Diana Shipping Inc (DSX) 2021 Q1 法說會逐字稿

Greetings and welcome to the Diana Shipping Inc.'s 2021 First Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce Ed Nebb of Investor Relations. Thank you. You may begin.

Thank you, Darryl, and thanks to all of you for joining us today for the Diana Shipping Inc. first quarter conference call.

The members of the management team who are with us today include Ms. Semiramis Paliou, Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Ioannis Zafirakis, Chief Financial Officer, Chief Strategy Officer, Treasurer and Secretary; Mr. Eleftherios Papatrifon, Chief Operating Officer; and Ms. Maria Dede, Chief Accounting Officer.

Before management begins the remarks and presentation, let me briefly summarize the safe harbor notice, which you can see in its entirety in today's news release and in the deck that has been provided. Certain statements made during this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act, and the forward-looking statements are based on assumptions, expectations, projections and 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 materially from the forward-looking statements, please refer to the company's filings with the SEC.

And now with that, it is my pleasure to turn the call over to Ms. Semiramis Paliou, Chief Executive Officer.

Thank you, Ed. Good morning, ladies and gentlemen, and welcome to Diana Shipping Inc.'s first quarter 2021 earnings call. My name is Semiramis Paliou, the company's CEO, and it is an honor and a privilege to be presenting to you today.

As you have probably noticed already, we have altered some more the format of our earnings call by adding a slide presentation to accompany our presentation. As a result, we will reference the various slides as we go along, and we hope that you will be able to seamlessly follow.

Turning to Slide 4. We thought that this is the first time that we are presenting via a slide presentation. It will be beneficial to provide a brief company summary. Diana Shipping Inc. is a pure dry bulk company that has been listed continuously on the New York Stock Exchange since 2005. We currently have 37 vessels in the water with a carrying capacity of approximately 4.7 million deadweight tons.

We have focused on the largest dry bulk vessels with our fleet ranging in sizes from Panamax vessels to Newcastlemaxes. As a result, we mainly carry major bulk cargoes. And for 2020, we transported 35.2 million metric tons with iron ore being the main cargo we carried at 26.2 million metric tons. The majority of our fleet, 31 vessels, is managed in-house by Diana Shipping Services and 6 vessels are managed by a 50-50 joint venture with Wilhelmsen Ship Management. We currently employ over 900 people at sea and ashore.

Moving on to Slide 5. I will go over the highlights of the first quarter and recent developments. This has been a very interesting quarter, characterized by the rapidly improving market conditions that haven't been seen for years. The anticipated Chinese lull expected between the months of January and February 2021 did not materialize. On the contrary, there was strong demand for raw materials. The fiscal policy to stimulate global economic growth, the frenzy to refill depleted inventories, the ban on Australian coal imports to China and the limited supply of new ships all seem to support the higher prices for commodities and transportation.

More specifically for our company, within the first quarter, we implemented leadership changes to ensure the continued sound strategic management of the company. Our new management team is eager to continue on the path set by our Founder and Chairman, Mr. Symeon Palios, following the guidelines and principles adopted at inception. At the same time, we will endeavor to prepare, navigate and expand the company successfully in this area characterized by rapid and radical technological changes and innovation.

Also within the quarter, we repurchased via tender offer 6 million of our common shares at a price of USD 2.50 per share. We view the timing as very opportune as based on the market developments over the last few months, this move has proved to be immediately accretive to our shareholders.

The market strength experienced during the course of last quarter, which resulted in increased asset values, allowed us to reach an agreement to sell 1 of our older vessels, the built-vessel Naias, at an attractive price of USD 11.25 million gross.

We are also pleased that during last quarter, Diana Shipping Services signed an agreement with American Bureau of Shipping to implement the ABS Environmental Monitor digital sustainability solution across 31 of the company's vessels managed by DSS. This is a cloud-based application that enables us to monitor and track overall fleet or vessel-specific environmental data in such categories as emissions, waste and consumables. We believe that the data analysis and reporting features of this application will support more sustainable vessel operations for our fleet while helping us enhance environmental performance.

Somewhat related to the above issue is the new $91 million sustainability-linked loan that we signed earlier this week. Although the prime reason for entering into this loan was to refinance early our loan facilities maturing in 2022, we are particularly pleased that we have been able to work together with ABN to introduce a sustainability element into the loan. This displays even further our commitment in being proactive in this specific field. We are further fostering our long-term commitment to sustainability by establishing a Sustainability Committee at Board level.

Lastly, we have continued over the last quarter to tackle successfully the COVID-19 pandemic-related operating challenges, such as crew changes and crew repatriations, procurement of provisions and spares and handling scheduled and unscheduled repairs.

I would like to take a moment to highlight the most important short-term challenge faced today in the shipping industry during the pandemic, that is the difficulty to repatriate our crew. Restrictions placed by ports, borders, local and international authorities, travel disruptions and suspension of flights have made it extremely challenging for our crew to return home and to their families.

The lack of cooperation by a number of charterers in facilitating this issue is noteworthy. We consider the crew change and repatriation issue extremely important not only due to the human element factor, it affects the safety of our crew, the safety of the ship and the cargo and could potentially affect the global supply chain of goods. Regardless, the shipping industry has shown once again resilience and adaptability to unforeseen and unprecedented events.

Turning to the financial highlights of the first quarter of 2021 on Slide 6. We find ourselves, as of March 31, 2021, with a cash and cash equivalent position of USD 86 million, including restricted cash, as against USD 82.9 million as of December 31, 2020. Our debt, net of deferred financial costs, stood at USD 411.4 million at the end of the first quarter of 2021 as against USD 420.3 million at the end of 2020.

Our time charter revenues for the first quarter of 2021 amounted to $41.1 million as against USD 43.8 million for the first quarter of 2020.

Lastly, our earnings per share for the first quarter of 2021 came in at a loss per share of $0.03 versus a loss of USD 1.21 per share for the same period of 2020. It should be noted that last year's figures included an impairment loss taken at the time. Our CFO, Ioannis Zafirakis, will go over these numbers in more detail further on in the presentation.

Moving on to Slide 7. We find a summary of all of our year-to-date chartering activity. Consistent with our conservative and disciplined chartering strategy, we have taken advantage of the improving chartering market and have secured attractive time charters for 13 vessels of our fleet. More specifically, we charted 7 Panamax/post-Panamax vessels at a weighted average daily rate of USD 16,571 for a remaining average period of 169 days per vessel. We have also chartered 6 Capesize/Newcastlemax vessels at a weighted average rate of USD 18,896 per day for a remaining average period of 244 days. We anticipate that we will continue chartering our vessels that will be redelivered to us in a similar way by staggering maturities, locking in cash flows and positioning us in a manner that will allow us to continue to participate in a potentially improving market in a balanced way.

Slide 8 provides an indication of the kind of cash flows that can be secured by our vessels that will be redelivered from their current charters within the remaining of 2021. As a base, we used the already fixed time charter revenues of USD 72.1 million, which amount to a daily average contracted time charter rate of USD 16,136 per vessel. If we use the current FFA rates for fixing the vessels opening up within the remainder of 2021 for a 1-year period, we expect to generate an additional USD 83.5 million of time charter revenues that equates to an average fixed time charter daily rate of USD 21,899 per vessel.

When we compare the sum of the fixed and then fixed revenues as against our breakeven levels, we find ourselves with the possibility of generating approximately USD 53.3 million of free cash flow, equating to an average free cash flow margin of USD 6,438 per vessel per day over the remainder of the year. Again, this is presented in order to display the free cash flow generating capacity of our fleet in the current market. It should be noted that the actual results will be dependent on how the market performs for the rest of the year and on how exactly we fix our vessels in this period of time.

I will turn over the call now to Ioannis to go over our first quarter 2021 financials in more detail.

Thank you, Semiramis.

During last quarter, we recorded, as we have already shown to you, a net loss attributed to common stockholders of $2.7 million. That's $0.03 per share. As you can see in the slide, during the first quarter, 3 vessels that we have agreed to sell in 2022 were delivered to their buyers, and we agreed to sell that 1 additional vessel, the Naias, expected to be delivered to the buyer latest by July 30, 2021.

Following the sale of the vessels in 2020 and those completed in the quarter, ownership days were down to 3,434 compared to 3,801 for the same quarter in 2020. And this is why you see the lower revenues at $41.1 million compared to $43.8 million for the first quarter of 2020. The voyage expenses also decreased compared to last year to $1.8 million compared to $3.7 million for the same quarter. And the decrease in voyage expenses was not only due to decreased commission on lower revenues, but also due to a gain of $0.5 million in bankers compared to a loss of $1.3 million in the same quarter.

During the discussed quarter, our vessels operating expenses decreased to $18.6 million compared to $21.3 million mainly due to the decrease in the number of vessels in the fleet. Daily operating expenses also decreased to $5,400 compared to $5,600 for the same quarter in 2020 mainly due to decreased spares and repairs and other operating expenses. This decrease was offset by increased crew costs, insurances, supply -- and supplies of stores and provisions.

Our general and administrative expenses decreased to $6.7 million compared to $9.6 million for the same quarter last year mainly to decreased payroll costs. The interest and finance costs amounted to $4.6 million compared to $6.4 million in the same quarter of 2020. This decrease was attributable to the decrease in the interest expense due to decreased interest rates and decreased other debt compared to the same quarter of 2020.

Looking at our balance sheet, you can see that our cash stood at $86 million and our total debt net of deferred costs stood at $411 million. Our net debt to only -- that grows our net debt to only $327.8 million.

We have another slide for the selected financial and other data for you to look at. I think most of the things there are something that we have already said previously. But again, I want to stress your -- I want to mention the time charter equivalent time charter rate that we achieved being $11,433 compared to $11,377 and the lower operating expenses that we had for this quarter.

It is the first time that we are trying to give you an idea about our cash flow breakeven. And you can see that based on the results of March 31 and based on the expected dry dockings that we are going to have for the remaining of the year, our cash flow breakeven stands at $12,350 approximately, which gives you a very good idea on the ability of the company, as our CEO just mentioned earlier, to generate free cash flow for the remaining of the year.

I will now give the floor to Stasi Margaronis to discuss the dry bulk market outlook, the way we see things.

Thank you, Ioannis.

We definitely need to start our short presentation on the current state and future prospects of the dry bulk carrier market by looking at the Baltic Exchange dry bulk indices. The slide that we have here shows the last 5-year levels of the above-mentioned indices as well as the 12-month time charter rate for Capes and Panamaxes. We can look at some more detailed statistics to get a better idea of short- and long-term trends. On January 4, which was the first trading day of 2021, the Baltic Dry Index stood at 1,374 and by May 19, it had reached 2,801. This compares with an all-time high of 11,793 reached on May 20, 2008, which was nearly exactly 13 years ago to the day. The Baltic Panamax Index started this year at 1,364 and closed on May 19 at 2,857. The all-time high for this index was 11,713 reached on October 30, 2007. The Baltic Cape Index was at 2,008 on January 4 and closed at 3,785 on May 19. This compares with an all-time high for this index of 19,687 reached on June 5, 2008, which once again was 13 years ago.

Here, we can add the Cape 5 time charter route average, which, on January 4, stood at 16,656 per day and on May 19, had reached 31,392 per day. The Panamax 5 time charter routes averaged at the beginning of the year at 12,272 per day and on May 19 stood at 25,709 per day. For comparison purposes, it is worth noting that the all-time high for the slightly differently calculated Panamax 4 T/C routes was 94,977 in October 2007. And for the Capes, the 4 T/C average was 233,988 in June 2008.

On the next slide, we're going to look at the key demand drivers. The macroeconomic statistics and how well the GDP has been moving during the past 20 years or so can be looked at here compared with ton mile growth of major bulk commodities. These are iron ore, grains and soybeans, coal, both thermal and coking. And we will also look at the combined volumes of minor bulk cargoes such as sulfur salt, cement, sugar, anthracite, alumina, fertilizers, bauxite and others.

According to the IMF and the OECD, world GDP is expected to grow by 6% this year, following a drop of 3.3% in 2020 due to the pandemic. This year, China is expected to grow by 8.4% after growing by 2.3% in 2020. During the first quarter of this year, China's gross domestic product grew by an impressive 18.3% year-on-year. The U.S. economy is expected to grow by 6.4% in 2021 while the Euro area is anticipated to grow by 4.4% this year.

According to Clarksons, overall global seaborne dry bulk trade is projected to grow by 4% in ton miles in 2021 against an underlying fleet growth of 2.8%, which we will discuss later on. Within this trade sector, iron ore shipments are currently expected to grow by about 3% in 2021 compared to 2020 levels and reached 1.55 billion tons. Small growth of a further 1% is expected for 2022. Clarksons report that Chinese government regulations on emissions might lead to steel output curves later this year. Iron ore demand might be affected by these regulations, especially during the second half of this year.

Global seaborne coking coal is currently projected by Clarksons to grow by around 6% this year. This will follow a 7% decline in 2020. Volumes in 2021 are expected to reach 266 million tons and 274 million tons in 2022, which will be a further 4% increase. At this point, it is worth pointing out that China's recent ban of imports of coal from Australia has led to an effective collapse of imports to under 1 million tons in January of this year. The shortfall has been made up by imports by land from Russia and Mongolia as well as by increases in domestic production.

Commodore Research report that Mongolian imports of coking coal have been coming under pressure due to the pandemic. This will most likely result in China needing to import more coking coal from much further seaborne-based exporters, including Canada and the United States.

As regards thermal coal, Clarksons report that after a 10% decline in 2020, due to the effects of the COVID-19 pandemic on global trade, seaborne steam coal trade is currently expected to grow by about 5% this year and reached 965 million tons. For 2022, Clarksons are forecasting a small increase of another 1% on volumes.

To place the Chinese coal demand in perspective, it is worth noting that according to Commodore Research, China recently announced that it will only start materially reducing coal consumption in 2026. After growing by 7% to reach 512 million tons in 2020, global seaborne grain trade is projected to grow by about 3% this year and another 3% in 2022. In this grain category, we need to monitor soybean shipments, which have been driving the grain market statistics for a while now.

During the first quarter of this year, China imported 19.1 million tons of soybeans, which was up nearly 18% year-on-year. As much as 94% of this volume was shipped from the United States and 6% from Brazil. After a 2% decline in full year 2020, global seaborne minor bulk trade is projected by Clarksons to grow at around 4% this year and a further 3% in 2022.

What is interesting to note in this slide is that according to Clarksons, in spite of the sharp drop in global GDP growth in 2020, volumes of all bulk cargoes witnessed, on average, a very small drop in the rate of growth, which was still slightly positive, about 0.5%, in ton miles and just 1.6% negative in pure volumes during 2020.

Next slide, we look at supply. On May 1, 2021, the Capesize order book stood at $20.6 million deadweight, representing about 5.6% of the global trading fleet. From these ships, half are scheduled for delivery this year and 9.1 million deadweight are expected to be delivered in 2022.

The Panamax order book consisted of 174 vessels with a combined deadweight of 14.5 million deadweight. This is the equivalent of 6.3% of the fleet by deadweight. From these new buildings, 6.5 million will be delivered this year and an expected 5.8 million in 2022. On an overall basis, on May 1 this year, there were 51.5 million deadweight worth of bulk carriers on order, representing 5.6% of the total global trading fleet.

According to the head research of Simpson Spence & Young, this is the lowest percentage figure seen in over 20 years. According to Clarksons, and as mentioned earlier on, the trading fleet is expected to grow by only 2.8% this year with delivery dropping to 35.4 million deadweight, down 28% year-on-year in deadweight terms. According to banchero costa and other shipping analysts, the trading fleet will grow by a mere 1% by the end of 2022 compared to this year.

We will briefly mention certain conservative assumptions, which have been made on scrapping losses and congestion for this year and next which have been incorporated in the calculation of the fleet growth estimates mentioned above.

On scrapping, Clarksons estimate that last year, bulk carriers of about 15.3 million deadweight were scrapped. According to banchero costa, so far this year, only 4.69 million deadweight of bulk carriers have been scrapped. Around 11% of the trading fleet is over 20 years old and a further 11% is between 15 and 19 years old. At the other end of the age spectrum, 16% of the dry bulk fleet is less than 5 years old.

At the moment, the situation in India remains extremely difficult. Rising COVID-19 cases are leading to the diversion of oxygen from scrapping facilities to hospital. Consequently, recycling activity in that country has effectively ceased. Similar pressures are seen in Pakistan.

banchero and costa are optimistic on demolition statistics and estimate that during 2021, about 165 dry bulk vessels might be scrapped or a total of 14.1 million deadweight. For 2022 and '23, they predict even stronger demolition statistics due to the age profile structure and environmental regulations.

From past experience, however, we believe that as we got scrapping for the rest of this year and beyond, much will depend on the future course of the freight market and also sentiment congestion. To counterbalance this positive projection, Braemar raised the following warning flag. As queues in Brazil loading ports continue to fall and congestion is reduced in its usual seasonal pattern, congestion will be halved by July. As this happens and more ships open up in the Far East after discharging, we could see a temporary cooling off effect on the current strong freight market.

As regard the outlook now, even though due to time restrictions, we have not analyzed steel production in this presentation, it is worthwhile noting that according to Commodore Research, the combination of steel and iron ore demand model for both China and the world at large remains one of several bullish elements poised to continue to support the dry bulk market going forward.

Howe Robinson have analyzed the above-mentioned projections on GDP growth. They have observed that since 2009 financial recession, growth in dry bulk cargo shipments has outperformed growth in international trade as a whole. They present evidence showing that from 2005 to 2021, dry bulk cargo shipments have grown almost twice as fast as GDP growth. This is also confirmed in the key demand drivers slide shown earlier on. The simulation results coming from their dry bulk model show a 6.7% increase in cargo volumes for 2021, followed by a further increase of 4.3% in 2022. If these projections are realized, the dry bulk market should perform even better than the statistics presented earlier on would indicate.

So thank you.

Thank you, Stasi.

Before we open it up to Q&A session, I would like to sum up as follows. As we have done in the first quarter, we will continue taking advantage of the current positive market fundamentals in striving to enhance shareholder value. We will retain our focus on generating positive free cash flow while at the same time, strengthening our balance sheet. We are also maintaining our vigilance and keeping a breadth of industry developments, allowing us to take informed and educated decisions as the shipping industry evolves. And last but not least, we remain committed to our disciplined operational and financial strategy that we have implemented since inception, which has allowed us to navigate successfully through the various market cycles and now permits us to look into the future with optimism.

Now I turn it over to the operator to commence the Q&A session.

(Operator Instructions) Our first questions come from the line of Randy Giveans with Jefferies.

First off, so nice to see the slide deck, certainly a great addition to the earnings call. So kudos on that. Now looking at the business. Obviously, you've done a great job with asset sales, the tender offer, buying at $2.50, share price is over $4 now. Share price is double to date, congrats on that.

So with the market outlook being so attractive, I guess what are your plans for your fleet in terms of sales and acquisitions? And then what are your plans for cash in terms of either further repurchases of shares or maybe a possible dividend later this year?

I'll take that question, and this is Ioannis, Randy. You know that we have always tried to have a lot of options ahead of us, and this is exactly the absolute time that we can prove so. We have to consider the various options that we have, as you mentioned, either buying other vessels, buying back our stock or paying a dividend. I can tell you that with the track record that we have and by the fact that everybody knows how we think, at the moment, in looking at the current market environment that seems like Diana could have the ability of paying a dividend in a sustainable manner for the next quarters or so. This is something that we will have to consider seriously, but we have not taken any decision to that effect as we speak.

Of course, if we keep trading below NAV, you show the benefit of what we have done, and we may continue doing so as well. Buying other vessels is something that you know that we are doing, but we are doing after having -- after trading above NAV and raising equity at above NAV, giving back to our shareholders value by doing that.

So the answer to your question is that we don't have an answer. But what we have, though, is the ability to choose the right thing at the right time. And you know that we always choose the right thing to do.

Agree. Yes. I think you certainly had that reputation. So I was just trying to get some insight into what would Diana do next.

Right. Right.

All right. All right. Well, yes, that's what I can take for. Anyway, second question. In terms of chartering, let's talk about that. Obviously, the market has improved as well. So there's 2 ways to do this. Do you switch to more short-term charters or even spot? Or on the other hand, is there any new interest from charters for 18-month or even 2-year time charters? Or is pretty much everything as these 6 to 14 months and just continue to roll those?

Randy, this is Eleftherios. I think Diana, we have been disciplined since early on, and we are not -- and basically, we have proven that no matter how the market behaves, we will be disciplined in our approach in how we charter our vessels, especially if nothing really changes, especially if we are not making acquisitions, that specific numbers where we would need to go and charter out the vessels a little bit longer in order to minimize the risk of those acquisitions.

So for the vessels that we have in our fleet right now, I think we will continue starting in the same manner, start getting maturities. With maturities raising anywhere from 6 months, sometimes you have to reposition the vessels, sometimes we have an upcoming dry dock that basically would mean that it's probably better for us to charter vessels with a shorter duration in order to reposition it for the dry dock or we could go even longer for a year or a little bit over a year.

Now going back to your question of if charterers are there for longer periods, I think charterers are always there for longer periods. And the question is that if the owners like the numbers that the charterers are offering. I mean we are entering into territory now. I mean not everyone would be taking the 2- and 3-year period deals because some people are a little bit more aggressive than us and they will always opt out of accepting a lower rate for a 2- or 3-year period rather than securing what sometimes it's a very attractive rate.

If you look at the things historically going forward, I think we haven't reached that level yet. But I think we might be getting close where at some point in time, not in the very far future, we might see charterers offering based on the FFA rate. Obviously, they're not doing it based on anything else, offering rates that could be attractive to lock in for the longer duration.

But for the time being, the way we are thinking of things, it's exactly the way we presented it in our slide that Semiramis went over where we are on average going to be chartering vessels somewhere at the region of 1 year, and then that obviously would provide us with excess cash flow as we speak.

Perfect. Good deal. Well, I won't keep asking questions, so I'll turn it over. But also, I noticed the sustainability-linked loan. Congrats on that. All you're doing on the ESG front has not gone unnoticed. So keep up the great work.

Thank you.

Thank you.

Our next questions come from the line of Greg Lewis with BTIG.

Yes. I was hoping to kind of dig in a little bit with some questions around asset prices. And clearly, asset prices are going higher. Ioannis, you mentioned the fleet trading at a discount to NAV. Just kind of curious if you could kind of parcel out, there's been a nice run-up in asset prices. Obviously, everyone is watching steel prices go higher. That in and of itself is probably helping lift asset prices.

But is there any way to think about the strength -- balancing the strength in the market and those increases in asset prices -- or increases in steel and maybe some of these inflationary environment in terms of the percentages or how you're thinking about those impacting and pushing asset prices higher?

You know, Greg, that there is always a lag between charter rates going up and the values following. The sentiment plays a big part in that and also how people think that this upturn is going to be sustainable. We have seen an increase in the price. But certainly, I think it's fair for someone to believe that we will see further increases in the charter rates and also as regards the prices of the vessels.

Talking about the NAV, I would like to point out something that you -- of course, the analysts can early understand that it's good for the sake of all the people that they are listening in or reading the transcript to explain how well and what good decision has been the last 2 years to keep buying back our stock at a discount to NAV. If you were to make a very quick calculation on NAV on a per share basis, if you run the scenario that we have kept those vessels instead of selling them and not buying back our shares and you try to find the NAV on a per share basis today, you would easily notice that it would have been lower by easily $0.30 in what you have in your calculations.

So basically, what we have done is that up to now, we created value by taking advantage of the inefficiencies in the capital markets for our shareholders. And that has also taken into account the increase in the prices of the vessels and the increase in our NAV. We keep saying that every time that we buy back our stock at a discount to NAV, we are investing more money in our vessels.

So we are very happy with what we have done up to now. If we -- I think that there will be a point where we will have higher charter rates. Our ability to pay a dividend is going to be clear and there. And then we are going to be in a position to be trading at premiums to NAV. And again, you will see us buying at that time more vessels with longer employment. Strengthening the balance sheet is something that we always do. And that has proven to be the right recipe in order to make nice money in the shipping industry, risk-reward-wise.

Our next question comes from the line of Ben Nolan with Stifel.

I wanted to -- well, I have a couple of things. Number one is, obviously, as has been discussed, the order book is pretty low but at the same time, we've seen increased freight rates, the secondhand asset values have appreciated. I know it's not really in your -- in the Diana DNA really to be out ordering ships. And you might not would want to do that right now anyway. But you guys have your ear to the ground or certainly all of your neighbors are in the similar business as you are. Have you gotten any sense that there is any cracks in the discipline that we've seen here lately with respect to ordering now that the cash flows are higher?

I think we've seen -- I mean, obviously, as rates move higher and higher, we'll see the cracks getting bigger and wider. We've seen some people going out there and ordering vessels. It hasn't really changed the picture that Stasi displayed a little bit earlier. I think a reason for that has been that a lot of orders have been made on the tanker space earlier on last year and more recently in the container space. I mean we've seen huge orders on the container space in the billions of dollars.

So that pretty much gives you an answer of what could potentially come in the dry bulk market, if things get very heated. I mean the container market is very heated and obviously, that led -- has led to a lot of ordering. People might say, "Where are you going to find the orders?" Obviously, a lot of premier shipyards might not have any capacity for 2022 and maybe early 2023. But as we've seen in the past, we might see some second or third tier yards capacity at that point in time. I mean, fortunately, we haven't seen it yet in our industry, but that doesn't mean that we are not going to see it sometime in the future.

Okay.

Ben, sorry, I just want to add to what Eleftherios has said, but you know that we do not share the opinion of others that there is lack of yards, lack of financing, stuff like this. When the market is good, then the revenues of the vessel justify the investment. You will see the order book coming in.

Also, Ben, if I could add. The fact that we don't have a clear picture of what the next technological solutions will be regarding fuel is a deterrent in order to put new orders at the moment. I think that is working in our favor at the moment.

Yes. Absolutely. And I guess -- and that's been talked about a lot. I guess the question is, at some point, the concern over the technological changes and what's going to be needed in the future, is that overcome by the fact that the near-term cash flows are simply strong enough to justify the investment? And we haven't seen it yet, but I guess to your point, we could if people are convinced that they can make money.

Absolutely.

Yes. So I wanted to -- this -- you guys were sort of maybe one of -- maybe not the most outspoken with respect to not installing scrubbers on your ships. Here we are a year, almost 1.5 years later. And for the better part of that time, it has proven to be probably a good idea. Things seem to be stabilized. Just curious, as you guys have consistent special surveys coming up in dry dockings, any thoughts about maybe now that sort of things are settled a bit installing scrubbers on your ships? Or is there any demand by your charterers to do that?

We think that we have the opportunity because we have a better use of our free cash flow. And we think that by not investing in scrubbers, we can do a lot of other things, as we tried to explain earlier. I think our shareholders will be most happy seeing a dividend or seeing us buying more vessels or buying back our stock or whatever rather than trying to play the oil price and investing scrubbers, try to make some money through that investment.

Up to now, our decision has proven to be correct. We keep saying to everybody that installing scrubbers is just an investment that it is highly dependent on oil prices. This is not what we are here for. We are here for -- to create value for our shareholders, doing shipping and taking advantage of the capital market's inefficiencies. And up to now, we have done a good job.

Right. No. I should have thought that would be your answer. And last one from me. On capital allocation, you mentioned it earlier about all of your options. I'm curious if you consider, I believe the preferreds are callable soon and at some point, those bonds are callable soon as the cash flows build. Any thoughts yet about sort of possibly calling those back or refinancing any of those things with probably a better cost of capital?

The preference that they are perpetual, they are perpetual for a reason. And at the moment, we have another option to repay the existing bond, which is maturing in 2023. Knowing as well, and this is why you do -- the question is that we always are very proactive as regards to managing our cash flow and our maturities.

So the only thing I can say to you that it is in our radar to see what we may do with maturities in 2023, which is the bond -- mainly the bond at that time. As you have noticed with the new facility that we did recently, we basically eliminated the maturities even for 2022, if you take into account the fact that we -- there is an option in the Nordea loan to go to 2023 and even 2024. So basically, again, we have created the appropriate environment to have as better cash flow as possible for our shareholders.

Our next questions come from the line of Omar Nokta with Clarksons Securities.

I just wanted to follow up on the previous topic or the main sort of discussion points of use of capital and your fleet makeup. Ioannis, you mentioned wanting to keep us guessing as to what your next moves are. But over the past several years, you've been trading below NAV and you've sold ships, you used the proceeds to buy stock and created value along that way. But you still do trade at a discount to NAV today. And so just wanted to maybe get your perspective. As you see things today, your at-a-discount asset values have continued to push higher. Do you see Diana at this point continuing to be a seller or more just sitting back and collecting cash?

A seller of vessels, you are asking?

Yes.

A seller of vessels, it doesn't mean anything until we know what we are going to be doing with the money. So making a thing into cash and then think again an asset again, it makes no difference. But yes, we have reached -- we think that we have reached the point where there are a lot of things we can do with the vessels -- with the older vessels of ours, and that may not be selling them. But I have tried really hard not to give you an idea on how we are thinking. But stay tuned, and we think that there are a lot of things we can do even with the vessels that we have, the older vessels of ours.

Okay. That's interesting. So I guess it's -- I'm going to infer basically from your commentary that for now, Diana is not interested in selling ships.

Correct.

And I guess that was going to bring me to my sort of like a follow-up to that, which is this market footprint and critical mass. You had 50 ships a few years ago, you're down to 36 after you sell the Naias. Do you feel that with the fleet size of 36 ships, is that enough capacity to still feel very much involved in the game and very relevant in the business? Or could it even be smaller than that and you'd still feel comfortable?

This is Eleftherios. Omar, I think it's having a fleet of 35 vessels plus, it's definitely a fleet that has scale, okay, not the 50- or 60-vessel fleet. But still, you are relevant. We're in the market. We have a very good name. Obviously, we are going to -- going back to what Ioannis said, yes, we might be under NAV right now. But we are chasing it at this point in time with where asset values going up on a daily basis, but our plan is to try to change that. And once we do and if it makes sense, we might look for ways to renew the fleet.

But for the time being, we are content with the fleet that we have. I mean we still have scale. We still have size. We have our relationships, our chartering relationships, our relationships with various vendors and then suppliers out there. So size is not -- should not really -- I mean that's my personal given many people might feel different should not be the end game. It's not -- if you are going to have 60, 70 or 100 vessels, it should be -- you have to be profitable and you have to be there.

And adding to what Eleftherios said, exactly the same, but in a different manner. What is critical is the balance sheet more than the actual size of the fleet. And you have seen that in the past. Being -- having a sound balance sheet was a much better thing to have in the full cycle rather than a big fleet. You know what I mean. I don't want to mention names.

There are no further questions at this time. I would like to turn the call back over to management for any closing comments.

So thank you for joining us today, and we look forward to talking to you again at our next financial earnings call.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.