Diamond S Shipping Inc.

Third-quarter 2020 spot crude fleet TCE was approximately $20,225 per day and spot product fleet TCE was approximately $10,375 per day, including pool MR tankers at about $12,000 per day and handy vessels at about $5,800 per day. All-in TCE was $21,400 per day for the crude fleet and $11,100 per day for the product fleet. Operating earnings were about $12,300 per day for the crude fleet and about $3,000 per day for the product fleet. Reported net loss was $9.7 million, EPS loss was $0.24 per share, and EBITDA was approximately $27 million; Kevin Kilcullen also said EBITDA was $27.1 million, down from $34 million last year. Gross debt at quarter end was $735 million, total debt declined by approximately $34 million from scheduled amortization, cash was over $120 million, available lines of credit were $60 million, and free liquidity was approximately $124 million. For Q4 to date, 58% of crude spot days were booked at just under $7,000 per day, 60% of MR spot days at about $9,400 to $9,500 per day, and 53% of handy days at about $6,000 per day. Management said Q4 would be considerably below cash breakeven and that 2021 OpEx is estimated at about $7,700 per vessel day for the crude fleet and $7,300 per day for the product fleet.

Craig Stevenson said the quarter showed how difficult the tanker market remains, with COVID still distorting demand and rate visibility. He stressed that Diamond S is focused on preserving cash, maintaining flexibility, and using disciplined capital allocation rather than chasing buybacks in a weak freight environment. Strategically, he highlighted the Norient Product Pool as a successful move that improved MR commercial scale and said the company is open to selling non-core or underperforming vessels, especially older Handies and a high-cost Suezmax.

Kevin Kilcullen emphasized that Q3 was a major turning point lower for the tanker market versus the first half of the year, with results held up partly by carryover rates and the move of 28 vessels into the Norient Pool. He said Q3 EBITDA was $27.1 million versus $34 million last year, cash flow generation was slightly negative, gross debt fell by about $34 million to $735 million, and liquidity remained solid at about $124 million of free liquidity. On costs, he said pandemic-related logistics added roughly $400 per vessel day to OpEx in Q3, 2021 OpEx is expected to be about $7,700 per day for crude and $7,300 for product, and scrubber installation on one vessel was postponed because the HFO-to-compliant fuel spread was tighter than expected.

Analysts asked how management would use proceeds from any future asset sales and whether share buybacks could resume; management said the environment is still in cash-burn mode, the repurchase basket is tied to net income and is currently unavailable, and excess proceeds would likely stay on balance sheet unless banks agree to loosen terms. Questions also focused on the Norient Pool’s benefit, the underperformance of Handies and the oldest Suezmaxes, and whether Diamond S might expand pooling on the crude side; management said the MR pool has met or slightly exceeded expectations, while Suezmax pooling is only being explored and no decision has been made. On refinancing, management said the upcoming $66 million facility tied to two joint-venture vessels has already had constructive discussions with banks and they are confident they can at least replicate the current structure.