it would have been lower by easily $0.30 in what you have in your calculations. So basically what we have done is that now we created value by taking advantage inefficiencies in the capital markets for our shareholders. And that has also taken into account the increase in the prices of the vessels and the increase in our NAV. We keep saying that every time that we buy back our stock at a discount to NAV, we are investing more money in our vessels. We are very happy with what we have done up to now. If I think that there would be a point where we will have higher charter rates, our ability to pay a dividend is going to be clear in there. And then we are going to be in a position to be trading at premiums to NAV. And again you will see us buying at that time more vessels with longer employment. Strengthening the balance sheet it's something that we always do. And that has proven to be the right recipe in order to make nice money in the shipping industry, risk reward wise.

Yes. No, absolutely. I have a couple of questions, but I will reach out to you offline. Thanks for the time everybody.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Ben Nolan with Stifel. Please proceed with your question.

Yes. Thanks and good afternoon to all of you. Well, I have a couple of things. Number one is, obviously as has been discussed, the order book is pretty low but at the same time we have seen increased freight rates, the second hand asset values have appreciated. I know it's not really in the Diana DNA really to be out ordering ships. And you might not would want to do that right now anyway But you guys have your ear to the ground or certainly all of your neighbors are in the similar business as you are. Have you gotten any that there is any cracks in the discipline that we have seen here lately with respect to ordering now that the cash flows are high?

I think we have seen. We have seen them. And obviously as rates move higher and higher, we will see the cracks getting bigger and wider. We have seen some people going out there and ordering vessels. It hasn't really changed the picture that Stasi displayed a little bit better earlier. I think a reason for that has been that a lot of orders have been made on the tanker space earlier on last year and more recently in the container space. I mean we have seen huge orders on the container space in the billions of dollars. So that pretty much gives you an answer of what could potentially come in the dry bulk market if things get very heated. I mean the container market is very heated, then obviously that has led to a lot of ordering. People might say, where you are going to find the orders? Obviously, a lot of premier shipyards might not have any capacity for 2022 and maybe early 2023. But as we have seen in the past, we might see some second tier yards offering capacity at that point in time. I mean fortunately, we haven't seen it yet in our industry but that doesn't mean that we are not going to see it sometime in the future.

Okay.

Ben, sorry. I just want to add to Lefteris stated that you know that we do not share the opinion of others that there is lack of yards, yards, lack of financing, stuff like this. When the market is good, then the revenues of the vessel justify the investment. You will see the order book coming in.

Also, Ben, if I could add. The fact that we don't have a clear picture of what next technological solutions will be regarding fuel is a deterrent in order to put new orders at the moment. I think that is working in our favor at the moment.

Yes. Absolutely. And I guess and that's been talked about a lot. I guess the question is, at some point there's the concern over the technological changes and what's going to be needed in the future is that overcome by the fact that the near-term cash flows are simply strong enough to justify the investment? We haven't seen it yet but I guess, to your point, we could if people are convinced that they can make money.

Yes, Ben.

Certainly.

Yes. So you guys were sort of maybe one of it, maybe not the most outspoken with respect to not installing scrubbers on your ships. Here we are, you are almost a year-and-a-half later and for the better part of that time, it has proven to be probably a good idea. Things seem to be stabilized. Just curious, as you guys have consistent special surveys coming up in dry docking, any thoughts about maybe now that sort of things are settled a bit, installing scrubbers on your ships, is there any demand by your charterers to do that?

We think that we have the opportunity because we have a better use of our free cash flow. And we think that by not investing in scrubbers, we can do a lot of other things as we tried to explain earlier. I think our shareholders will be more than happy seeing a dividend or seeing us buying more vessels or buying back our stock or whatever rather than trying to play the oil price and investing scrubbers trying to make some money throughout the investment. Up to now, our decision has proven to be correct. We keep saying to everybody about installing scrubbers is just an investment but it is highly dependent on oil prices. This is not what we are here for. We are here to create value for our shareholders doing shipping and taking advantage of the charter market's inefficiencies. And up to now, we have done a good job.

Right. No, I sort of thought that would be your answer. And last question for me on capital allocation. You mentioned earlier about all of your options. I am curious if you consider, I believe the preferreds are callable soon and at some point those bonds are callable soon. If the cash flows build, any thoughts yet about possibly calling those back or refinancing, any other things with probably have a better cost of capital?

We prefer that they are perpetual. They are perpetual for a reason. And at the moment, we have another option to repay the existing bond which is maturing in 2023. Knowing ns well and this why you do the question is that we are always very proactive as regards to managing our cash flow and our maturities. So the only thing I can say to you that it is in our radar to see what we may do with maturities in 2023which is the bond, mainly the bond at that time. As you noticed, with the new facility that we did recently, we basically eliminated the maturities even for 2022, if you take into account the fact that there is an option in the Nordea loan to go to 2023 and 2024. So basically again, we have created the appropriate environment to have as better cash flow as possible for our shareholders.

Right. Okay I appreciate it. That does it for me. I appreciate it. Thanks guys.

You are welcome.

Thank you. Our next question comes from the line of Omar Nokta with Clarksons Platou Securities. Please proceed with your question.

Hi. Thank you. Hi guys. Good afternoon. I just wanted to follow-up on the previous topic or the main sort of discussion points of use of capital and your fleet makeup. Ioannis, you mentioned wanting to keep us guessing as to what your next moves are. But over the past several years, you have been trading below NAV and you have sold ships, used the proceeds to buy stock and created value along that way. But you still do trade at a discount to NAV today. And so I just wanted to maybe get your perspective as you see things today, you are at a discount, asset values has continued to push higher. Do you see Diana at this point continuing to be a seller? Or more just sitting back and collecting cash?

A seller of vessels, you are asking?

Yes.

A seller of vessels, it doesn't mean anything till we know what we are going to be doing with the money. So making a thing into cash and then think again and an asset again, it makes no difference. But yes, we are seeing that we have reached a point where there is a lot of things we can do with the vessel, with the older vessels of ours and that we may not be selling them. But I have tried really hard not to give you an idea on how we are thinking. But stay tuned and we think that there are a lot of things we can do, even with the vessels that we have, the older vessels of ours.

Okay. That's interesting. So I guess I am going to infer basically from your commentary that for now the Diana is not interested in selling ships.

Correct.

And I guess that is going to bring me to my sort of like a follow-up to that which is, just your market footprint and critical mass, you had 50 ships a few years ago. You are down to 36 after you sell the Naias. Do you feel that with a fleet size of 36 ships, is that enough capacity to still feel very much involved in the game and very relevant in the business? Or could it even be smaller than that and you would still feel comfortable?

This is Lefteris. Hi Omar. I think having a fleet of 35 vessels plus, it's definitely a fleet that has scale, okay. It's not the 50 or 60 vessel fleet, but it's still, you are relevant. We are in the market. We have a good name. obviously, we are going to, going back to what Ioannis said, yes, we might be under NAV right now. But we are chasing it at this point in time with where asset values going up on a daily basis. But our plan is to try to change that. And once we do and if it makes sense, we might look for ways to renew the fleet. But for the time being, we are content with the fleet that we have. I mean we still have scale. We still have size. We have our relationship, our chartering relationships, our relationships with various vendors and suppliers out there. So size should not really, I mean that's my personal view and many people might feel different, should not be the end game. If you are going to have 60, 70 or 100 vessels, it should be, you have to be profitable and you have to be there.

Said differently to what Lefteris says, exactly the same but in a different manner, what is critical is the balance sheet more than the actual size of the fleet. And you have seen that in the past. Being having a strong balance sheet was a much better thing to have in the full cycle rather than a big fleet. You know what I mean. I don't want to mention names.

Yes. It's pretty clear. That's very clear. Yes. Well, thank you. I am looking forward to seeing what you guys have up your sleeve. I will leave it there.

Thank you.

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

So thank you for joining us today and we look forward to talking to you again at our next financial earnings call.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.