Diana Shipping (DSX) Q4 2012 earnings summary

Executive summary

• Profitable through a severe dry-bulk downturn, but 2012 net income and time-charter revenue fell sharply as charter rates weakened.

• Expanded the fleet through acquisitions and newbuilding contracts while maintaining substantial cash and financial flexibility.

Financial highlights

• Time-charter revenue was $220.8M in 2012 vs. $255.7M in 2011; the decrease reflected lower charter rates, partly offset by additional vessels.

• Operating income was $63.1M vs. $110.9M; net income was $54.6M vs. $107.5M, and basic EPS was $0.67 vs. $1.33.

• Vessel operating expenses rose 20% to $66.3M; depreciation and deferred-charge amortization increased 12% to $62.0M.

• Interest and finance costs rose 55% to $7.6M, driven by higher average debt and interest rates and additional loan costs.

Outlook and guidance

• 92% of 2013 fixed revenue days were covered; management expected 2013 revenue to decline further if charter rates remained at prevailing levels, despite fleet growth.

• 2013 vessel operating expenses and depreciation were expected to rise with fleet expansion; general and administrative costs were expected to remain about the same.

• Two 76,000-dwt Ice Class Panamax newbuildings were scheduled for delivery in Q4 2013; construction obligations were expected to be funded with cash and debt.