Diana Shipping Inc. (DSX) Earnings

Management highlights

- Overall Market and Operational Performance * The Q1 2026 dry bulk market saw strong momentum carried over from H2 2025, and the traditional seasonal Q1 slowdown did not occur, with Cape-size posting its best first quarter since 2010. * Market strength came from supply-side utilization tightening, including longer ton miles, a substantial industry-wide dry dock schedule, and operational disruptions from the Middle East conflict that slowed vessel speeds and tied up some tonnage, rather than sharp demand growth. * Diana achieved a 99.9% fleet utilization rate in Q1 2026, highlighting effective vessel management. The company operates 36 dry bulk vessels with a total deadweight capacity of ~4 million tonnes, with an average fleet age of 12.5 years; two methanol dual fuel newbuilds are scheduled for delivery at the end of 2027 and early 2028. * From February 20 to May 20 2026, the company secured new time charters for five vessels: an Ultramax at $16,000 daily for 408 days; three mid-sized/post-Panamax vessels at an average $17,250 daily for an average 387 days; and one Cape-size at $27,500 daily for 641 days, all at rates significantly higher than prior charters. * Diana maintains a disciplined staggered medium-to-long-term chartering strategy to avoid clustered maturities, deliver earnings visibility, and protect against market downturns. As of May 20 2026, 83% of 2026 remaining ownership days and 17% of 2027 remaining ownership days are secured under contract. - Genco Acquisition Offer * Diana, Genco's largest shareholder, has increased its cash tender offer to acquire all outstanding Genco shares to $24.8 per share, and extended the offer deadline to June 26 2026. The revised offer represents a 39% premium to Genco's pre-offer undisturbed share price and is priced at approximately 1x Genco's net asset value (NAV). * The offer is fully backed by $1.433 billion in committed financing from six global banks with no financing conditions, and Diana has a definitive agreement with Starbuck Carriers Corp. to sell 16 Genco vessels for $470.5 million upon closing of the acquisition. * The Genco board has refused to engage with Diana on the offer to date; Diana urges Genco shareholders to vote for Diana's six independent director nominees at Genco's June 2026 annual meeting and tender their shares. - Balance Sheet and Capital Return * As of March 31 2026, Diana held $124.5 million in cash, total net long-term debt of $621.1 million, and a conservative net loan-to-value ratio of 46%, with gradual debt amortization and no significant near-term refinancing needs through 2029. * The company's 2026 full-year cash flow break-even rate is $16,344 per day, below the average contracted rate of $18,338 per day for secured 2026 days, providing significant downside protection. * Diana declared a Q1 2026 quarterly cash dividend of 1 cent per common share ($1.2 million total), marking consistent quarterly dividends since Q3 2021, with cumulative dividends of $2.71 per share paid over that period. - ESG Recognition * Diana was awarded the 2026 Governance Leader Global Award at the ESG Shipping Awards 2026, and maintains an industry-leading ESG program with its latest ESG report published in September 2025.

Guidance

Management did not provide explicit revised full-year financial guidance, but confirmed the following forward-looking outlooks: * The company's disciplined chartering strategy has locked in contracted revenue of $123.5 million for 83% of remaining 2026 ownership days at an average rate of $18,338 per day, and $44.1 million for 17% of 2027 ownership days at an average rate of $19,858 per day, providing strong earnings visibility and downside protection for the period. * Expected total potential revenues including estimated revenue for unfixed days (based on market rates as of May 20 2026) are $149.6 million for 2026 and $252.3 million for 2027. * The dry bulk market is expected to see continued support from firm seaborne trade volumes, sustained ton-mile tightness from longer trade routes, and a large ongoing industry dry dock schedule that will limit available tonnage through 2026.

Segment performance

Diana Shipping operates a single core segment of dry bulk shipping, broken out by vessel size for performance. Time charter revenues for Q1 2026 totaled $54.7 million, slightly down from $54.9 million in Q1 2025, driven by a smaller average fleet size (36 vessels in Q1 2026 vs 37.8 in Q1 2025) after two vessel sales in 2025. This revenue decline was fully offset by higher average time charter equivalent rates, which rose 2% year-over-year to $16,035 per day. Adjusted EBITDA remained flat at $23.3 million year-over-year. Vessel operating expenses totaled $19.5 million, a 3% decline from the prior year quarter due to the smaller fleet, while daily operating expenses rose 2% to $6,009 due to higher crew, supply, and environmental costs. Net income for Q1 2026 was $29.1 million, up sharply from $3 million in Q1 2025, and net income attributable to common shareholders reached $27.7 million, up from $1.6 million year-over-year. The large increase was driven by a $26.4 million unrealized gain on the company's investment in Genco, reduced interest expense from steady debt amortization, and higher dividend income. By vessel size, the Cape-size segment had the strongest market performance, with Q1 average earnings of $26,405 per day (the best Q1 result since 2010), while mid-sized segments saw strong improvements: Camsar Max vessels averaged $15,395 per day and Ultramax vessels averaged $14,577 per day in Q1 2026.

Risks & headwinds

- Geopolitical uncertainty from the ongoing Middle East conflict creates significant unpredictable risks for global economic growth, bunker prices, shipping operations, and dry bulk demand; the IMF estimates global GDP growth could fall to as low as 2% in 2026 in a severe escalation scenario, with oil prices rising to $110 per barrel. * Fleet growth for mid-sized Camsar Max and Ultramax vessels is projected at 4.3% and 4.5% respectively in 2026, which could outpace demand growth and put downward pressure on rates for these vessel sizes. * Potential export restrictions on bauxite from Guinea in the second half of 2026 presents downside risk for Cape-size vessel demand, as Guinea is a major growing exporter of high-grade bauxite and iron ore. * Indonesia plans to tighten commodity export controls for coal and palm oil to address tax evasion and currency weakness, which could reduce cargo volumes for mid-sized vessels that typically carry these commodities. * China's long-term shift in steel production from blast furnaces to electric arc furnaces reduces demand for lower-grade iron ore from Australia, which is a major core trade for Cape-size vessels, even as demand for high-grade ore from Brazil and West Africa grows. * Further drought related to El Nino could reduce Panama Canal capacity, leading to costly route diversions and further tightening of available tonnage, while also adding operational cost volatility. * Ship recycling activity remains at historically low levels, slowing the removal of excess tonnage from the dry bulk market to offset new deliveries. * Coal demand, particularly in China, is expected to remain under long-term pressure despite near-term increases driven by energy security concerns.

Analyst Q&A

• Q: With the revised higher offer for Genco, is management more likely to get Genco's board to enter discussions, should the Starbucks vessel sale agreement be revised to reflect higher asset values, and what specific vessels are included in that sale agreement? /

  A: Management noted that any further price increases depend entirely on Genco finally agreeing to engage in meaningful discussions. At the current offer price of ~1x Genco's NAV, which is above the average 82% of NAV that most recent shipping deals have traded at, there is a point where the acquisition no longer makes financial sense for Diana. Management declined to provide further details on the vessel sale agreement at this time.

• Q: What is the risk of Guinea implementing bauxite and iron ore export restrictions in H2 2026, given that China is the main importer of these commodities? /

  A: Management noted that talk of export restrictions from Guinea could be political bluster, or may even be driven by China to signal softer demand after a period of overbuying. While there is some downside risk to the market from potential restrictions, management does not expect the impact to be very significant, and will not change Diana's existing strategy based on this uncertainty.

• Q: Can management provide an update on the Windward investment, including potential value crystallization or divestment, and the current market-to-market value of the Windward fleet? /

  A: Management is satisfied with Windward's performance, which has improved significantly, with improved charter availability, longer charter periods, and higher vessel values. The company is evaluating all strategic options for the investment, including potential consolidation activity. A recent new investment in Windward at a higher valuation delivered a marked step-up in the carrying value of Diana's stake, with the total value of the investment still up more than 20% from prior levels, after a recent minor pullback from a near 30% gain a few months prior.