New York-listed owner and operator of crude and product tankers Diamond S Shipping Inc. has decided to initiate a share repurchase program of up to USD 50 million.
“Given the disconnect between our long-term outlook and the company’s share price, we believe that share repurchases represent the most prudent use of our financial resources and the appropriate mechanism to return value to our shareholders at this time,” Craig H. Stevenson Jr., President and CEO of Diamond S, commented.
The tanker owner said that the program will be launched in the first quarter of 2020.
The plan is being revealed as Diamond S reports net income of USD 26.1 million, or USD 0.65 per basic and diluted earnings per share, for the fourth quarter of 2019. This is a major rebound when compared to a net loss of USD 30.8 million for Q4, 2018. The increase has been ascribed primarily to a greater number of vessels as a result of the merger and improved tanker market conditions in both the crude and product tanker segments.
“The company’s ability to capitalize on a strong rate environment is reflected in our fourth-quarter results as Diamond S’ unit leverage and spot market focus offers investors upside exposure in the tanker markets. We believe that Diamond S’ conservative balance sheet, low cash break-evens and strong liquidity profile will enable us to appropriately manage the market volatility from the outbreak of the coronavirus, while keeping us ready to take advantage in any run-up in tanker rates from the current seasonal levels,” Stevenson added.
Furthermore, as the order book across all tanker segments remains at historically low levels, the tanker owner and operator does not expect the thin balance between supply and demand to be disrupted resulting in rate volatility.
The company believes that its crude fleet and product fleet both offer very favorable exposure to long-term market dynamics and that it is well-positioned to generate substantial earnings in a strong rate environment due to its competitive breakeven levels.
Diamond S owns and operates 66 vessels on the water, including 15 Suezmax vessels, one Aframax and 50 medium-range product tankers.