Diana Shipping Q1 2026 Earnings Call Transcript

Diana Shipping (NYSE:DSX) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Summary

Diana Shipping reported strong financial performance in Q1 2026 with a net income of $29.1 million compared to $3 million in Q1 2025, supported by higher time charter equivalent rates and decreased interest expenses.

The company is actively pursuing the acquisition of Genco, increasing its offer to $24.8 per share in cash, representing a significant premium over Genco's share price, despite resistance from Genco's board.

Diana Shipping operates a fleet of 36 dry bulk vessels with a high utilization rate of 99.9% and has secured substantial contracted revenues for 2026 and 2027, showcasing strong fleet management and financial stability.

The company declared a quarterly cash dividend of $0.01 per common share and continues to focus on its ESG strategy and fleet modernization efforts.

Management highlighted geopolitical factors affecting the market, such as the Middle East conflict impacting vessel speeds and fuel availability, and the potential risks associated with Guinea's bauxite export restrictions.

Full Transcript

OPERATOR

Thank you for standing by, ladies and gentlemen, and welcome to the Diana Shipping Inc. Conference call on the first quarter 2026 financial results. We are joined by the company's Chief Executive Officer, Ms. Semiramis Paiu. At this time, all participants are in a listen only mode. There will be a presentation followed by a Q and a session. To ask a question, press star one on your telephone keypad and wait for your name to be announced. Please note that this conference is being recorded. We will now turn the floor over to Ms. Semiramis Paiu. Please go ahead.

Samira Mispaliu (Chief Executive Officer)

Thank you. Good morning ladies and gentlemen. Welcome to Diana Shipping Inc. first quarter 2026 financial results conference call. I am Semiramis Paiu, the CEO of the company and it's my pleasure to present alongside our esteemed team Mr. Ioannis Zafiraki's Director and President, Ms. Maria Zedek, Co CFO and Treasurer, Mr. Dave Vanderlinden, Chief Financial Officer of Diana Shipping Services SA. Before we begin, I'd like to remind everyone to review the forward looking statements on page four of the accompanying presentation. The first quarter of 2026 continued to show strong momentum which carried over from last year. The usual seasonal slowdown in Q1 did not happen and the Capeside market had its best first quarter since 2010. Again, this was due to several factors, none of them necessarily demand driven. We saw more utilization tightening caused by longer tan miles, a substantial dry dock schedule and the situation in the Strait of Hormuz. The Middle east conflict not only caused part of the dry bulk fleet to be tied up in that area, but also an overall reduction in operating speeds, especially on the long haul routes. Capesize vessels were the strongest movers, but this time we have also seen a marked improvement in the Capesize market which was supported by by a spike in coal movements in the Pacific. Countries like Japan, South Korea and Vietnam have increased their coal imports to address their energy needs. Interestingly, the growth in grain shipments was also concentrated to other countries besides China. In the quarter we took period coverage across all sizes in the fleet, again at rates significantly higher than their previous charters. I would like to mention that although Diana has no vessels directly affected by the Persian Gulf situation, our thoughts are with the many seafarers who must fear for their safety and well being. Turning to Slide 5, let's review our company snapshot. As of today, Diana Shipping Inc. Founded in 1972 and listed on the New York Stock Exchange since 2005, operates a fleet of 36 dry bulk vessels. One of which is mortgage free. Our fleet has an average age of 12.5 years and a total dead weight capacity of approximately 4 million tons. We anticipate the delivery of two methanol dual fuel new building Campermax dry bulk vessels at the end of 2027 and early 2028 respectively. Fleet utilization reached 99.9% for the three months ended March 31, 2026, highlighting our effective vessel management strategy. As of the end of the first quarter, we employed 941 individuals at sea and ashore. Financially, our net Debt stands at 46% of market value supported by US$124.5 million in cash reserves as of quarter end and total secured revenues of approximately US$168.5 million as of May 20, 2026. Moving on to Slide 6, let's go over the key highlights of the first quarter 2026 and recent developments. In January we announced our intention to nominate a slate of six highly qualified independent candidates for election at Genco's annual meeting on June 18. In March the same year, we increased our effort to Our offer to US$23.5 per share in cash to acquire all outstanding shares of genco not already owned by us. The offer is backed by US$1.433 billion in full committed financing from six leading global banks with no financing conditions. The offer is further supported by a definitive agreement with Starbuck Carriers Corp. Which will acquire 16 Genco vessels for US$470.5 million. Upon closing in May 2026, we launched a 10 acquire all outstanding shares of Genco for $23.5 per share in cash as of May 20, 2026, we have secured US$123.5 million of contracted revenues for 83% of the remaining ownership days of the year 2026 and have secured US$44.1 million of contracted revenues for 17% of the REM days of the year 2027. In May 2026, we were awarded the Global Award in the Governance Leader Award category at the Environmental, Social and Governance Shipping Awards 2026. Today we are pleased to declare a quarterly cash dividend of US$0.01 per common share with respect to the first quarter of 2026, totaling approximately US$1.2 million. Lastly, just yesterday we amended our offer price to acquire Genco to US$24.8 per share in cash and have extended the tender offer deadline to June 26, 2026. The revised offer price will be adjusted on a one for one basis for any dividends or other distributions declared or paid to shareholders following the announcement of our offer. The new increased offer represents a 39% premium to Genco's undisturbed share price on the day before our initial offer, a 48% premium to its 30 day volume weighted average price as of that date and is priced at approximately 1 times net asset value at what analysts have described as 15 years high asset value. It should be noted that Genco's share price is currently trading at or around NAB, while the dry bulk peers are currently trading at an average 20% discount to NAV. Before our involvement, Genco traded at an average 30% discount to NAB since 2020. As such, Genco shareholders face significant downside risk in the absence of our offer. If the offer is not completed, Genco's share price could decline to approximately $18 per share if the stock reverts towards its historical trading. Unfortunately, for six months the genco Board has completely refused to engage with us, genco's largest shareholder. Our previous offer have each been met with silence and we are hopeful that the genco Board will finally sit down with us to engage in a constructive dialogue. This is the path forward that we strongly prefer, but we have also given genco shareholders the opportunity to vote for our board nominees who we are confident will explore all opportunities to maximize value and to tender their shares. We are committed to seeing this through and you can stay informed by visiting our campaign [email protected] we urge Genco shareholders to vote the Gold Universal Proxy card for Diana's sixth independent directors nominee at the 2026 annual meeting. For more information please visit our [email protected] Moving on to slide 8 slide 8 summarizes our recent chartering activity. From February 20, 2026 until May 20 we have secured time charters for five vessels an Ultramax vessel at a daily rate of 16,000 for 408 days three Panamax Capesize and post Panamax vessels at an average daily rate of US$17,297 for an average of 387 days a capesized vessel at a daily rate of 27,500 for 641 days. Slide 9 highlights our disciplined chartering strategy. We focus on staggered medium to long term charters to avoid clustered maturities, ensuring earnings visibility and resilience against market downturns. This disciplined chartering strategy has secured for the remaining of 2026 approximately US$124 million in contracted revenues resulting in an average fixed time charter rate of $18,338 per day for the rest of 2026, only 17% of days remain unfixed. The average contract duration is 1.1 to 1.24 years covering some days of 2027. Now I'll pass the floor to our co CFO Maria Deves for a more detailed financial analysis. Thank you.

Maria Deves (Co CFO)

Good morning everyone and thank you for joining us today. I will walk you through our financial performance for the first quarter of 2026 Time charter revenues were 54.7 million, slightly lower than 54.9 million in the same quarter last year. The decrease reflects a smaller fleet size compared to the prior year period and was largely offset by a higher time charter equivalent rate achieved during the quarter. Adjusted EBITDA was $23.3 million for both periods. Net income was $29.1 million compared to $3 million in the first quarter of 2025. Net income attributable to common stockholders was $27.7 million compared to $1.6 million in the first quarter of 2025. Basic and diluted earnings per common share was $0.25 for the first quarter of 2026 compared to $0.01 for the same quarter last year. Profitability of the quarter was supported by the higher time charter equivalent rate men decreased interest expense on our steadily amortizing debt, increased dividend income and an unrealized gain on our investment in Genco of 26.4 million. We continue to maintain a strong balance sheet with increased cash and decreased debt compared to year end 2025. As of March 31, 2026, cash stood at 124.5 million compared to 122.3 million as of December 31, 2025. Long term debt and finance liabilities net of deferred financing Costs decreased to 621.1 million as of March 31, 2026 from 636.1 million as of year end 2025, reflecting the quarter's debt amortization. We ended the quarter with a strong liquidity position and a conservative net loan to buy of 46%. During the quarter we operated an average of 36 vessels compared to 37.8 vessels in the same quarter last year following the sale of ALC MINI early in March and Selena in July 2020. This reduction is reflected in lower revenues, operating expenses and ownership available and operating days time charter equivalent averaged $16,035, a 2% increase compared to $15,739 in the first quarter of 2025 with a strong fleet utilization of 99.9%. The cell operating expenses for the quarter decreased by 3% to $19.5 million compared to 20 million in the first quarter of 2025 due to the smaller fleet size on a per day basis. Daily operating expenses rose by 2% to $6,009 compared to 5,866 in the first quarter of 2025, mainly due to higher crude stores supply and environmental costs. We maintain a disciplined approach to leverage the mix of variable rate secured bank debt, the senior unsecured bond with a fixed coupon and certain leaseback facilities at fixed interest rates provides diversification and stability. Our amortization profile is gradual with no significant near term refinancing concentration. Our debt amortization schedule is steady and predictable through 2029 when the 175 million senior unsecured bond matures. We will address this maturity well in advance to ensure liquidity stability, minimize refinancing risk and maintain predictable cash flows. In this slide, we compare our free cash flow breakeven levels against estimated revenues for 2026 and 2027. As of March 31, 2026, our cash flow break even rates stood at $16,344 per day including voyage, operating and general and administrative expenses, financing costs and debt amortization. For the remainder of 2026, we have secured 83% of the ownership days at an average time charter rate of $18,338 per day, generating expected revenues of 1:23.5 million. For 2027, 17% of the ownership days are fixed at an average time charter rate of $19,858 per day with expected revenues of 44.1 million. Potential revenues for the remainder of 2026 and for 2027, including the estimated revenues for the unfixed days based on FFA rates as of May 20, 2026 could reach 149.6 million and 252.3 million for 2027 respectively. Overall, our competitive breakeven rate reflects disciplined cost control across the fleet. Our contracted revenues provide solid visibility and downside protection while the market exposure of the unfixed operating days allows us to preserve flexibility in our commercial strategy and participate in improving market conditions. This slide highlights dividend distributions. The company has consistently rewarded shareholders with quarterly dividends since the third quarter of 2021 in both cash and shares. In line with this policy, we declared a dividend of $0.01 per share for 1Q20, bringing cumulative dividends paid since 2021 to $2.71 per common share. Dividends are declared at the discretion of the Board and depend on earnings, cash flows and capital requirements. I will now hand over to Dave Van der Linden for an overview of

Dave Vanderlinden (Chief Financial Officer)

the dry bulk margin. Thank you Maria and again welcome to all the participants on this latest quarterly earnings call from Diana Shipping Inc. Slide 15 gives a brief dry bulk market overview and some geopolitical and trade developments. The dry bulk market started 2026 on strong footing, continuing the momentum across all sizes which we saw in the second half of 2025 and ignoring again the traditional market seasonality. The factors supporting the market remain the same, not necessarily an explosion in demand, but rather a utilization tightening caused by longer ton miles, a substantial drydown schedule and slower speed. Cape sized vessels again outperformed Q1 earnings at 26,405 based on the new 185.5tc index and the best start of the year since 2010. Mid sized vessels have been catching up nicely with Q1 earnings averaging 15,395 for Panamax and 14,577 for Ultramax vessels. The 12 month time charter rate has increased on all sizes as well compared to the previous quarter. Underlying positive sentiment for a 182 index type vessel without scrubber. The one year rate now stands around 34,000 a day. The equivalent rate for modern chemzar Max is around 20,000 a day and the modern Ultramax can get about 18,500 a day for a year. Part of this unusually strong first quarter can be attributed to an exceptionally late Chinese New Year which saw some early restocking activity. However, much like last year, 2026 have so far witnessed significant geopolitical and trade disruptions that continue to alter shipping patterns and freight dynamics. The Middle east conflict has caused bunker prices to spike and owners have been deviating their vessels to secure adequate supply of fuel. Long distance routes like the Brazil and West Africa to China has caused the Cape sized fleet to lower their average speed by 4%. Furthermore, we have seen strong coal movements with Japan's Trade and Industry Ministry as well as the South Korean, Vietnamese and Taiwanese governments all indicating stronger interest in coal procurement as a near term solution to alleviate energy security concerns. It is worth noting that analysts see significant effects of the conflict in adjacent industries as well, such as nickel production and agricultural planning. Torstone notes that in Australia many farms are switching from wheat to crops like barley and canola that either need less fertilizer or sell for a higher price. The harvest for Australian wheat due towards year end could be between 16 and 41% smaller. China's economic stimulus measures and infrastructure spending continue to support commodity imports, while India's consistent appetite for coal and iron ore reinforces its position as an increasingly important demand center for dry bulk commodities. Nevertheless, according to the Economic Times Coal India is planning a 10 year roadmap to slash the 243 million tons of coal that they import currently through increased domestic production cost, quality upgrades and logistical cost parity. In the Capesize sector we saw particularly strong Australian iron ore flow supporting the Pacific while the guinea bauxite exports continue to grow unabated. Having said that, there is some concern about a possible export limit to be imposed by the Guinean government in the second half of the year. Danish Ship Finance notes that the iron ore trade, which still the most durable of Chinese seaborne commodity relationships, is changing beneath the surface. The steel industry is beginning to shift away from blast furnaces towards electric arc furnaces which require cleaner, higher grade ore. Australia built an entire export economy around the blast furnace grade and does not produce the new grade at scale, whereas Brazil and West Africa do. China Bai Wu, the world's greatest the largest steelmaker, has secured majority control of the Simandou deposit in guinea, the largest untapped high grade iron ore reserve on the planet. The Chems ALMAX sector has seen the most impressive growth so far, relatively supported by grain shipments in the Atlantic and coal shipments in the Pacific. The Ultramax sector has managed to take advantage of the same trading pattern and has additionally seen an increase in Atlantic coal shipments. However, Indonesia, which is a major factor for these vessel sizes, plans to tighten control over commodity exports including coal palm oil to clamp down on tax evasion and bolster a plunging rupiah. Moving to the next slide we look at some macroeconomic considerations and some key demand drivers. As mentioned before, the year has started. Historically strong iron ore and bauxite support the Capesize vessels and long haul grain shipments for the mid sized vessels. Iron ore exports have been particularly well supported through Q1, driven by consistently strong shipments from both Australia and Brazil and complemented by additional cargoes from West Africa and Canada, thereby tightening lightning tonnage in the Atlantic. Total seaborne trade in coal continues to be under pressure with China's imports recording negative growth for the quarter combined with an increase of inland imports with Mongolia. Bauxite continues to be the big success story and it's worth noting that in Q1 the Diana Newcastle Max fleet was almost entirely employed in the bauxite trademark, whereas the Capes Ice carried mostly iron ore in coal. Meanwhile, global seaborne grain loading staged a strong recovery in Q1 with Access Marine data showing volumes rising nearly 11% year on year. US and Brazil together accounted for nearly 50% of the total grain shipments. It was for the first time since 2022 that the US shipped more volume than Brazil in Q. Interestingly, China, still the world's largest grain imported, accounted for only a limited share of this growth. Towards the end of the quarter, however, the agricultural sector started facing some headwinds due to war related uncertainty, revised fetal sanitary inspection procedures in Brazil at China's request and the surge of nitrogen fertilizer prices by nearly 40%. It is worth noting that BIMCO estimates that the Strait of Hormuz disruption has caused an 8% increase in Panama Canal transits, with slots being auctioned at record levels and delays last seen since during the severe 2023 drought. The canal is currently operating near maximum capacity and any further disruptions such as reduced rainfall during the expected elevation El Nino may cause vessels to reroute via Cape of Good Hope Regarding global gdp, it is clear that the impact of the Middle east conflict is starting to bite with several countries including Germany already revising their 2026 forecast downwards. The IMF itself presented three separate scenarios in their latest World Economic Outlook. A reference forecast whereby the conflict is relatively short lived growth is slightly Revised down to 3.1% for 2026 and 3.2% for 2027. Second scenario is a more protracted conflict for the IMF called the adverse scenario where world GDP growth forecast of 2026 falls to 2.5% assuming the petroleum spot price index will average $100 a barrel in 2026 and around 75 in 27. And then they also have a severe scenario which is based on average petroleum spot prices of about 110 barrels in 2026 and125 in 2027 which could cause the global economy to grow barely 2% for 2026. Moving to the tonnage supply on slide 17, elevated new building prices remain a deterrent for most protective buyers with capesize, with values for capesize reaching their Highest level in 17 years around 76 $77 million for late 2029 early 2030 deliveries. Extended delivery swaps at major shipyards which remain heavily committed to high margin container and oil and gas projects have further constrained ordering appetite. Q1 ordering in the tanker market however was the highest on record and is continuing to be very strong. According to Clarksons, the bulk carrier fleet is forecast to grow by 3.2% in 2016, only 1.7% for Capes and Q1 saw the lowest delivery total in Cape size vessels since 1998. For Kenzarmax and Ultramax vessels, the fleet projected increase is a substantial 4.3 and 4.5% respectively, and the deliveries for both these segments were substantial in Q1. However, this was partly offset by the number of vessels affected by the Middle east conflict which are either stuck in the Persian Gulf or still have cargo on board destined to that area. Brehmer notes that on March 1st 2.2% of the dry bulk fleet capacity was off market due to the war in the Middle east, either stranded west of the Strait of Hormuz or carrying cargoes bound for Middle East Gulf ports. Today this figure has fallen to about 1.2% of dry bulk capacity. The impact varies by fleet sector, 2% of the Panamax dead weight capacity, 1.4% of Ultramax and only 0.3% of Cape SaaS capacity. Regarding the bulk carrier fleet order book, according to Ifcor Galbraith, it now stands at around 160 million ton deadweight, nearly 11800 vessels which represents nearly 13% of the existing fleet. Sentiment in the ship recycling industry remains cautious. Markets in Pakistan and Bangladesh saw firm fundamentals despite a shortage of available units. Ground rupee depreciation and rising gas costs are dampening buyer activity. In India, barely 1 million tons of dead weight dry bulk vessels were recycled in Q1. Let's end in slide 18 with the main positive and negative factors that analysts expect will influence the dry bulk carrier market going forward. On the positive side we have global seaborne trade which is expected to stay firm for the balance of the year supported by iron ore demand and minor bulks, mainly bauxite and grains ton mile support is expected to continue with longer iron ore flows from Brazil and West Africa. Grain exports from east coast South America are expected to remain strong and the significant dry dock schedule combined with modest deliveries especially in the Capesize segments could be seen as a part of 2025 saw a surge in dry dock activity with more than 3200 dry bulk vessels undergoing special surveys and 2026 is scheduled to be similar. On the negative side, fleet growth, especially for cabs, Armax and Ultramax could exceed demand and demolition is expected to stay historically low. Coal demand while seeing a temporary increase is expected to remain under pressure especially in China. Macro and policy risk also especially in China and Indonesia as mentioned before and then of course the geopolitical uncertainty which can highly influence the global economy. It is very hard to predict the medium to long term effects of the Middle east conflict on dry bulk and the economy in general. And on this note, I will pass the call Back to our CEO, Mrs. Semiannis Paliou for some important takeaway points from this earnings call.

Samira Mispaliu (Chief Executive Officer)

Thank you. Dave thank you. Before concluding today's presentation, I'd like to highlight our ESG performance at Diana Shipping Inc. We remain committed to maintaining an industry leading ESG structure and continuously strengthening our sustainability practices. You can find our latest ESG report published in September 2025 on our website. In summary, Diana Shipping Inc. Stands on a strong foundation built on over 50 years of industry experience and 21 years on the New York Stock Exchange. A seasoned management team adapt to addressing industry challenges and identifying opportunities Strong stakeholder relationship and a disciplined strategic 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 a robust ESG strategy Thank you for joining us today. We are now happy to take your questions and ask you to keep them focused on our first quarter performance and related topics.

OPERATOR

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your questions. Our first questions come from the line of Christopher Barth Shea with Arctic Securities. Please proceed with your questions.