Diana Shipping Inc. - Earnings Estimate For 2010 Q4

For the quarter ended December 31st, 2010, we forecast that Diana Shipping Inc. (NYSE: DSX) generated net income of $34.5 million or $0.43 basic earnings per common share. We also forecast that TCE Revenues for the quarter were $69.4 million and the net average TCE rate was $31,560.

As of December 31st, 2010, we estimate that the company had a capitalization of $1.52 billion including long-term debt of $344 million. Its debt to capitalization ratio stood at 22.7%.

As of December 31st, 2010 the company was operating a modern diversified fleet of 23 dry cargo vessels (consisting of 14 panamax size vessels, one post-panamax vessel, and 8 cape size vessels), with a total DWT carrying capacity of 1,398,000 MT. The company also has two specialized cape size vessels on order, scheduled for delivery in 2012.

Diana Shipping was the majority holder of privately held Diana Containerships Inc. In January 2011 DSX did a partial spin-off of Diana Containerships, reducing its shareholding to approximately 11%. Following the partial spin-off, Diana Containerships is publicly traded on NASDAQ (NASDAQ: DCIX).

Genco Shipping & Trading Limited - Earnings Estimate For 2010 Q4

For the quarter ended December 31st, 2010, we forecast that Genco Shipping & Trading Limited (NYSE: GNK) generated basic earnings per common share of $1.00 on net income attributable to GNK shareholders of $35,200,000. We forecast that the company generated net consolidated TCE Revenues of approximately $127,500,000. We also forecast that EBITDA for the quarter was about $91,350,000.

As of December 31st, 2010 we estimate that the company had total debt of $1.745 billion inclusive of the convertible senior notes issued by GNK, and inclusive of $101.250 million of debt issued by the company’s subsidiary Baltic Trading Limited. We also estimate that GNK had a total capitalization of $3.080 billion.

GNK is a publicly traded shipping company that presently owns a modern diversified fleet of 49 dry cargo vessels with a total DWT capacity of approximately 3,650,000 MT. It also has on order 4 new building vessels with a total DWT capacity of approximately 163,000 MT.

In addition, the company’s subsidiary Baltic Trading Limited (NYSE: BALT) owns a fleet of nine dry cargo vessels with a total DWT capacity of 670,000 MT.

Safe Bulkers Inc. - Analysis Of Earnings Results For 2010 Q4

Safe Bulkers Inc. (NYSE:SB) reported $0.47 earnings per share for the quarter ended December 31st, 2010. Our forecast called for earnings per share of $0.33. Clearly our forecast missed reported earnings by a wide margin and it is important to analyze why, to avoid repeating the same mistake in the future.

The discrepancy between our forecast and actual results was because of our miscalculation of the company’s expected gain/(loss) on derivatives.

The company is using a very prudent interest rate risk management strategy. As of December 31st, 2009 it had entered into interest rate swap transactions for a notional amount of $452 million to effectively hedge its interest rate exposure on total debt of $471 million.

The weighted average swap rate as of December 31st, 2009 was 3.33%. Because the prevailing short-term LIBOR rate has been below this level for the entire year, we had expected the company to realize a net loss on interest rate swaps that expired during the year. Any gain or loss from expiring swaps is typically included on quarterly earnings either as a component of interest expense (if the swap qualifies for hedge accounting) or as a separate item (if not).

However, the company’s interest rate swaps do not qualify as effective cash flow hedges under GAAP. Safe Bulkers has to include on its quarterly earnings any unrealized gain or loss from differences in mark-to-market valuation on its outstanding interest rate swaps.

During the fourth quarter of 2010, because of an upward trend on the LIBOR term structure, the company’s unrealized gain on its outstanding interest rate swaps exceeded realized loss on the expired swaps. As a result, Safe Bulkers reported a gain on derivatives of $4.9 million, compared to a loss of $3.9 million for the previous quarter. Our forecast had mistakenly called for a loss on derivatives of $4 million.

The fact that the company’s interest rate swaps do not meet the strict GAAP hedging accounting criteria will continue to create volatility on its quarterly earnings. Despite this volatility, Safe Bulkers should be commended for a very prudent and very conservative interest risk management strategy.

Safe Bulkers Inc. - Coverage Initiation & Earnings Estimate For 2010 Q4

We have initiated coverage on Safe Bulkers Inc. (NYSE:SB), a publicly traded dry cargo shipping company.

As of December 31st, 2010, Safe Bulkers was operating a modern diversified fleet of 16 bulk carriers (consisting of 4 PANAMAX, 3 KAMSARMAX, 8 POST-PANAMAX, & one CAPE size vessels), and had an additional 9 new-building vessels on order.

For the quarter ended December 31st, 2010, we forecast that SB generated basic earnings per common share of $0.33 on net income of $21.5 million. We forecast that the average TCE rate for the quarter was $28,650 per day on TCE revenue of $41.1 million. We finally forecast that the company generated operating income of $27 million.