Earnings call transcript: Diana Shipping Q4 2024 sees stable EPS, revenue meets forecast

Diana Shipping Inc . (NYSE:DSX) reported its Q4 2024 earnings, posting earnings per share (EPS) of $0.02, aligning with analyst forecasts. The company’s revenue reached $57.1 million, slightly exceeding the forecast of $54.7 million. Following the earnings release, Diana Shipping’s stock saw a modest pre-market increase of 1.67%, reflecting a positive market sentiment towards the results. According to InvestingPro analysis, the company is currently trading below its Fair Value, with impressive gross profit margins of 57.48% and a notably low Price-to-Book ratio of 0.44.

Key Takeaways

• Diana Shipping’s Q4 EPS met expectations at $0.02.
• Revenue slightly surpassed forecasts, reaching $57.1 million.
• The stock price rose by 1.67% in pre-market trading.
• The company anticipates stable earnings for 2025.
• Fleet utilization remained high at 99.7% for the year.

Company Performance

Diana Shipping reported a mixed performance for Q4 2024. While revenues decreased by 5% year-over-year to $57.1 million, net income saw a slight increase to $9.7 million from $9.4 million in Q4 2023. The company maintained strong fleet utilization and secured substantial time charters, ensuring revenue visibility for the coming years. The global drybulk shipping demand is expected to grow modestly, which aligns with Diana Shipping’s strategic focus on medium to long-term charters. InvestingPro data reveals a strong free cash flow yield of 21%, suggesting efficient capital management despite market challenges. Subscribers can access 8 additional ProTips and comprehensive financial metrics for deeper analysis.

Financial Highlights

• Revenue: $57.1 million, a 5% decrease from Q4 2023.
• Adjusted EBITDA: $25.9 million, down from $27.1 million in Q4 2023.
• Net Income: $9.7 million, up from $9.4 million in Q4 2023.
• Cash Position: $207.2 million, up from $161.6 million in 2023.
• Long-term Debt: $637.5 million, a 1% decrease from 2023.

Earnings vs. Forecast

Diana Shipping’s Q4 2024 earnings per share of $0.02 met the forecast, while revenue slightly exceeded expectations at $57.1 million against the projected $54.7 million. This performance indicates a stable financial position, despite a year-over-year revenue decline.

Market Reaction

Following the earnings announcement, Diana Shipping’s stock rose by 1.67% in pre-market trading, reaching $1.83. This movement reflects investor confidence in the company’s ability to meet earnings expectations and manage its fleet efficiently. The stock remains within its 52-week range, with a high of $3.215 and a low of $1.73. InvestingPro analysis indicates the stock is trading near its 52-week low, with an overall Financial Health Score of FAIR, suggesting potential value opportunity for investors seeking exposure to the shipping sector.

Outlook & Guidance

Looking ahead, Diana Shipping projects stable earnings for 2025, with secured revenues of $124.8 million for the year. The company is also focusing on fleet modernization and eco-friendly technologies, anticipating the delivery of two methanol dual-fuel vessels by late 2027 or early 2028. Market conditions remain volatile, but Diana Shipping is positioned to navigate these challenges with its disciplined chartering strategy.

Executive Commentary

CEO Sameer Amis Paliou remarked, "2024 has been another record year for drybulk volumes," highlighting the company’s resilience in a fluctuating market. President Stacy Margarone noted the increasing volatility in the drybulk market, while reaffirming Diana Shipping’s commitment to eco-friendly technologies.

Risks and Challenges

• Supply Chain Disruptions: Potential impacts on fleet operations and delivery schedules.
• Market Volatility: Fluctuating demand and supply dynamics in the drybulk sector.
• Geopolitical Tensions: Trade tariffs and international relations could affect shipping routes and costs.
• Economic Slowdown: Slower growth in major economies could impact demand for drybulk shipping.
• Environmental Regulations: Compliance with new standards may increase operational costs.

Diana Shipping remains focused on mitigating these risks through strategic planning and operational efficiency.

Full transcript - Diana Shipping Inc (DSX) Q4 2024:

Conference Operator: Greetings, and welcome to the Diana Shipping Incorporated twenty twenty four Fourth Quarter Conference Call and Webcast. At this time, all participants are in a listen only mode.

A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Edward Nepp of Investor Relations. Thank you. You may begin.

Edward Nepp, Investor Relations, Diana Shipping: Thank you, Daryl, and thanks to everyone who is joining us today for the Diana Shipping Inc. Twenty twenty four fourth quarter and year end conference call. With us today leading the management team is Sameer Amis Paliou, Chief Executive Officer, who will introduce the other members of the management team. And so without further delay, I will turn the call over to Ms. Palieu.

Sameer Amis Paliou, Chief Executive Officer, Diana Shipping: Thank you, Ed. Good morning, ladies and gentlemen, and welcome to Diana Shipping Inc. Fourth Quarter and End of the Year twenty twenty four Financial Results Conference Call. It’s a pleasure to address you today alongside our esteemed team Mr. Stacy Margarone, Director and President Mr.

Ioannis Afirakis, Director, Co Chief Financial Officer and Chief Strategy Officer Mr. Luceris Papatric, Director and Ms. Maria Dede, Co Chief Financial Officer. Before we begin, I kindly remind you to review the forward looking statements on Page four of the accompanying investor presentation. For Q4 twenty twenty four performance, it has been another record year for drybulk volumes through 2024 and earnings have averaged well over that seen in 2023.

But this was a year of two halves in terms of rates with a very strong first six months followed by somewhat softer conditions through the back end of the year. Trade disruption played a key part in boosting tonne mile demand, especially as Panama Canal transit slots were cut due to drought conditions leading to rerouting. This was further exacerbated by Houthi attacks on ships in the Gulf Of Aden, which subsequently led to a 40% reduction in bulk of transit and even more rerouting. Towards the end of twenty twenty four, shipments volumes remained high, but fleet efficiency gains began to weigh on Capesize and Panamax earnings. Meanwhile, the near normalization of the Panama Canal and more basin bound trade kept limits on ton mile growth.

Having said that, the forward curve has remained in steep contango for all sizes and we have managed to charter our vessels for period at significant premiums over the spot market. Turning to Slide five, let’s review our company’s snapshot as of today. Diana Shipping Inc, founded in 1972 and listed on the New York Stock Exchange since 02/2005, operates a fleet of 38 drybulk vessels, seven of which are mortgage free. Our fleet has an average age of 11.4 and a total deadweight capacity of approximately 4,200,000 tonnes. We anticipate the delivery of two methanol dual fuel newbuilding Camp Harmax drybulk vessels at the end of twenty twenty seven and early twenty twenty eight respectively.

Fleet utilization reached 99.7% for the fiscal year 2024, highlighting our effective vessel management strategy. As of the end of the fourth quarter, we employed nine eighty one individuals at sea and the shore. Financially, our net debt stands at 40% of market value supported by $2.00 $7,000,000 in cash reserves and total secured revenues of approximately $155,000,000 as of February 19. On Slide six, we outlined the key developments from the fourth quarter through February. In October, we signed a term loan facility with Danish Ship Finance secured by seven vessels, drawing US80.2 million dollars to refinance the existing term loan facility.

This refinancing released two previously financed vessels. In October, we successfully completed the approval and publication of the company’s prospectus for the bond listing on the Oslo Exchange. In November, we completed a USD25 million cap issue under our outstanding senior unsecured bond due July ’20 ’20 ’9 issued at 102% of par value with a fixed coupon of 8.75%. In November, we released our 2023 ESG report, the fifth in a row, underscoring our ESG strategy and commitment to sustainability. In December, we repurchased 11,442,645 common shares at the price of $2 per share.

As of February 19, we have raised $25,600,000 through the exercise of 6,394,709 warrants under our ongoing warrant program with the potential to raise an additional $65,000,000 under the full scope of the program. As of February 19, we have secured revenues for 63% of the remaining ownership days of 2025, amounting to approximately US125 million dollars and 10% of available ownership days in 2026, amounting to approximately US30 million dollars Maria will provide further details on our cash flow generation potential. In February, we announced the sale of Motivel Al Alkmini for a purchase price of approximately US11.9 million dollars before commissions. This is expected to be delivered to her new owners latest by 03/07/2025. For the fourth quarter, we are pleased to declare a quarterly cash dividend of $0.01 per common share, totaling approximately US1.1 million dollars On Slide seven, summarizing our recent chartering activity.

Since our last earnings presentation, we have secured favorable time charters for nine vessels. Two Ultramax vessels at the weighted average daily rate of $12,952 for two twenty eight days. Seven Panamax and Post Panamax vessels at the weighted average daily rate of 11,200 and and $60 for two fifty two days and four Capesize vessels at a weighted average daily rate of $18,312 for two sixty four days. Slide eight highlights our disciplined chartering strategy. We focus on standard medium to long term charters to avoid clustered maturities and ensuring earning visibility and resilience against market downturns.

Now I’ll pass the floor to Maria for a more detailed financial analysis.

Maria Dede, Co Chief Financial Officer, Diana Shipping: Thank you, Josemire. Going to slide nine, on the financial highlights for the fourth quarter of twenty twenty four, our revenues stood at $57,100,000 compared to $60,000,000 in the same quarter of last year, a decrease of about 5%. Our adjusted EBITDA was $25,900,000 compared to $27,100,000 in the fourth quarter of twenty twenty three, a decrease of $1,200,000 Regarding our net income, this increased compared to the same quarter of last year to $9,700,000 dollars from $9,400,000 in 2023, an increase that is mainly attributable to decreased interest expense as a result of a combination of decreased average debt and decreased interest rates and increased gain from non operating activities in the fourth quarter of twenty twenty four compared to the same quarter in 2023. Earnings per common share diluted, however, was $0.02 in the fourth quarter of twenty twenty four compared to $0.06 in the same quarter of twenty twenty three. The decrease in the diluted earnings per share was due to the increased average number of shares and also the adjustments of net income to calculate this number, including not only the preferred dividends paid to preferred shareholders, but also the gain on warrants, which in the fourth quarter of twenty twenty four was $5,500,000 compared to only $1,600,000 in the fourth quarter of twenty twenty three.

On the balance sheet side, we ended with the year with cash of $207,200,000 compared to $161,600,000 as of 12/31/2023, comprised of cash and cash equivalents, time deposits maturing in periods above three months, which are excluded from cash and cash equivalents and restricted cash serving as compensating cash balance to secure our loan facilities. Long term debt and finance liabilities, net of deferred financing costs, comprising of a mix of variable and fixed rate indebtedness, which includes secured debt and unsecured bond and foresail and leaseback agreement was $637,500,000 as of 12/31/2024 compared to $642,800,000 as of 12/31/2023, a decrease of around 1%. At this point, we would like to remind you that during 2023 and 2024, we refinanced all our debt agreements and bond to push back debt and bond maturities and also decrease loan margins. Going to Slide 10, we talked about our revenues for the quarter earlier in the previous slide. Now voyage expenses increased marginally compared to the same quarter last year due to increased loss on bankers compared to 2023.

On the other hand, vessel operating decreased in absolute numbers due to the sale of two vessels during the year, but also due to savings achieved in the fourth quarter of twenty twenty four, which can be evident by the decrease of the day operating expense achieved for the fourth quarter of twenty twenty four being $5,496 compared to $5,745 in 2023. Our time charter equivalent for the fourth quarter was also increased to $15,589 compared to $15,162 in the fourth quarter of twenty twenty three. Fleet utilization was the same for both comparative quarters at a strong rate of 99.7%. Going to the next slide, number 11. Our revenues for the year were $228,200,000 compared to $262,100,000 last year, a decrease which was the outcome of decreased average rates achieved during the year and decreased average number of vessels.

That being said, our time charter equivalent for 2024 was $15,267 compared to sixteen thousand seven hundred and fifteen dollars in 2023. Net income was $12,700,000 compared to $49,800,000 in 2023, a decrease that was affected by decreased revenues and non operating losses relating to the reversal of the bond in 2024 and losses derived from the valuation of our investments compared to gains in 2023. Going to the next slide, number 12, you can see the outcome of our debt refinancings mentioned earlier through which we managed to have steady debt repayments until 2029 and a steady amortized steadily amortized debt until 02/1932. Going to the next slide, as of 12/31/2024, our breakeven rate was $16,314 per day. As Emilio mentioned earlier, our contracted revenues for the remainder of 2025 were $124,800,000 and for 2026, ’30 million dollars Having calculated the revenues for the unfixed date of 2025 and 2026 at the FSA rates presented in this slide, we estimated that for 2025 we will be at or around breakeven.

Going to the next slide, in Slide 14 we present to you our dividend payout since the third quarter of twenty twenty one when we distributed our first cash dividend since 02/2008, which has rewarded our share holders with quarterly distributions of both cash and shares. Consistent with this payout, we have declared another dividend of $0.01 per share, increasing our cumulative dividend paid since 2021 to $2.66 per common share. And with this, I will turn the call to Stacy, who will continue with the drybulk market over.

Stacy Margarone, Director and President, Diana Shipping: Thank you, Maria. And a further warm welcome to the participants of this quarterly and annual earnings call of Diana Shipping Inc. A quick look at the market and an update on it. The drybulk market has become increasingly volatile and the erratic paper market helps to increase this instability. As evidence of this trend, we cite the highs and lows of the drybulk market over the last twelve months or so.

The Baltic Dry Index hit a high of 2,419 in March and at the January stood at only $715 12 months time charter rates for Capes reached a high of $35,000 a day in March 24 for a scrubber fitted ship and in January had dropped to $18,000 per day. For Camture Maxes, the high was $21,000 per day in March of last year and the low was reached in December of last year of $11,250 per day. For Ultramaxes, the figures were $19,500 per day in February 2024, dropping to $12,500 per day in December of last year. For the time being, ARO shipping and energy have identified a sharp drop during the second half of twenty twenty four in grain shipments as well as coal shipments. As these rates account for nearly 80% of Panamax shipments, it is no surprise that earnings dropped so much over the last two quarters.

At least grain shipments are expected to increase over the next few quarters, while the future trend of coal shipments is much less certain. Looking now at macroeconomic development. Market performance depends very much on world GDP growth. And on the positive side, it is encouraging to note that a record small number of countries are expected to be in recession in 2025 and 2026. Related projections for growth of the major world economies provided by the IMF are shown in this slide.

China’s growth this year is expected to come in at around 4.6%. For The U. S, the projections are 2.7% for this year and 2.1% in 2026. While for Europe, the projections are 1% for this year and 1.4% in 2026. Oil growth is anticipated to grow by 3.3% both this year and next.

The major bright spot remains India with anticipated growth being forecast at 6.5 for the next two years. According to Optima Shipping Services, a looser monetary policy in China is expected to provide support to the drybulk trade later this year, particularly in commodities tied to domestic infrastructure and industrial demand. A brief look at commodities. Steel output in China has dropped so far by 1% year on year. Global steel production is projected to have dropped by 0.7% in 2024 as compared to 2023 to 1,835,000,000 tonnes.

The largest increases were seen in Vietnam, Brazil, India and Turkey, while largest production drops during last year were seen in Mexico, Russia and South Korea. Grain shipments are expected to grow by about 2% during 2025 grain season after showing good performance of 3% in 2024. Shipments in 2026 are expected to grow by 3% even though much will depend on the war in Ukraine. Klapzels expect thermal coal shipments to drop by 2% this year to 1,027,000,000 tonnes and by a further 2% in 2026. However, eventually demand might grow as China and other emerging economies in the Asia Pacific region still depends heavily on coal for power supply for which demand is increasing rapidly.

Iron ore shipments, which are expected by analysts to remain steady this year and drop by 1% in 2026 are being disrupted by cyclones affecting major loading ports in Australia, such as Port Hedland, Ampere and Port Walker, where congestion now is beginning to build up. Demand growth in the major bulk in the minor bulk trade will be the main positive factor in 2025 and are anticipated to increase by 3% to 2,300,000,000 tonnes. Increased shipments of bauxite and aluminum will remain the cornerstone of the minor bulk trade, supporting global economic recovery and the energy transition in 2025 and beyond. The share of Capes in the bauxite trade has increased to just over 20% of total shipments. Total (EPA:TTEF) bauxite shipments in 2024 are estimated by Clarksville to come in at 162,400,000 tonnes, which will represent 15% year on year increase.

Turning to demand. Now analysts expect global demand for drybulk shipping to grow by about 1% this year with supply anticipated to increase by about 3% year on year leading to an overall softer fundamental balance in the sector. However, several factors such as slower speed, greater or higher time due to special surveys and fitting energy saving improvement could help reduce this discrepancy. Looking ahead to 2026, bulk carrier earnings are anticipated to be modest with fleet growth expected to be approximately 2.6% and demand expected to increase around 1% in tonne mile. So in 2026, a decrease in fleet growth is expected, mostly attributed to an increase in demolition to about 14,000,000 deadweight tons and limited newbuilding delivery.

2026 might be a year of slightly better bulk carrier earnings than in 2025, but it is far too early to make any focus. Moving to the next slide covering fleet development. The newbuilding order book is about 109,300,000 deadweight or 10.6% of the existing fleet. Panamax’s Camsharmax’s in particular are the most broadly ordered size at 36,600,000 deadweight on orders, representing nearly 14% of the existing fleet. As Clarkson points out, the fueling transition remains in focus in 2024 with a record volume of alternative fuel capable tonnage contracted about 62,000,000 deadweight or around 50% of the total.

However, the alternative fuel readiness of this tonnage differs greatly from ship to ship, most being prepared with minimum present cost to receive some sort of alternative fuel down the road, at which time much larger outlays will be required for the necessary modification. According to statistics prepared by Braemar, the Capesize fleet is expected to grow by about 5,000,000 tonnes this year and by about 6,000,000 deadweight tonnes in 2026. For Kansharing Maxes and Panamaxes, the figures are 9,000,000 for this year and 14,000,000 in 2026. The Ultramaxes are expected to grow in tonnage by 10,000,000 deadweight in 2025 and by 7,000,000 in 2026. All figures given above are net of expected deletions from the fleet.

Talking of deletions, demolitions are expected by Clarksons to reach 9,200,000 deadweight this year and about 14,700,000 next year. Since age is one of the factors affecting the decision to scrap vessels together with sentiment and the state of the freight market of course, it is worth noting that according to Clarksons, twenty four percent of Handymax Supermax tonnage is over 15 years old, as well as 26% of Panamaxes and 17% of Kate. Conjection has been gradually dropping since 2021, thus boosting the supply of available tonnage. Bimco expected to stabilize around current levels, although extreme weather conditions like that that we are facing now in Australia in the iron ore loading force could increase congestion at least temporarily. As regards asset values, new building prices are for the time being defined the trend of the freight market and remain firm across the size range.

Capes have increased by 10% year on year at 74,500,000.0 with Camshamaxes at 37,000,000 showing a 3.5% year on year increase. Similar increases are seen for Handymax. According to Bimco, Bimco over the next two years secondhand prices are expected to weaken together with Freightree. After peaking in July of last year, they gradually returned to the early twenty twenty four levels. As an example, in January, a five year old bulkier would sell on average about 88% of the price of a new build.

This downward trend is expected to continue over the next few quarters. Finally, turning to the market outlook. Overall, major dry bulk commodity shipments are expected to either remain steady or drop somewhat from level seen in 2024. The minor dry bulk trade representing about 2,350,000,000 tonnes of shipments will play the most significant role in determining the future course of the dry bulk market over the next two years or so. Modest supply growth will help in maintaining a balance between supply and demand.

Nevertheless, 2025 is projected to be a softer year than 2024, mainly due to a moderation in the rate of growth in demand. A major unknown factor is the effect on the drybulk market of fossil tariff from China, Mexico, Canada and other countries’ exports to The U. S. By the new U. S.

Administration, which might disrupt primarily grain and miner bulk trade. According to BIMCO, rising tariffs present a considerable downside risk in the fight against inflation and to global economic growth in the near to medium term. An increase in tariffs could lead to a rise in consumer prices, keeping interest rates high for a longer period than would have otherwise been the case. High interest rates could also affect supply chain, which will certainly be bad for shipping in January. So the last slide provides a short summary of positive and negative influences for the drybulk market as presented by various elements.

To cite a few, we continued on the positive side. We have continued import growth into China and Southeast Asia. The record small number of countries expected to be in recession during this year and next. Gradual increase in congestion, looser monetary policy in China, leading to potential recovery in the Chinese property and infrastructure markets, and the commencement later this year of iron ore shipments from the Cement 2 in Guinea. On the negative side, we have worldwide lower iron ore consumption, we have protectionist measures with high tariffs leading to trade wars, bulk carrier fleet growth outpacing demand growth except for the Cape sector, easing tensions in The Middle East with increased Red Sea transit, weather related disruptions of exports in the Australian iron ore trade, large increases in hydropower, output in India and China and finally Panama Canal, a drought related problem resolution.

On this note, I will pass the call to our CEO, Semira Mispalu to provide the most important financial highlights for the last year and fourth quarter as well as some takeaway points from this earnings call.

Sameer Amis Paliou, Chief Executive Officer, Diana Shipping: Thank you, Stacy. So before we conclude today’s presentation, I’d like to highlight our ongoing ESG initiatives. So Diana Shipping is committed to promoting eco friendly technologies and modernizing our fleet, transparently sharing emission data to ensure accountability. Verona is committed to building on partnerships and collaborations to advance our sustainability goals and is also developing an equity, diversity and inclusion program while continuously investing in our people. On slide 20, in summary, Diana Shipping stands on a strong foundation built on over fifty years of industry experience and twenty years on the New York Stock Exchange, a seasoned management team, adept to addressing industry challenges, strong stakeholder relationships and a disciplined strategy and approach, a solid balance sheet with a strong cash position and a counter cyclical mindset, ongoing fleet modernization efforts, a focus on rewarding our shareholders when possible and the robust ESG strategy.

Thank you for joining us today. We now look forward to addressing your questions during the Q and A session.

Conference Operator: Thank you. We will now be conducting a question and answer session. I’m not showing any questions at this time. I’d like to hand the call back over to management for any closing comments.

Sameer Amis Paliou, Chief Executive Officer, Diana Shipping: Thank you very much for joining us for Diana’s fourth quarter and end of year financial results conference call. I look forward to talking to you again in the next quarter. Thank you very much.

Conference Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.