Safe Bulkers, an international provider of marine drybulk transportation services, announced its unaudited financial results for the three months period ended March 31, 2020.
|In million U.S. Dollars except per share data||Q1 2020||Q4 2019||Q3 2019||Q2 2019||Q1 2019|
|Adjusted Net (loss)/ income 1||(10.2||)||3.5||5.9||1.7||5.7|
|Adjusted EBITDA 2||9.4||23.1||25.1||21.0||24.9|
|(Loss)/Earnings per share basic and diluted 3||(0.12||)||0.01||0.02||(0.01||)||0.03|
|Adjusted (loss)/earnings per share basic and diluted 3||(0.13||)||0.01||0.03||(0.01||)||0.03|
|Average Daily results in U.S. Dollars|
|Time charter equivalent rate 4||9,089||13,707||13,311||11,970||12,280|
|Daily vessel operating expenses 5||4,771||5,103||4,448||4,615||4,153|
|Daily vessel operating expenses excluding dry-docking and pre-delivery expenses 6||4,285||4,540||4,053||4,283||4,150|
|Daily general and administrative expenses 7||1,371||1,414||1,363||1,366||1,374|
|In million U.S. Dollars|
|Total Cash 8||109.3||120.1||87.0||90.2||82.9|
|Total Debt 10||605.2||601.0||563.8||568.5||563.5|
Dr. Loukas Barmparis, President of the Company, said: ”We thank our crews, as they had to stay on board during the global lockdown and continue to perform their duties longer than usual with dedication, expecting that crew changes will soon be allowed. Our Company is well prepared for this outbreak, having liquidity of $127.2 million as of May 29, 2020, lean operational characteristics, smooth debt profile for the next two years, ability to develop long period time charter contracts to provide visibility of future cash flows and the responsiveness required in such unique circumstances”.
Update on Covid-19, company’s actions and status
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where we conduct a large part of our operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have and may continue to cause severe trade disruptions and together with projections of contraction of global growth in 2020 will adversely impact the dry bulk industry. The extent to which COVID-19 will impact the Company’s future results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain or treat its impact and political implications that could further impact world trade and global growth among others. Accordingly, an estimate of the long-term impact of the pandemic on the dry bulk industry, our operations and financial performance cannot be made at this time.
The Company has taken measures to protect its seafarers’ and shore employees’ health and well-being, to keep its vessels sailing servicing its charterers and to mitigate and address the risks, effects and impact of COVID-19 on our operations and financial performance, the current status of which is summarized below.
The Company’s and our Manager’s officers have conducted our business efficiently through remote access since March 20, 2020. Shore operations have reopened since May 4, 2020. Shore premises are sanitized regularly, have been supplied with protective equipment and follow relevant recommendations provided by public health authorities.
In relation to our seafarers onboard, our COVID-19 Management Plan and relevant circulars are being disseminated to the vessels describing procedures, first response practices to potential incidents, use of protective measures that are being supplied on board, in order to minimize the risk of quarantine of the vessel. Crew members have been instructed to have minimum or zero contact with port personnel, crew shore leaves have been suspended and ordinary scheduled superintendent and third party visits have been postponed, excluding presence for dry dockings, vessel deliveries and urgent circumstances.
In certain ports where we conduct a large part of our operations vessels may have to undergo a quarantine period before arriving or berthing. We did not have COVID-19 incidents on board and all our vessels are in operation.
We have assured the normal supply of bunkers, provisions and potable water at main ports under specific procedures to avoid contact with port personnel. We are cooperating closely with certain ports to provide stores and spares. Despite the restructuring of the air freight network and the shortage of staff and customs officials globally, spare parts for vessels are being supplied, however slower and more costly than usual.
Crew changes have been suspended due to global lockdown in ports and airports. The Company keeps close contact with seafarers on board and their families on shore. Furthermore, free internet access is offered on-board to relieve the stress of seafarers due to the extended service. We have cooperated with flag administrations and national Standards of Training, Certifications and Watch keeping (‘STCW’) competent authorities to obtain crew employment contract and certificates extensions so as to address suspension of crew changes due to COVID-19, where applicable. A detailed plan of crew changes has been developed and close cooperation with manning agencies and ex-crew currently on shore has been maintained, in order to increase crew availability and meet replacement demand once crew changes resume.
Critical technical services are maintained and the program of dry dockings, ballast water treatment systems and scrubber installations continues, having concluded 6 dry dockings, 5 ballast water treatment systems and 4 scrubber installations.
Common stock issuance and repurchase program of common and preferred shares
In April 2020, the Company issued to an unaffiliated third party 2,951,699 shares of common stock to pay $3.3 million as part of the delivery installment, of its Post-Panamax class vessel on order, which was delivered on April 16, 2020.
The Company as part of the latest ongoing stock repurchase program, has repurchased as of May 29, 2020, 3,346,406 shares of common stock all of which have been cancelled. As of May 29, 2020, the Company had 102,400,276 shares of common stock issued and outstanding.
Chartering our fleet
Our vessels are used to transport bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes. We intend to employ our vessels on both period time charters and spot time charters, according to our assessment of market conditions, with some of the world’s largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with visible and relatively stable cash flow, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions. The Company during the first quarter of 2020 has opted to maintain the majority of its fleet in the spot charter market. We operated 41.00 vessels on average during the first quarter of 2020, earning a TCE rate11, representing charter revenues net of commissions and voyage expenses divided by the number of available days, of $9,089, compared to 41.00 vessels and a TCE rate of $12,280 during the same period in 2019. Our contracted employment profile is presented below in Table 1.
Table 1: Contracted employment profile of fleet ownership days as of May 29, 2020
|2020 (remaining)||44 %|
|2020 (full year)||67 %|
Detailed employment profile is presented in Table 7. Scrubber benefit for scrubber fitted vessels is earned on the basis of fuel consumption of heavy fuel oil and price differential between heavy fuel oil and compliant fuel cost for the specific voyage and is either incorporated as part of the daily charter hire in Table 7, or in cases where it is based on actual consumption it is not incorporated in the stated daily charter hire.
In May 2020, the Company entered into three period time charters for non-scrubber fitted Panamax class vessels, for a duration of 5-years each, with a forward delivery in the third quarter of 2020 at a gross daily charter rate of $11,750 for the first two years and a gross daily charter rate linked to the Baltic Exchange Kamsarmax Index (“BPI-82 5TC”) times 97% minus $2,150, for the remaining three years. In addition, the Company entered into a period time charter for a non-scrubber fitted Post-Panamax class vessel, for a duration of 11 to 13 months, with delivery date within the second quarter of 2020 at a gross daily charter rate linked to the BPI-82 5TC times 109%. The anticipated aggregate gross revenue of the four period time charters based on the BPI-82 5TC Forward Freight Agreement curve on May 26, 2020, is approximately $54.7 million.
Vessel acquisition – Orderbook
In April 2020, the Company took delivery from an unaffiliated seller of a Japanese built, 85,000 dwt, resale, newbuild vessel named Troodos Oak. The Company does not have any other newbuilds on order or capital expenditure requirements in relation to orderbook.
As of March 31, 2020, we had liquidity of $145.7 million consisting of $92.6 million in cash and bank time deposits, $16.7 million in restricted cash, $10.0 million available under the unsecured revolving credit facility and $26.4 million secured under a commitment from a bank for the post-delivery financing of a newbuild Post-Panamax class vessel.
As of May 29, 2020, we had liquidity of $127.2 million consisting of $108.0 million in cash and bank time deposits, $19.2 million in restricted cash, having taken delivery and drawn down the financing of our newbuild.
Debt – Leverage
As of March 31, 2020, our consolidated debt before deferred financing costs was $610.1 million and our consolidated leverage12 was 63% versus 58% as of March 31, 2019.
Interest rate derivatives
In March 2020, the Company entered into five pay-fixed, receive-variable interest rate derivative contracts commencing March 2020 and maturing September 2024, at an average fixed rate of 0.765% and for an aggregate notional amount of $60 million.
In May 2020, the Company entered into a further pay-fixed, receive-variable interest rate derivative contract commencing May 2020 and maturing May 2025, at a fixed rate of 0.40% and for a notional amount of $10 million.
Financing – refinancing and debt profile
Following the quarter-end the Company drew down an aggregate of $36.4 million consisting of $10.0 million available under the unsecured revolving credit facility and $26.4 million loan facility for the MV Troodos Oak, and pushed back $39.1 million of payments for certain of its loan and credit facilities scheduled for 2020 and 2021 to 2022 and 2023, expanding the average tenor, creating a reduced repayment schedule until 2021, maintaining the same financial covenants, strengthening the balance sheet and increasing its financial flexibility.
The loan repayment schedule of the Company as of March 31, 2020 and on a pro-forma basis taking into account the transactions described above, is presented below in Table 2.
Table 2: Loan repayment Schedule on an annual basis
( in USD millions)
|March 31, 2020||51.3||95.7||93.1||78.5||185.4||65.1||14.4||26.6||610.1|
Environmental Social Responsibility – Environmental investments
In the context of our Environmental Social Responsibility policies the Company is undertaking environmental investments mainly in scrubbers and ballast water treatment systems, the progress of which is presented below in Table 3. Our environmental investments as of March 31, 2020, were $55.8 million.
Table 3: Environmental investments schedule
until May 29, 2020
|Expected installations i
n Q2 2020
in Q3 2020
* MV Martine, MV Venus Horizon, MV Venus History, MV Andreas K, MV Pedhoulas Cherry, MV Eleni, MV Venus Heritage, MV Pedhoulas Farmer, MV Panayiota K, MV Sophia, MV Marina, MV Pedhoulas Rose, MV
Pedhoulas Fighter, MV Pedhoulas Builder, MV Agios Spyridonas, MV Troodos Sun, MV Troodos Air, MV Mount Troodos.
The estimated down time in relation to Dry-dockings and equipment retrofits is presented in Table 4.
Table 4: Estimated down time in relation to Dry dockings and equipment retrofits.
|Down time in Days **|
|Q2 2020||Q3 2020|
|Number of vessels||4||4|
|Total down time||140||90|
** Down time includes scheduled dry-docking or special surveys to be performed concurrently with scrubber and ballast water system installation where applicable.
Bunker fuel contracts
The Company enters, from time to time, into bunker fuel contracts, with the objective of reducing the risk arising
from changes in the price differential between very low sulphur fuel oil and high sulphur fuel oil.
The Company has not declared a dividend on the Company’s common stock for the first quarter of 2020. The Company had 102,400,276 shares of common stock issued and outstanding as of May 29, 2020.
The Company declared a cash dividend of $0.50 per share on each of its 8.00% Series C Cumulative Redeemable Perpetual Preferred Shares (NYSE: SB.PR.C) and 8.00% Series D Cumulative Redeemable Perpetual Preferred Shares (NYSE: SB.PR.D) for the period from January 30, 2020 to April 29, 2020, which was paid on April 30, 2020 to the respective shareholders of record as of April 23, 2020.
A Company’s subsidiary declares a cash dividend on a quarterly basis on each of such subsidiary’s 2.95% Series A Cumulative Redeemable Perpetual Preferred Shares (‘Series A shares’) to the respective shareholders of record, presented under the caption “Mezzanine Equity” in the condensed consolidated balance sheets. The aggregate cash dividend declared for the Series A shares for the period from January 1, 2020 to March 31, 2020, which was paid on March 31, 2020, was $0.1 million. The aggregate cash dividend declared for the Series A shares for the period from April 1, 2020 to June 30, 2020, payable on June 30, 2020, is $0.1 million.
The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. The timing and amount of any dividends declared will depend on, among other things: (i) the Company’s earnings, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to the Company’s growth and leverage strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in the Company’s existing and future debt instruments; and (v) global economic and financial conditions.