Diana Shipping's CEO Discusses Q3 2012 Results - Earnings Call Transcript
November 20, 2012 4:27 PM ET
Diana Shipping Inc. (DSX)
Q3 2012 Earnings Call
November 20, 2012 9:00 am ET
Edward Nebb – Investor Relations, Comm-Counsellors, LLC
Simeon P. Palios – Chief Executive Officer
Anastasios C. Margaronis – President
Andreas Michalopoulos – Chief Financial Officer and Treasurer
Michael Webber – Wells Fargo Advisors, LLC.
Gregory Lewis – Credit Suisse
Fotis Giannakoulis – Morgan Stanley & Co. Inc
Joshua Katzeff – Deutsche Bank Equity Research
David E. Beard – Iberia Capital Partners
Greetings and welcome to Diana Shipping Inc’s Third Quarter 2012 Conference Call and Webcast. At this time all participants are in a listen-only mode. A brief 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 your host, Edward Nebb, IR Advisor for Diana Shipping. Thank you, Mr. Nebb, you may begin.
Thank you very much Jessie, and greetings everyone and welcome to the Diana Shipping 2012 third quarter conference call. The members of the company’s management team who are with us today are Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Stacey 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 remind you that under the Safe Harbor provisions, any statements which are not statements of historical fact are forward-looking 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 that may or may not prove to be accurate. 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 Chief Executive Officer.
Simeon P. Palios
Thank you. Good morning and thank you for joining us today. The performance of Diana Shipping Inc. during the 2012 third quarter reflected continued third quarter results and expanding fleet and a sound capital structure. As a result, we deliver another solid quarter at a time of persistent challenging conditions in our industry. In particular, we have made progress in our fleet expansion strategy. Today, we announced delivery of the motor vessel Polymnia, a newly built Post-Panamax dry bulk carrier of 98,704 deadweight. The vessel was purchased in October 2012 from a third party seller for a price of $24.6 million. We also announced today a time charter contract for the Polymnia with Sino East Transportation Ltd., Hong Kong at a gross charter rate of $8,000 per day, minus a 5% commission paid to third parties, for a period of about 45 days to 55 days. The charter is expected to commence tomorrow, November 21, 2012.
Another recent addition to the fleet was the Tsuneishi of the Polymnia motor vessel of Amphitrite, a newly build dry bulk carrier delivered in August 2012. The rest of the charter to Bunge S.A. at a gross charter rate of $10,000 per day for a period of about 22 months to about 26 months. The charterer rate also has the option to employ the vessel for a further 11 to 14 months at a gross charter rate of $11,300 per day. This demonstrates our continued ability to meet the needs of highly restricted charterers, which has been a main feature of our approach.
Including the Polymnia and the Amphitrite, our fleet consists of 30 dry bulk carries. We also have two Ice Class Panamax vessels under construction with delivery expected during the fourth quarter of 2013, which will bring the size of our fleet to 32 vessels. In total, we have eight vessels either delivered or under an agreement to purchase in 2012 to date. This represents significant progress in the growth of our fleet and it reflects our discrimination to capitalize upon opportunities in the current market to build our product (inaudible).
We continue to manage our fleet in a responsible manner that promotes a balance of time charter maturities and produces a predictable revenue stream. Currently, our fixed revenue days are 95% for 2012. The vast majority of our vessels are chartered for periods ranging from 2013 through 2015 and beyond.
Now, let me briefly summarize our financial performance for the third quarter of 2012. Net income of Diana Shipping Inc. was $12.3 million for the 2012 third quarter compared to $26.4 million a year ago. Time charter revenues for the latest quarter totaled $56.2 million versus $64.2 million in the third quarter of last year. Time charter rates averaged $21,335 for the 2012 third quarter compared with $27,957 in the same period of 2011. We continue to have one of the strongest balance sheet in our industry. Our cash position at September 30, 2012 was more than $452 million or about $36 million higher than at the end of 2011.
The company continues to operate with a very manageable degree of leverage. Long-term debt including current portion was $459.1 million of principal balance starting at September 30, 2012 compared to stockholder’s equity of about $1.3 billion.
While the environment for the dry bulk shipping industry remains challenging, we will continue to pursue the strategy that we believe will deliver stable and profitable results in the near term and that will contribute to our growth for the long term. We will continue our program of selectively and gradually adding to our fleet as market conditions permit to acquire vessels at attractive prices.
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