Greetings and welcome to the Diana Shipping Second Quarter 2020 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 your host, Ed Nebb, Investor Relations for Diana Shipping. Thank you. You may begin.

Thank you Jessie. And thanks to all of you for joining us for the Diana Shipping Inc. 2020 second 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, Miss Semiramis Paliou, Deputy Chief Executive Officer and Chief Operating Officer, Mr. Anastasios Margaronis, President; Mr. Ioannis Zafirakis, Interim Chief Financial Officer, Chief Strategy Officer, Treasurer 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 call, which are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act. And such forward-looking statements are based on assumptions, expectations, intentions and beliefs as to future events that 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 SEC. And now it is my pleasure to turn the call over to Mr. Simeon Palios, Chairman and Chief Executive Officer

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 2020. I am pleased to be addressing you today, and I am happy to report that I feel very well. I especially want to thank all of you who expressed your best wishes for my recovery from the Coronavirus. The Company has continued to steer a steady course through challenging market conditions and the uncertainty of the pandemic. To summarize the 2020 second quarter, Diana Shipping Inc. reported a net loss of US$10.8 million , and a net loss attributed to common stockholders of US$12.2 million [ph] for the second quarter of 2020, including a 2.6 million impairment loss. This compares to a net loss of $1.3 million and net loss attributed to common stockholders of US$2.7 million in the second quarter of 2019. Time charter revenues were US$41 million for the second quarter 2020, compared with US$55 million for the same period of 2019. The balance sheet remains strong with cash and cash equivalents and restricted cash totaling US$101.7 million at June 30, 2020. In the recent months, we took advantage of financial market conditions to restructure several credit facilities. Earlier this month, we repurchased an aggregate amount equal to US$8 million of the outstanding senior unsecured bonds. In June, we signed a supplemental agreement with BNP Paribas to extend by 2.5 years the maturity in existing secured loan facility until May 2024. In May, we signed a term loan facility with ABN AMRO Bank for US$52.885 million. This enabled us continue to existing launch with the lender into one facility maturing in June 2024. Also, in May, we refinanced a loan facility with Nordea Bank for US$55.848 million. In this process, we extended the loan facility until March 2022 with an option to extend the repayment by two more years until March 2024. Finally, to continue our activity fleet management, we agreed to sell the 2007 built vessel Arethusa to an unaffiliated third party with delivery to the buyers latest by August 31, 2020 for a sale price of US$7.85 million before commissions. As we move forward through unchartered waters, we will continue the prudent management of our financial position of our fleet, and we'll maintain our focus on delivering value to our shareholders. With that, I will now turn the call over to our President, Stacy Margaronis for a perspective on industrial conditions. He will then be followed by our Interim Chief Financial Officer, Chief Strategy Officer, Treasurer and Secretary, Ioannis Zafirakis, who will provide a more detailed financial overview. Thank you.

Thank you, Simeon, and welcome to all who are participating in this mid-summer quarterly conference call of Diana Shipping. For us, this is a particularly important and special conference call as our Chairman and CEO has recovered from his COVID-19 illness and is once again leading the Diana Shipping Inc. management. Looking at the earnings of the first half of this year of bulk carriers, it's interesting to note the wide oscillations of daily earnings during the first half. According to Gibson Shipbrokers, the Capesize Baltic 5 PP rate on June 30 was US$30,857 which was up from US$3,369 on May 29. The BDI started the year at 976 and closed on Friday the 24 of July at 1,317. The Baltic Cape Index was at 1,646 on January 2, and closed last Friday at 2,084. The Baltic Panamax Index moved from 1,003 at the beginning of the year to 1, 198 last Friday. Looking at the macro economic development. According to figures issued by the IMF recently, global GDP growth is expected to drop by about 4.9% this year. Growth of 5.4% is expected to return in 2021, assuming always that COVID-19 pandemic will be reasonably contained by them. European GDP growth is expected to drop 10.2% this year, and increase by 6% in 2021. The Chinese GDP growth is expected to increase by 1% in 2020 and by 8.2% next year. Projections for the United States are that GDP growth will be minus 8% this year and plus 4.5% in 2021. Turning to supply and demand. According to Clarkson, seaborne dry bulk trade is projected to decline by about 4.1% in ton mile in 2020. If this materializes, this will be a steeper drop than what was seen in 2009 following the financial crisis. On the supply side, Bulk…

Good morning, everyone. I'm pleased to be discussing today with you the Diana Operational results for the second quarter of the six months ended 2030 [Ph] -- for 2020. During that quarter, we recorded a net loss attributable to common stockholders of $12.2 million or $0.14 per share, which includes $2.6 million impairment loss. As you know, in 2019, which sold six of our vessels and another one in the first quarter of 2020. That has an effect a decrease in the operating days for this quarter as it was only 3,731 compared to 4,179 for the same quarter in 2019. Less ownership days together with a deteriorating market conditions has led to lower revenues, i.e., $41 million compared to $55 million -- $55.4 million to be exact, in the second quarter of 2019. As regards the voyage expenses, we had $3.8 million for this quarter, compared to $3 million in the same quarter in 2019. And this was mainly due to a loss that we had from bankers, that was $1.6 million compared to basically zero sum or loss of $67,000 last year. That combination of decreased revenues and increased voyage expenses has resulted also to having a lower time charter equivalent rate, which was 10,593 compared to 12,717 for the same quarter of 2019. The fleet utilization rates, it was more or less same as in 2019 for the same period, 98.3% compared to 9.4% [ph]. During the quarter that we are discussing now, our vessel operating expenses decrease to $2.8 million compared to $22.9 million. Basically, we had again the lower number of vessels. And because, we are talking about lower number of vessels, the daily operating expenses increased to 5,577 compared to 5,478 for the same quarter of 2019 per vessel. The interest and finance costs,…

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

How do you, Simeon, and welcome back. How you're feeling.

Thank you very much. I feel very well indeed. Thank you for your interest.

Sure. Glad to hear. Alright. So just first question, few weeks ago you repurchased $8 million of the unsecured notes. What was the price of that? And how much in cash, I guess, did you spend on that purchase? And is that the kind of first use of cash going forward?

Can you repeat your question please. Can you speak a little bit louder please.

Sure. A few weeks ago you repurchased $8 million of your unsecured notes. So I'm curious, what the price was and how much in cash?

$0.94 to the dollar.

$0.94. Okay. And are additional repurchases of these unsecured notes kind of a first use of free cash going forward?

You see, that poses as an attractive opportunity for us. We don't want to overdo it. Every day, we are considering our defensive way of tackling the situation to-date. And the attraction that we saw when we bought back the $8 million worth of share, it was the big saving in interest costs and also the gain from buying the bond a bit cheaper than previously than it was issued. So for us, yes, you're right. One, there is the opportunity to buy back the bond. Of course, it has to be at a discount if we want to do it.

Sure. Makes sense. And then, with that and I guess more so the recent financing and the refinancing, what is your new debt and amort for the fourth quarter 2020 or 2021 for the full year?

So, if you look at what we have done, we have changed basically the loan maturities and let me find -- hold on.

Sure.

So, do you want it per quarter.

Yes. If you have that.

Okay. For Q3 2020, we have basically -- as a subsequent event, the bond purchase and the repayment of the Arethusa loan, but going forward Q4 2020, Q1 2021, Q2 2021 -- sorry, okay. Let me -- hold on. Yes, Q4 2020, Q1 2021, Q2 2021, Q3 2021, zero loan repayments. And even for the 15-month period going forward, we have zero repayments. We have, of course, the installments that we need to pay amounting for a 12-month period at around $40 million, including another $9.273 million for Q3 2020. We have done a very good job there.

Yes. For sure. And just two more quick questions. One on the Arethusa delivery. That delivery is happening this summer. What are you doing with those proceeds in addition to the debt repayments, kind of the additional proceeds? And any other plans for additional vessel sales this summer, and how is that kind of secondhand S&P market trending now that we saw a pretty strong move in rates over the last month and a half?

Okay. Again, Ioannis speaking here. The proceeds from Arethusa is not going to be a lot of money. Most of it is going to the repayment of the existing debt. But the option to sell more vessels is still there. And as Stacy said in his remarks, selling vessels, probably the use of proceeds is going to be either keeping the money or reducing mainly the bond or buying back our stock in case we find this as an attractive opportunity based on the pricing of our shares. And we don't -- I know that you see the market that has picked up, and we show some good rates, but we don't want to get excited about that. We still think that a company like ours that respects 100% of money of our shareholders needs to be on a defensive stage rather than anything else.

Yes. That's fair. And then I guess one quick modeling question on the expense side. It looks like G&A fell pretty materially from the first quarter to the second quarter. However, depreciation actually increased from 1Q to 2Q. So can you discuss those two line items? And what's a good run rate to use going forward?

As you have seen, we had increased the drydocking expenses, and that has led to drydock increased depreciation number as a result of drydock amortization. We spend money on the vessels, and that has created a greater book value for the vessels that needs to be depreciated. We're talking ballast water installation [ph].

Sure. That covers. And then on the G&A side?

On the G&A side, it is true that we are trying to reduce our G&A, but mainly as you saw the G&As were really large number in the previous quarter. It had to do with compensation on two of the of the directors that left the company. They had to get their vested -- their invested shares. And that's why you show the big number.

Got it. Okay. So the current level’s a good run rate.

Sorry, come again?

So the current level is a pretty good run rate for the rest of the year?

The current level is going to be, yes, the current level is the one that you should be expecting.

Excellent. That's enough time for me. So thanks so much.

Okay.

Thank you.

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

Hi. Thank you. Good afternoon, guys. And also Simeon, nice to have you back.

Thank you. Thank you very much indeed. Thank you.

Yes. I wanted to just follow up a couple of items, maybe just the first thing. Stacy on the call mentioned the potential of selling ships in the future, with the proceeds being used for A, buying back stock; B, paying down debt.; and C, keeping in reserve. Is that an order of preference or is that just a listing of the options?

No. That's just listing. Let me put it in the right order. Keeping the money, buying back debt, and buying back stock after.

Okay. Yes. So reverse order.

Yes.

Okay. And then, following up on what Randy was asking on the debt repayment schedule. Clearly between the BNP, the ABN AMRO, the Nordea loans, you guys have pushed out a lot of maturities. And so, just to wanted to make sure I had the numbers right. In addition to the bonds that were repaid, the $8 million plus the Arethusa proceeds. If we exclude those, basically, it's between $9 million and $10 million a quarter of amortization over the next 12 to 15 months?

That is exactly right. We're talking about $10.8 million to $9.2 million -- $10.8 million, yes.

Okay. And then for, I guess, for 2021 as a whole, I don't want to get too much into the numbers. But we -- I think we came into this year with basically $140 million to something along those lines for 2021. And as we look at it now, basically, we've gone from $140 to just basically $40. Is that kind of [Indiscernible]?

To around $57 million. That's a good job.

That was good work. I mean, in three months time, right into last call.

Thank you.

Okay. Well, I'll leave it there. I appreciate it. Thank you.

And the main idea behind that, why I mentioned that we have done a very good job here is because we didn't decrease our cash position because you could have just repaid or because we see everything around. We have one as to improve these positions, materially without spending any money.

Thank you. [Operator Instructions] Our next question comes from the line of Ben Nolan with Stifel. please proceed with your question.

Good morning, or afternoon. I think that refinancing is the questions here and that sort of remind might as well. Obviously, you said, good job, getting the refinancing done. And I'm sure having the cash on the balance sheet that you do really enables that. I was curious if maybe you could talk through the state of -- well, certainly, obviously, your company's ability to be able to do that. But the market in general, has there been any change in the way that banks are approaching or making capital available or refinancing available given kind of the uncertainty that we see?

I can say that the banks that we talked to, I have seen no change in the way they're looking at things. And they were, I would say, surprise when we approach them in order to implement our strategy as regards their refinancing. Their first reaction is, but why do you want to do that? Or are you prepared to pay 50 basis points more in order to do that, and they didn't understand. So for me that shows that they do not worry a lot about what's happening.

Yes. Well, again, I'm sure having as much cash on the balance sheet as you do sort of puts you in a much better position to have those conversations and many of the other people in the world. But that's sort of leads to the next question. I mean, obviously even for you guys, you're generating $5 million of cash flow this particular quarter, hopefully it'll be better going forward. But you have contracted cash flows. You have a lot of debt or a lot of cash on the balance sheet aren't too levered, and not all companies or most companies, I would think we're probably not in that similar position. If the market doesn't get better, can you maybe prognosticate as to sort of how things should shake out? And is this ultimately just sort of preserving cash because you think there might be an opportunity to buy assets more cheaply?

You understand that if we have assets being cheaper than what it is today, it would be probably because of deteriorating market conditions. So having even deteriorated market conditions, our defensive play still has to be there. And I don't see the scenario where the market deteriorates and we are spending, or we are making our balance sheet worse than what it is today. No, this is not the scenario that -- the scenario that we see happening is eventually the market picking up. And Diana Shipping Inc. makes a lot of money on the previously invested money in the cycle in the year 2014 till 2018 purchases.

Okay, got you. Now that's helpful. But irrespective of sort of your capital deployment and where you're spending money, I mean, given the fact that you are taking a more defensive stance, is this sort of a or do you think that there's a legitimate chances, things could get substantively worse in the industry?

Listen, as we have said publicly many times, we are talking about an event that has startled the entire world. We are talking about most of the economies of the world, if not all of them having big, big issues in their GDP growth. So this is a kind of event that should make everyone worry about what is going to happen in the future, as regards the demand for carrying goods by sea. Certainly I know that you are talking to other companies that are having a lot of wishful thinking. And they're saying yes, but we're going to have -- be having stimulus packages that are going to make this demand better than what it is today or not as low as someone may expect. But having said that, this is a scenario that we will welcome but it's not for us the most probable scenario, of course, the good thing about what is happening together today is that we supply has been kept in very low numbers. And of course this will help. Having said all of these things, what we are saying here is that the other [Ph] reaction in what is happening is going to leave the market where it's going to go. So, if people are really scared about the future, then we would take the position that the market may be better but at the moment, they are keeping a neutral position or neutral to positive and we don't like that.

Right. Now I'm, I'm on the same page as you just curious where how you're thinking about things. So appreciate the color.

Thank you, Ben.

Thank you.

Thank you. It appears we have no additional questions at this time. So I'd like to pass the floor back over to management for any concluding remarks.

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

Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.