Greetings, and welcome to the Diana Shipping Second Quarter 2018 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I now like to turn the conference over to your host, Ed Nebb. Thank you. You may begin.

Thank you, Matt, and thanks, to all of you for joining us for the Diana Shipping Inc. 2018 Second Quarter Conference Call. The members of the management team who are with us today are: Mr. Symeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos; Chief Financial Officer; Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary; and Miss Maria Dede, Chief Accounting Officer. Before management begins their remarks, let me briefly remind you of the safe harbor notice. Certain statements made during this conference call, which are not historical fact are forward-looking statement under the safe harbor provisions of the Private Securities Litigation Reform Act. And 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. 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. Symeon 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 second quarter of 2018. Our results for this recent quarter reflected a dramatic improvement in the company's financial results and significantly increase by next financial flexibility. Our performances reflected our long standing strategy of positioning the business benefits from an improving industry cycle while strengthening our balance sheet. We highlight our financial results. The company reported net income of $2 million and net income attributed to commercial holders of $0.5 million for the second quarter 2018. This is a significant turnaround compared to a net loss of $23.8 million and the net loss attributed to commercial orders of $25.3 million reported in the second quarter of 2017. Reflecting the rising trend in time charter rates, all of the vessels we have chartered in this month, were fixed significantly higher rates than their previous charters. As a result, time charter revenues rose to $53.4 million for the second quarter of 2018 compared to $37.8 million for the same period of 2017. The sharp growth in time charter revenues were due to the increased average time charter rates that we achieved for our vessels during the quarter as well as increased ownership days resulting from the enlargement of the fleet. With respect to the balance sheet, cash, cash equivalents and restricted cash at June 30, 2018, were $107.9 million, well above the level of 2017 year end. Long-term debt, net of deferred financing fees was $571.9 million compared to stockholders' equity of $624.4 million. Our balance sheet has been further strengthened still the close of the second quarter. We recently announced that the company signed a term loan facility with BNP Paribas for up to $75 million, with a maturity…

Thank you, Symeon, and welcome to all the participants in this second quarter midsummer conference call of Diana Shipping Inc. The dry bulk market has developed during the last quarter very much as expected with small variances. The Baltic Dry Index started the quarter on April 3rd at 1016 and closed yesterday at 1774. The Baltic Panamax Index reading on April 3rd was 1455 and yesterday stood at 1581. The Baltic Cape Index started the quarter at 924 and closed yesterday at 3461. Admittedly there have been some oscillations of the indices on the way to the latest numbers, but the markets have not behaved in any irrational or emotional manner at least not thus far. Turning to macroeconomic developments. According to Clarksons research, the preliminary Chinese customer data in the first five months of 2018, value the Chinese foreign trade at 17% higher year-on-year, reaching 1.8 trillion with the value of exports rising by 13% and the value of imports by a staggering 21%. According to Braemar, China's manufacturing index so far this year showed steady growth with the PMI index come in at 51.1 for May. Generally China face a slowdown in economic growth as domestic demand cools down due to credit availability drying up and as Mr. Trump's trade war threatens to damage confidence. The forecast for 2018 Chinese gross domestic product growth is 6.6%, and for 2019 it’s 6.4%. In the Eurozone industrial production continues to falter with output across the 19 countries in the Eurozone for the month of April coming in at 0.9% lower than in March. Its Purchasing Managers' Index for the manufacturing sector declined to 1.5 year low at 54.9 in June from 55.5 in May. The Euro area forecast for GDP growth this year is 2.4%, which is expected to drop…

Thank you, Stasi, and good morning. I’m pleased to be discussing today with you Diana's operational results for the second quarter and six months ended June 30, 2018. Net income and net income attributed to common stockholders amounted to $2 million and on $5 million respectively. Earnings per common share was zero. Time charter revenues increased to $53.4 million compared to $57.8 million in the second quarter of 2017. The increase was due to the increased average time charter rates that we achieved through our vessels during the quarter and revenues derived from the additions to our fleet of Astarte, Electra and Phaedra delivered in May, 2017. This increase was partly offset by a decrease in revenues due to the grounding of the [Indiscernible] in October 2017. Ownership days were 4,550 in the second quarter of 2018 compared to 4,491 in the same quarter of 2017. Fleet utilization was 97.9% compared to 97.8% for the same quarter of 2017. And the daily time charter equivalent rate was $11,773 compared to $8,173 for the same quarter of 2017. Voyage expenses were $0.8 million for the quarter compared to $2.1 million for the same quarter of 2017. The decrease in voyage expenses was due to a gain from bunkers of $2.1 million compared to gain of $0.4 million in the same quarter of 2017. Vessel operating expenses amounted to $24.6 million compared to $22.3 million for the second quarter of 2017, an increase by 10%. The increase was due to the 1% [indiscernible] ownership days, resulting from the enlargement of the fleet and increased crew, insurances and maintenance costs of the vessels. Daily operating expenses were $5,398 from the second quarter of 2018 compared to $4,971 for the same quarter of 2017, representing an increase of 9%. Depreciation and amortization of deferred…

[Operator Instructions] Our first question is from Amit Mehrotra from Deutsche Bank. Please go ahead.

Good morning. This is Chris Mehrotra for Amit. So my first question is around potential fleet high grading. Now that you guys have kind cleared the liquidity run way with the BMP refinancing and we have seen rates infect [indiscernible] at even levels, would you guys look to add some of the under tonnage?

This is Ioannis Zafirakis speaking. We have explained that many years ago and we keep saying that that the growth period for a company and shipping should be at the lower part of the cycle. And the more you are getting into the upper part; growth is not at the first option. And you shouldn’t be expecting us to add the more vessels if we are at the same position as we are today. And increased value of vessels is going to be based on the revenue capacity and the capacity for a long-time charter, which you may see us doing, but we have no plans like result we speak.

Could you also provide us with an updated debt paydown schedule following the BMP refinancing for the back half of '18 and then 2019 to 2020 if possible?

Yes, we can. For the last quarter of 2018, the fourth quarter, you will have that amortization of $12 million or less. Than if we go to January to until March 2019, you have $43.4 million. I think there we need to consider balloon for [Indiscernible] of about $33 million. So the second quarter of '19, the number is $30.2 million. But again there is another balloon from -- don’t have with ABN for [Indiscernible] of $90.7 million. Then third quarter, it's $9.3 million. And finally, fourth quarter of '19, it's 14.4 million. And again here you have another balloon of $4.9 million for [Indiscernible]. So I guess that helps. Now if you want an additional information, I can give you. For this quarter, the third quarter that is, it's the payment is $64.4 million [indiscernible], which includes the $55 million we prepaid to [Indiscernible].

And so I guess just kind of now turning to bring that back taken all in cash breakeven level. First, I know, obviously the debt that I'm more kind of jumps around refers to maybe again average more of around $15 million a quarter. We're coming out with all in cash breakeven of a bit under $12,000 a day. Does that sound right to what you guys are looking at?

Yes, that's sounds correct.

Okay. And then just finally one quick housekeeping item. I see you guys ended Q2 with about $34 million due from related parties. Is that the amount we -- you'll receive from containers in Q3 or is there something else in that due from related parties number?

That's mainly the amount received from container ships.

[Operator Instructions] Our next question is from Fotis Giannakoulis from Morgan Stanley. Please go ahead.

You mentioned about the significant improvement in the market and the financial position of the company. I'm trying to understand what is the next goal for Diana right now? Obviously you're not going to buy any vessels at this part of the cycle. I was wondering if this is a part of the cycle to sell some of the older vessels, the 2001 vessels. Or this is the time to continue to delever your balance sheet. It seems that it's already low lever right now or to start introducing a dividend?

I see that after so many years you know us very well and you know very well what we do as the upper part of the cycle. And you are absolutely right that selling some of our vessels is an option that we are seriously considering. And also the reduction of a dividend at a point is certainly something that we do as the upper part of the cycle. And overall it seems that you like more [indiscernible] in place reading your reports. You see that we are delivering to whatever we have promised since 2005. And based on our strategy you see that it seems that we would manage once again to deliver exactly what we promised and we consider ourselves to be the best risk reward player out.

In this potential over dividend rate reduction, how shall we think of your dividend? In the past, when you first went public, you followed a way floating dividend strategy. Of course, at that time the [Indiscernible] was fully delivered that it was debt free. How shall we think about the dividend right now? And given the facts about your trade [indiscernible] discount when the market. I was wondering if there are any thoughts of potentially buying back some of your shares.

No. Buying back shares is like buying vessels of the upper part of the cycle. What we do is we will reduce dividend, you’re not have it same quarters that when we were paying dividend we were debt free. We ended up debt free after having paid a lot of dividend. If you look back of the year, you will see that we were paying dividend, we cut debt, but we ended up being debt-free after a while. And I have to remind you how shipping works. You buy vessel, you operate them, you make money, you sell them and you get the fruits of having purchased, operated and selling vessels. And this is how it is going to be done. Certainly, we’re not in a position to tell you that we have decided something like this right now or this is something that we’re telling what's going to happen soon. But this is our way of thinking that we have explained many years ago. So to cut the long story short, if you look at us selling vessels, it is very, very probable to see a nice dividend after that.

Can I clarified that this is going to be a special dividend or it is going to be a floating form of a paying dividend or how shall we try to model it?

Fotis, you shouldn’t try to model it because as Ioannis just told you we have not even decided that we’re going to give any kind dividend at the moment. But should look at our strategy from 2005 and you're well placed because it's very well from the beginning.

But in addition to what Andreas said, looking at sales and estimating dividend is a good start.

That’s very helpful. One more question on some of the comments that Stacy made earlier about the trade situation and the risk that the trade conflicts pose to the overall shipping market. I’m trying to understand these are the other segments of shipping. And also given the size of the market, how important the U.S, China trade? What kind of implications this can have for the overall dry bulk demand apart from the soybean market? And how -- what kind of probabilities do you put in your strategy of full blown trade war? And how do you prepare yourself for it?

Starting from the last of your several questions, there’s very little to do to prepare in a company like ours with the chartering strategy that we have. And what appears to be a policy of having ships all the ways to fix regularly in the market. So we’re not going to be caught at any point with more shifts in our policy dictates through fix at certain point in time as regard to the market. So we are not concerned about how our market strategy is going to be affected by the trade war because there’s nothing we can do. We’re not going to try and outsmart politicians and reflect that their decisions have on the market. What we believe is going to happen is that after people realize that the initial measures of imposing tariffs have adverse effects all around as I mentioned earlier, even in the country that impose them let alone the measures that are taking again to continue that started this which is the U.S. We think that all this is going to die away quietly. And we put a very low probability on a all-out trade war developing. If it does, that will affect all commodities and virtually all finished product shipments. It will also possibly reach out to all cargoes and things that we’re not concerned with. So it’s going to be a very-very huge disaster. And I can’t believe that the people don’t realize it. So politicians are testing the voters, I think. And the commodities for the time being have not being affected greatly as we said beyond the soybeans. But we’re beginning now to see the effect on steel exports, as I mentioned earlier, high end finished steel products, and on some containerized goods. I won’t mention them here, because I don’t have reliable information to present. But empirical evidence shows that there’re some fears that even finished products shipped in containers might be affected and are already being affected by these tariffs that are being imposed. On commodities, which is strange to think about, but there’re fears generally, unfortunately, and we hope that this thing doesn’t escalate.

The thing to add what is -- on what Stacy said, I think we have always try and place ourselves in the middle and not in the corner. And this is the beauty of being in stock market. You can do that. Provided you have clarity, transparency and you’re focused on what we said from day one. And if you stick to what we have said, you’re bound to have less affect from anywhere, here, there or anywhere. And furthermore, bear in mind that America needs China and China needs America. They cannot go around for a war because it will not help anybody.

One more question, if you can comment also about the possibility of -- or the -- the possibility of Chinese stimulus and the fact that the China seems to be shifting away from delevering to support its growth. How do you view this can impact the demand for dry bulk vessels?

So we don’t feel that it's going to affect at anytime soon because the programs for purchasing commodities are basically there for at least this year and part of the next year, restocking or destocking depending on the commodity. So in our view for the medium term it will have no effect. For the long-term it might. It depends very much out this business with the trade wars and import tariff is going to develop. That is what we should watch more carefully I think.

Fotis, this is Ioannis, again. If we go back what we did say about the sentiment and the effect of the fear or optimism of something happening, well, that is going to be greater than the actual fun. If you remember, we always say that from the one hand you have the fact and on the other hand you have the fear or the optimism of something happening. And if one is greater than the other the effect is the opposite. So let's see how this is going to develop. To give you an example, imagine if everyone is getting really scared about the trade wars, then supply is going to go down. And if it goes down fair well then the demand is going to go down due to the trade war. Then the result is going to be positive. So we soon waste all of our time calculating demand and supply without looking at the same sentiment of that.

The next question is from Randy Giveans from Jefferies. Please go ahead.

Obviously, Diana has been pretty active in the time charter market in recent weeks and months. So is that mostly the kind of capitalized on the recent rates strengthening? Or are you expecting kind of a rate pullback later this year?

You see, although we have an opinion or we think we know what the market is going to do, by having the hedging strategy that we do by having access to charter every 10, 15 days. So we are bound to get as we keep saying mathematically the average of the market. So we do not want to forecast as we speak what do we expect about the market. It is true that we like what we see as regard to demand and supply, but all scenarios for us, they're open. We take the agnostic view as regard the revenues. And therefore we keep hedging the way we charter our vessels. And as I say mathematically we are going to have the average of the market for 2019 or 2020 whatever that is going to be. And if the average is good then we are going to have nice results.

Kind of a structural question. So there has been lot of news recently regarding a coal slowdown in China, inventories are at elevated levels, more and more power generations switching to gas. Have you seen the slowdown in kind of Chinese coal pictures recently? Or do you expect, I guess, Chinese coal pictures to flow meaningfully in the coming months?

No, we don’t actually see that yet. Best impress about shipments of the coal going down for years now, especially looking at hydroelectric power, wind power generation and switching into gas. The problem is that people cannot actually calculate correctly the rates of increase in the demand for electricity. And it seems that there is a continuous scenario underestimation of this. And therefore, every year that we expect to see a drop in steam coal demand -- imported steam coal. It doesn’t seem to materialize. So effectively we are not affecting this as we got the pictures for coal apart from short-term events that really nobody can forecast.

Okay. And then one Diana specific question. So you have about 82 million cash, including the $34 million receives in Diana containerships and then other $25 million in restricted cash, so all in that would be about $140 million in cash. So what is that kind of amount you want to keep on your balance sheet? Do you have like a maximum or minimum cash balance or target cash balance?

No. We don’t have a minimum or a maximum cash balance. First of all the number is a $107 million for the quarter, but -- the total number, but we don’t have a maximum amount of cash. We need a minimum amount of cash and the minimum amount of cash that we need is the minimum that is required by our loans. But apart from that, no, we don’t have a target cash amount or remaining cash amount. We want to use our cash as best as we can and most efficiently we can to be not only is safe during the bad moments of our very cyclical industry, but also efficient during the good moments of this industry.

If you look at our balance sheet it is -- it looks very, very healthy and it is the most appropriate balance sheet to implement any strategy that you may have, but certainly to implement the strategy that we have described in the last 13 years have been publicly listed.

Sure. And just to be clear that 107, that's the 82 and the 25 restricted. But if I include the $34 million …

Yes, but we paid $65 million into the [indiscernible] loan.

This concludes the question-and-answer session. I would like to turn the floor back over to management for any closing comments.

Thank you, again, for your interest in and support of Diana Shipping Inc. We look forward to speaking with you in the future. Thank you.