Executives
Edward Nebb – Investor and Media Relations, Comm-Counsellors, LLC
Symeon Palios – Chairman and Chief Executive Officer
Anastassis Stacey Margaronis – President
Andreas Michalopoulos – Chief Financial Officer and Treasurer
Analysts
Michael Webber – Wells Fargo Securities, LLC
Jeffrey D. Rudner – UBS
Diana Containerships Inc. (DCIX) Q2 2012 Earnings Call August 1, 2012 9:00 AM ET
Operator
Greetings and welcome to Diana Containerships’ Second Quarter 2012 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Edward Nebb, IR Advisor for Diana Containerships. Thank you. Mr. Nebb, you may begin.
Edward Nebb
Thank you very much, Melissa. And greetings, this is Ed Nebb and I’m want to welcome you to the Diana Containerships Inc. 2012 second quarter conference call.
The members of the Diana Containerships’ management team who are with us today include Mr. Symeon Palios, Chairman and Chief Executive Officer; Mr. Anastassis Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary; and Ms. Maria Dede, Chief Accounting Officer.
Before management begins their remarks, let me briefly summarize the Safe Harbor notice. Certain statements made during this conference call, which are not statements of historical facts are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act.
Forward-looking statements are based on assumptions, expectations, projections, intentions and beliefs as the future events that may not prove to be accurate. For a description of the risks, uncertainties, and other factors that may cause future results to differ materially from what is expressed or forecast in the forward-looking statements, please refer to the company’s filings with the Securities and Exchange Commission.
And with that, let me turn the call over to Mr. Symeon Palios, Chairman and Chief Executive Officer.
Symeon Palios
Thank you, Ed. Good morning and thank you for joining us. It is my pleasure to report to you on the performance of Diana Containerships Inc. for the second quarter ended June 30, 2012. Our results during the recent quarter reflect the increasing earning capacity of Diana Containerships, as we have delivered on our fleet expansion strategy. At the same time, we have demonstrated our commitment to translate the company’s growing earnings power into shareholder value in the form of an attractive cost dividend.
With respect to our fleet expansion this quarter at June 30, 2012 was the first period increase we have operated with a full complement 9 vessels. This includes the four vessels that joined our fleet during the first quarter of this year. Considering that we operated only two vessels for most of the second quarter of 2011, we are clearly making great stretch in our efforts to be in the fleet of quality container vessels, we’ve looked at the time-charter in a revenue style.
Our ships have been charted to some of the industry’s leading container lines such as A.P. Moller-Maersk, CSAV, Valparaiso, APL, and Reederei Santa, Containerschiffe. Overall the fleet is time-chartered for 100% of the days in 2012 and approximately 61% of the days in 2013 providing a stable revenue stream. The contracted revenue of the fleet including the first half of 2012 is approximately $127.4 million net of commissions. As I have often noted, the Board of Directors is committed to providing shareholder value in the form of an attractive dividend and consequently our Board of Directors amended the company’s dividend policy to give us greater flexibility. We have today declared a cash dividend on our common stock of $0.30 per share. The cash dividend will be payable on or around September 5, 2012 to all shareholders of record as at August 16, 2012.
Now, let me review some of the highlights of the 2012 second quarter which were distinguished by strong performance and profitable growth. Time-charter revenues were $14.9 million, this compares to $4.2 million for the second quarter of 2011. The increase reflects the growth of our fleet including a full quarter of operating the recently purchased vessels, Cap San Marco, Cap San Raphael, APL Sardonyx and APL Spinel and also the three Maersk vessels delivered in June last year.
Net income was $2.2 million for the 2012 second quarter. For the same period the year ago, the company reported a net loss of $0.6 million. We have continued to focus on maintaining a strong balance sheet to ensure that we have the financial capacity to support a sound and growing business.
At June 30, 2012, Diana Containerships had stockholders equity of $201.9 million. In comparison long-term debt was a manageable $92.7 million at that date. Early in the third quarter on July 19, the company completed the public offering of 8.1 million shares of common stock raising gross proceeds of more than $50 million. We believe the further strengthening on our capital base was a prudent action to position us well for the opportunities we see in our business.
Let me conclude by noting that we are delivering on our strategies for profitable growth and we remain dedicated to translating that growth into increasing shareholder value, as we progress through 2012 and beyond.
Our strategic direction remains consistent with our original goals. We will seek opportunities to acquire high-quality containerships throughout this inside. We will strategically deploy our vessels in a manner that balances the maturities of our time-charter to mitigate cyclical condition while generating strong visible cash flow.
We will maintain a strong balance sheet to provide the flexibility to capitalize our market condition. We will maintain low cost efficient and reliable operations in keeping with an excellent reputation of our managers. And we will seek to provide an attractive yield to shareholders through quarterly dividends.
I will now turn the call over to our President, Stacey Margaronis, for a perspective on industry conditions. We’ll then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide a more detailed financial overview. Thank you.
Anastassis Stacey Margaronis
Thank you, Symeon, and welcome to all who have joined on the second quarter 2012 conference call of Diana Containerships Inc. As a general overview of the sector, we at Diana Containerships agree with a view recently expressed by Clarkson Research that, in the long term and on a global basis, the container trade is exhibiting signs of relatively robust growth.
After contracting by 9% in 2009, trade increased by 12.8% in 2010 with demand rebounding across the board. Clarkson Research estimate that trade expanded by about 7.9% in 2011, with growth driven predominantly by an increase in volume on non- mainline trade which grew by nearly 10% last year compared to the mainline trade which showed growth of a mere 3.6%.
The good news for the container trade in the long term comes from HSBC commercial banking, who predict that during the next 15 years, imports and exports of U.S. based companies will rise 4.7% annually, mainly as a result of exports to satisfy consumer demand in emerging market.
Turning to more recent freight performance. In January 2012, the Shanghai containerized Freight Index, showed that the average ocean freight rate of a 20-foot container to Northern Europe was $730. With well-timed and assertive increases by liner companies, at the end of the second quarter of this year that rates have rebounded to $1,500 per TEU.
There is no doubt according to Braemar Seascope that the problems in the Eurozone have resulted in slower world GDP growth, especially in emerging and developing economy, which have previously enjoyed the trading with developed nations of Europe and with United States.
A year ago, Braemar Seascope’s rate of anticipated growth for 2012 was 4.3% while now the estimate is closer to 3.5%. This will undoubtedly have a negative effect on the rate of growth of container traffic on a worldwide basis for this year and the beginning of 2013.
Although worldwide supply demand balances look reasonably matched according to Howe Robinson. Weakness is Europe still on the remaining cargo flows from Asia to Europe, growth in this trade has continued to be revised downward and the residual prospect of a quick recovery. This continues to fuel an aggressive stage that leaves smaller and less economical ships exposed.
Chinese manufacturing industries have slipped to seven month low during the second quarter of 2012, as the rate of growth of overseas orders dropped. at the same time, South Korea tough its estimate for export this year underscoring the risks to Asian economies from Europe’s debt crisis.
the purchasing managers’ index for China fell to 48.2 in June down from 48.4 in May as reported by HSBC Holdings. In the short-term, the market looks vulnerable according to Howe Robinson, and unless there is a significant pickup in orders. the coming summer weeks are likely to see increased downward pressure on charter rates.
All sub-panamax sectors according to shipping analysts work them at while are under pressure with only the highest specification and lower economical ships managing to this play, any sign of resistance to this downward trend in rate.
Turning to time-charter rates now, according to Howe Robinson Phase 2 of the famous cascade, which we have referred to several times in the past has still to run its course. This phase has the 3500 TEU to 5000 TEU ships pushing out from via trade routes the 2000 TEU to 3000 TEU vessels.
Growth and demand in the North/South trade have still to catch up with this increased supply of tonnage. Therefore, Howe Robinson believes that the market remains in something over transitory state. However, in the long run macro supply demand balances suggest that the smaller ships will be needed to absorb demand growth.
Consequently, during recent weeks, the market of medium size and small containerships has showed signs of weakness that is above 3000 TEU and capacity have experienced a noticeable decrease of demands that’s only a handful of fixtures have been reported according to shipping analysts and (inaudible).
According to Braemar Seascope, now the second quarter of this year has been a case of bigger is better, with the largest ships continuing to improve with the benchmark 5,500 to 8,500 TEU sectors commanding about $25,000 a day and $40,000 per day respectively.
On the other hand, the sub-Panamax market has largely traded water for most of the quarter, with a growing sense that there is underlying weakness which will continue to impact earnings as we get deeper into the summer.
Similarly, improved from lines in the Panamax sector has focused according to Howe Robinson on the 5000 TEU unit rather than the 4250 TEU shipped, and this may reflect the increased usage of these ships in the Asian feeder trade where the heavier boxes attract the larger dead weight unit.
Let's turn to demand now. It is currently projected by Clarkson Research that global container trade will expand by 7.6% in 2012. The same pattern of growth is expected to prevail as occurred in 2011 with no south and non-mainline trade increasing by about 9%, and the mainline trade increasing by roughly 2.8% with a serious weakness of European demand compounded by anaemic U.S. growth.
According to the latest data, container traffic from the Far East to Europe contacted by 0.9% year-on-year through April 2012, while European import from North America fell by 7.5% over the same period. Non-mainline trade is expected to grow relatively, robustly during 2012. So far this year, the Latin American trade has grown by 7.5% year-on-year to April, while intra-regional trade growth is expected to remain strong in spite of slower Chinese economic growth over the last few months.
For additional trading patterns change during the first half of 2012, especially has regard to China were stronger containerized input have been witnessed according to Braemar Seascope. Asian containerized inputs have grown 6% between January and April this year.
In the past, China was important in mainly raw material, utilized for manufacturing and infrastructure project. This additional pattern is continuing, that with the additional future of finished high quality goods being shipped to China. The new wave of demand for luxury and high-value consumer goods and high-tech products being shipped to China will give ocean container carrier of the opportunity to increase import freight trade.
Supply now, as of July 1, 2012, fully cellular fleet reached according to Braemar Seascope of 15.9 million TEU capacity, consisting of approximately 5,000 container ships. The order book compared as approximately 520 vessels with the total capacity of 3.6 million TEU. This order book represents 23% of the current fleet. In July 2011m, the order book represented about 30% of the trade increase.
According to Braemar Seascope, the current order book of the 3,000 TEU to 4,000 TEU side vessels represents approximately 15.7% of the existing fleet. The equivalent statistic for 4,000 TEU to 5,100 TEU side band with 12.3% of the current capacity in service, while in the 5,000 TEU to 7,500 TEU size range, only 8.4% of the existing fleet is on order. As you move up to this size range, this percentage increases dramatically with 7,000 TEU to 10,000 TEU range showing that 36.1% of the existing fleet is on order.
Numbers were even larger sizes on order I’m not statistically significant because they are set against a relatively small number of ships in service. To prove this point, all we need say is that the Clarkson’s figure for newbuilding order book for 8,000 plus TEU tonnage is staggering 58.1% of the existing 458 vessels already in services. According to Clarkson research the global container ship supply will expand by 7.1% this year and as a result the balance supply and demand growth is expected is be narrow.
Meanwhile, about 7% of (inaudible) projected to be delivered in 2012 is expected to consist of delivers of ships, capable of carrying in excess of 8,000 TEU. Braemar Seascope schedule show that since, 1 January, 2012 approximately 110 boxships have been launched, having 780,000 TEU of new capacity from the fleet. This figure includes about for the ships with capacity in excess of 10,000 TEU. The estimated slippage for this year is about 10%, with a majority of pushback orders going into 2014. Therefore, Braemar Seascope estimates that actual deliver during 2012 will come to about $1.4 million TEU.
Let’s look at newbuilding orders now. According to figures compared by Braemar Seascope, newbuilding in the first return during the second quarter though comparatively cautiously when set against the corresponding period of 2011. A total of 22 firm units with a combined TEU capacity over 140,000 TEU were confirmed from April 1 to June 30 this year. During the same period last year, approximately 90 units were ordered with a combined TEU capacity of 730,000 TEU.
With slow steaming becoming more and more prevalent, shipyards have been forced to offer significantly more fuel-efficient ship design often with lower speeds in mine. However, Clarkson note that the majority of containerships currently being delivered are still of the older design. In deed, 73% of vessels scheduled for delivery this year were ordered before 2009 and consequently operating older designs will limit relative return even with slow steaming.
With increasing bunker prices, the industry is turnings its attention to more efficient boxship design, which however will be unable to ever achieve the high service speeds of their previous vessel through the liner operators ever decide to again utilize such high speed in their space.
Demolition now. So far in 2012, Braemar Seascope have recorded approximately 78 cellular vessel sold for scrap with a combined total TEU capacity in the region of 150,000 TEU. For the corresponding period last year, they recorded only 22 ships sold for scrap, totaling 25,000 TEU. The estimate for the whole year is for approximately 210,000 TEU vessel capacity to be scrap.
This is materializes would be about 1.3% of the trading fleet as of January 1, 2012. This figure would be below the 3% of the fleet scrap in 2009.
However, during the past 20 years annual cellular scrapping has won’t be exceeded 1% of the trading fleet, three times in 1998, in 1999 and in 2009. This might very well turn out to be the fourth year of high demolition.
Now turning to laid-up tonnage, according to Braemar Seascope, the idle cellular fleet has noticeably decreased during the second quarter of this year. At the end of the first quarter of 2012, over 840,000 TEU of capacity was reported as idle. This represented about 5% of the trading fleet. In just one quarter the idle tonnage has gone down to 430,000 TEU or 2.7% of the fleet. Clarkson use the statistics provided by Alphaliner, which showed that from June 4, a total number of 225 ships were laid-up representing about 3% of the fleet in terms of capacity. So it appears from the above statistics that even more ships lets lay up between June 4, 2012 and the end of the month.
Here, we also need to keep in mind, that as is usually the case with long term laid-up tonnage, some laid-up ships will never trade again, due to the excessive cost of reactivation and passing of survey.
Now the outlook for the trade. Looking forward to the third quarter of 2012, Braemar Seascope’s see a mile softening in both the time-charter markets and in asset prices, which have been increased pressure on many time vessel owners. This might very well to create investment opportunities, which we have Diana Containerships wish to be ready to take advantage of for investment opportunity, to the benefit of our shareholders. The feedback received by Braemar Seascope from liner operators is that utilizing their sound of balance sheet compared to 2009. We will create course, which will be able to make strategic move to better prepare themselves were the market going forward.
Over the following quarters, the company will be making acquisitions that are accretive to our dividends per share, and the vessels purchased will be chartered under medium or long-term contract to the most creditworthy liner operators. Existing cash resources and debt will be used to finances these acquisitions and as the company grows and the containership market moves well within the upper part of the cycle, the company will reduce debt and the replace older tonnage with younger ships utilizing mainly equity and continuing to pay dividends to each shareholders. By the time, the next peak of the containership market has been reach investment strategies which have help us create a company with young vessel with a healthy and secure cash flow, and the very strong balance sheet.
I will now pass the call over to our CFO, Andreas Michalopoulos, who will provide you with the financial highlights of the second quarter and first half of this year.
Andreas Michalopoulos
Thank you, Stacey and good morning. I’m pleased to discussing today with you Diana Containerships Inc. operational results for the second quarter of 2012 and the six months ended June 30, 2012. For the second quarter of 2012, net income of Diana Containerships Inc. amounted to $2.2 million and earnings per share amounted to $0.10.
Time-charter revenues amounted to $14.9 million compared to $4.2 million in 2011. the increase in time-charter revenues was due to the enlargement of the fleet after the addition of the Maersk Merlion, Maersk Madrid and Maersk Malacca in June 2011 and Cap San Marco, Cap San Raphael, APL Sardonyx and APL Spinel in February and March 2012. This increase was partly offset by the amortization of prepaid charter revenues amounting to $3.3 million, which is the difference by the way we have with most analysts and relating to the acquisition of Cap San Marco, Cap San Raphael, APL Sardonyx and APL Spinel, which were acquired with time-charter agreements at favorable market rates.
According to the company's policy and the applicable accounting standards, described in detail in our latest Annual Report under critical accounting policy when the present value of the contractual cash flows of the time-charter assumed is greater than its current fair value. the difference is recorded as prepaid charter revenue and is amortized as a reduction of revenue over the period of time, over the period of time-charter assumed.
Ownership days were 819 for the quarter, compared to 220 in the same period of 2011. Fleet utilization was 99.5% compared to 97.3% in 2011, and the daily time-charter equivalent rate was $17,778 compared to $18,680 in 2011. Voyage expenses were $0.4 million for the quarter. Operating expenses amounted to $7 million compared to $1.8 million for the same quarter of 2011. Operating expenses in the second quarter 2012 increased due to the enlargement of the fleet compared to the same quarter 2011. On average, operating expenses increased due to increased repairs and maintenance costs and this increase was offset by decreased insurances in stores and spares.
Daily operating expenses were $8,606 for the second quarter of 2012 compared to $8,279 in 2011. Depreciation amounted to $3.2 million for the quarter. Management fees amounted to $0.4 million and represent the fees paid to the manager during the quarter.
General and administrative expenses were $0.9 million, the same as in the second quarter of 2011. Interest and finance costs for the second quarter of 2012 amounted to $0.8 million compared to $1 million in the same period of 2011. The decrease was due to the write-off of finance cost in the second quarter of 2011 due to the repayment of our loan facility with DnB Bank and the decrease was partly offset by increased interest cost in the second quarter 2012, due to both increased average debt and interest rate compared to the same quarter last year.
Turning now to the six months ended June 30, 2012, net income of Diana Containerships Inc. amounted to $4.1 million and the earnings per share amounted to $0.18. Time-charter revenues amounted to $27.4 million compared to $7.5 million in 2011. The increase in time-charter revenues were due to the enlargement of the fleet, following the addition to the fleet of three vessels in June 2011 and four vessels in 2012.
Ownership days were 1,457 in 2012, compared 400 in 2011. Fleet utilization was 99.7% compared to 98.5% in 2011, and the daily time-charter equivalent rate was $18,342 for the period, compared to $18,083 for the same period of 2011. Voyage expenses $1.7 million. Operating expenses for the six month ended June 30, 2012 amounted to $12.7 million compared to $2.8 million for the same period of 2011.
The increase was due to the enlargement of the fleet, and also due to increased costs to all categories of operating expenses as the addition to the fleet of older and bigger vessels closed the average operating expenses to increase.
Daily operating expenses were $8,750 for the six month ended June 30, 2012, compared to $6,939 in the prior year. Depreciation amounted to $5.9 million, management fees amounted to $7 million and represent a [fee based] to manger from the vessels delivery until the period end. General and administrative expenses amounted to $1.8 million as for the same period in 2011.
Interest and finance costs were $1.5 million for the six month ended June 30, 2012, compared to $1.3 million in 2011 and consist of interest expense and loan costs relating to increased interest rates and average debt during the period, compared to the same period of 2011.
Turning to dividend policy, for the second quarter of 2012 the Board of Directors has decided to declare a dividend of $0.30 per share.
Thank you for your attention. We would be pleased now to respond to your questions. And I would turn the call to the operator, who will instruct you as to the procedure for asking questions. Thank you.
Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Michael Webber with Wells Fargo. Please proceed with your question.
Michael Webber – Wells Fargo Securities, LLC
Hey, good morning. How are you?
Symeon Palios
Good morning. Fine, how are you?
Michael Webber – Wells Fargo Securities, LLC
Good. Just want to jump in and talk about acquisitions strategies here, following the capital rates. What are you guys seeing in the market here in terms of size, in term of assets with charters? What’s coming across your desk right now, and then I know it’s very difficult to do, but maybe some sort of kind of broad timetable in terms of putting capital to work?
Unidentified Company Representative
Hi Mike, this is (inaudible). We see similar deals on to the last one where we all sale vessels and it was done. We see some vessels at the same age or a bit younger for sale from liner operators with leaseback for a period of time, I would say from two to four years, and that type of deals you can easily understand that clearly aggressive as regard to (inaudible) on a per share basis.
Michael Webber – Wells Fargo Securities, LLC
All right.
Symeon Palios
We have inspected some vessels. We do not have something identified at the moment or more concrete I would say, but there are some vessels around there.
Michael Webber – Wells Fargo Securities, LLC
Are these one-off assets or anything on block or we think slugged in two and three vessels at a time?
Symeon Palios
Two vessels at a time I would say. But there are some – that’s one vessel.
Michael Webber – Wells Fargo Securities, LLC
Fair enough. And then maybe just kind of putting that in context with what you guys – you guys have obviously been on this market for the last couple of years buying assets. How thin and/or robust is that S&P market right now in terms of what you guys are seeing?
Symeon Palios
Can you elaborate that in your question?
Michael Webber – Wells Fargo Securities, LLC
Yeah, just relative to the S&P market you guys have been operating in the last year or year and a half. Can you just give us some color in terms of volume of deals you guys are seeing? Is it a particularly robust market right now? It seems like it’s a bit thicker than it was maybe earlier in the summer. That seems like there are more deals floating around that. But just some sort of color in terms of just the volume of deals you guys are seeing right now or (inaudible)?
Symeon Palios
No, I would say the volume is similar to what we saw few months ago. You understand that this what Mr. Margaronis described earlier, creates this type of opportunities and leads to some of the liner operators being willing to sell some of their [medium-range] unit with leaseback. This type of environment is something that we would like to take advantage of.
Michael Webber – Wells Fargo Securities, LLC
Sure.
Symeon Palios
And there are some deals out there.
Michael Webber – Wells Fargo Securities, LLC
Fair enough. All right, that's helpful. Forgive me, if I miss this earlier when you’ve in the past you guys have talked about extending that credit facility by next year $50 million is around with the equity. You should help with that, how were those negotiations going, and I’m assuming that still are ongoing. And then maybe if you give us some color on potential terms there?
Symeon Palios
The negotiations are still progressing, and as soon as we have further news. We will – you will be the first to know.
Michael Webber – Wells Fargo Securities, LLC
Fair enough. Is that $50 million still kind of the soft target there?
Symeon Palios
Yes, that’s the target, $50 million.
Michael Webber – Wells Fargo Securities, LLC
Okay Great, and then to say, I guess one more from me, and I'll turn it over and state the – as usual very solid sector overview. And it's kind of one I bring it down the kind of thing you are pointing here, but obviously doesn't directly impact your business, but it does have a big impact on sentiment, you’ve talked about freight rates improving throughout the year. Just kind of simply, what are your expectations for freight rates in the back half of the year, and what do you think that and how do you think that impacts the overall container complex?
Symeon Palios
Thank you, Mike for your kind comments to begin with. In answer to your question, it difficult to forecast what's happening, because you imagine we don't, we're not under receiving end of shipping orders for boxes, and we filling up of slots. But what we read and from what we hear, it appears that with improvement in freight rate will not go on for the rest of the year. And if anything certain routes might see some softening. Even though, we do not expect disorderly [drop] in freight rate for containers on any route whatsoever, because – mainly because the liner companies now we’ve learned a lesson from 2009, and I’m not ready, we feel to sacrifice all for the sake of gaining market share. Now, how will that affects the employment of our ship? So first of all, as you know we don’t have ships opening up for the time being for charter until well into the second quarter of next year.
Michael Webber – Wells Fargo Securities, LLC
Yeah.
Symeon Palios
So, as far as the time-charter rates in general have concern, we think that for the sub-panamax sizes, they will remain probably soft for the rest of the year. It doesn’t mean that any ships that we will acquire over that period will be influenced by that soft market. It will be a matter of what the liner companies will want to pay in order to secure the services of these ships over the next couple of years. And they receive the price that they hope to receive as opposed to face market level. So similarly through our previous acquisitions, we will be looking at ships that in all likelihood, that’s not a certainty or a prediction. We’ll possibly be buying at higher than what the market is dictating as far as price is concern. But the employment will certainly be above market level and provide good cash flow.
Michael Webber – Wells Fargo Securities, LLC
Gotcha. All right, that’s very helpful. Thank you guys for the time, I appreciate it.
Symeon Palios
You’re welcome. Thanks.
Operator
Thank you. Our next question comes from the line of Ken Hoexter with Bank of America/Merrill Lynch. Please proceed with your question.
Unidentified Analyst
Hi, good morning gentlemen. It’s actually [Ross] sitting in for Ken.
Symeon Palios
Good morning.
Unidentified Analyst
I just want to point a clarification. I think you mentioned that in your policies of revenue, I think we also saw a similar $3 million amortization at least on the top line. Could you actually clarify that a little bit before I jump back into digging more further into Annual report on how that’s going to accounted for on the charter side?
Andreas Michalopoulos
Yes, basically when you acquire a vessel with a charter attached, you – it’s a U.S. GAAP requirement that you put the excess charter in prepaid charter revenue and you amortize that. I think the best for you to do though instead of me paraphrasing what is very well explained in our 20-F under critical accounting policies, you go there and you refer to that and you will find that amount for this quarter $3.3 million, that basically does not show in your gross revenues and shows in other current assets in the balance sheet.
So going into the critical accounting policies, it’s the U.S. GAAP requirements, you will see exactly the way you can calculate that going forward. And this is basically what makes that difference with most of the analyst in the Street and this is what makes the fact that although everything is according to plan and all our vessels have performed as best as they can with utilization of 99.5% for this quarter, we still have mix in the earnings per share of more than $0.10. So, if you correct that, which is an accounting mistake done from analysts in general, then you will be spot-on on the numbers we get.
Unidentified Analyst
And you said the excess, this excess is the excess over the market rate correct, fair market rate or what it the excess over?
Andreas Michalopoulos
Correct.
Unidentified Analyst
So fair market, okay. And let’s jump into I guess asking about the dividend, I mean looking at how much you guys generated this quarter in cash from operations, which is about $5.8 million and thinking about just the increased share count, I mean it seems like you guys are going to have to draw a little bit more from the cash balance, instead of just paying the dividend out from the cash from operations. Should we interpret that to me that you guys are closely looking at a deal and going to close on one to kind of make up for that shortfall or how do we think about the dividend policy at least in terms of being paid directly from operations or were the sources of cash are going to come from?
Symeon Palios
The shortfall that you’re referring to is very small. The ability of the company to pay the $0.30 before the offering was much bigger and the shortfall is minimal. And you’re correct that you should expect the company to act quickly and by vessels. However, since we’re very convinced about the ability of the company to finalize and commit vessels in the future, we're not afraid to top-up just a small portion if necessary to the dividend potential of the company, but we’re talking about a very small number.
Unidentified Analyst
Sure. And then just my last question is, I mean if I think about the 750,000 charter of the Centaurus that you guys announced.
Symeon Palios
Yeah.
Unidentified Analyst
That gives a pretty big step down from obviously previous various type of charter rate. I mean do we think about the next one or two vessels being in the same range or I mean are you guys seeing…?
Symeon Palios
You are referring to a fixture that we just did at the middle of this quarter…
Unidentified Analyst
Right.
Symeon Palios
That’s very few days in this quarter i.e., the next quarter that we are going to disclose numbers. But the deals that we are talking about that we are able and we think we can find. It has nothing to do as Stacey said earlier with the support or the time-charter environment today. The deals that we talk about our sales with leaseback and the returns on that type of deals are completely different to this spot market. You understand of those people if they are selling medium sized vessels at a price higher than the market. but at the same time, they are willing to pay a much higher charter rate, and companies like ours, we feel that we are in a position to be able to identify the risk of its charter rate to the benefit of our shareholders.
Anastasios C. Margaronis
And if you were thinking of ships that we have coming now, I explained earlier that we don’t have any ships until well into the second quarter of next year, coming up for re-chartering.
Unidentified Analyst
Got it. Thank you very much.
Symeon Palios
And the market is going to be much different.
Unidentified Analyst
Sure, thank you.
Symeon Palios
You’re welcome.
Operator
Thank you. Our next question comes from the line of Jeff Rudner with UBS. Please proceed with your question.
Jeffrey D. Rudner – UBS
Good morning gentlemen, and again congratulations on a very nice performance in the second quarter.
Symeon Palios
Yeah, fine.
Jeffrey D. Rudner – UBS
I’d like to follow-up the question on the divided policy that was asked by the previous gentleman. the share count now went from $23 million, I guess roughly up to $31 million after the underwriting. We’re paying a $0.30 dividend on all the shares, so I understand where the concern is that the money coming from. But I see from the income statement that as you pointed out the cash is there.
Recognizing the fact that the company is looking to enhance shareholder value through return of cash through dividend, being that the share count should remain stable now for the next few quarters, as you deploy the proceeds from the $8 million shares, the sales – the revenues obviously will go up. So future dividend either if they were maintained it’s $0.30 would be covered by the cash flow.
Again it would seem just intuitively that because of the higher share count outstanding the dividend might come down. Could you comment at all based on what you think should happen for the next six months going forward in the market that the dividend might considerably remain in if not this area, something close to the $0.30 area, such as the $0.25 we paid in the previous two quarters?
Symeon Palios
You understand that the essence of our model is to raise equity when we feel that we can have attrition on the dividend on a per share basis even with the increased number of shares after the office. The deals are there today indicate to us that we can utilize the proceeds in such a manner that the dividend we’re going to pay as soon as we use the proceeds is going to be higher than the one if we didn’t have these new number of shares. We feel that the level that we have paid today is something that we could continue to have for the recent quarter for the – close quarters that are going to come. However, it all depends on how quickly we’re going to utilize the proceeds.
One thing is for certain. The ability of the company to pay a dividend has been enhanced, big time today after the offering, rather than previously. Going back to the $0.25 is something possible, something however that we do not foresee ourselves.
Jeffrey D. Rudner – UBS
Okay, thank you very much.
Symeon Palios
Yeah. The other thing I wanted to mention is that, you can realize today that the yield of a company like ours is enormous and we strongly feel that the market has not realized the true value of our company, even for the most pessimistic analyst or shareholders, they should clearly see that for the near future, the ability of the company to pay this type of dividends that you mentioned is there.
Jeffrey D. Rudner – UBS
Okay. Thank you very much.
Symeon Palios
Welcome.
Operator
Thank you. Gentlemen, we’ve come to the end of our allotted time for questions. I’d like to turn the floor back over to management for any closing comments.
Symeon Palios
Well, thank you again for your interest and support of Diana Containerships. We look forward to speak with you in the months ahead. Thank you.
Operator
Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
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