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…

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…

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…

[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.