Safe Bulkers an international provider of marine drybulk transportation services, announced its unaudited financial results for the three and nine months period ended September 30, 2018.
Summary of Third Quarter 2018 Results
- Net revenues for the third quarter of 2018 increased by 34% to $50.1 million from $37.3 million during the same period in 2017.
- Net income for the third quarter of 2018 increased by 21% to $8.1 million from $6.7 million, during the same period in 2017. Adjusted net income1 for the third quarter of 2018 was $8.2 million as compared to adjusted net loss of $1.8 million, during the same period in 2017.
- EBITDA2 for the third quarter of 2018 was $27.5 million as compared to $27.4 million during the same period in 2017. Adjusted EBITDA3 for the third quarter of 2018 increased by 47% to $27.7 million from $18.9 million during the same period in 2017.
- Earnings per share and Adjusted earnings per share4 for the third quarter of 2018 were $0.05 and $0.05 respectively, calculated on a weighted average number of 101,559,492 shares, compared to Earnings per share of $0.04 and Adjusted loss per share of $0.05 during the same period in 2017, calculated on a weighted average number of 101,521,234 shares.
Summary of Nine-Months Ended September 30, 2018 Results
- Net revenues for the nine months of 2018 increased by 33% to $140.6 million from $105.7 million during the same period in 2017.
- Net income for the nine months of 2018 increased to $18.1 million from $1.9 million, during the same period in 2017. Adjusted net income for the nine months of 2018 was $18.7 million as compared to adjusted net loss of $7.1 million, during the same period in 2017.
- EBITDA for the nine months of 2018 increased by 23% to $73.4 million as compared to $59.8 million during the same period in 2017. Adjusted EBITDA for the nine months of 2018 increased by 45% to $73.9 million as compared to $50.8 million during the same period in 2017.
- Earnings per share and Adjusted earnings per share for the nine months of 2018 were $0.09 and $0.10, respectively, calculated on a weighted average number of 101,550,099 shares, as compared to Loss per share and Adjusted Loss per share of $0.10 and $0.19 respectively, during the same period in 2017, calculated on a weighted average number of 100,731,192 shares.
1 Adjusted Net income/(loss) is a non-GAAP measure. Adjusted Net income/(loss) represents Net income/(loss) before loss on sale of assets, gain/(loss) on derivatives, early redelivery cost, other operating expense and gain/(loss) on foreign currency. See Table 1.
2 EBITDA is a non-GAAP measure and represents Net income/(loss) plus net interest expense, tax, depreciation and amortization. See Table 1.
3 Adjusted EBITDA is a non-GAAP measure and represents EBITDA before loss on sale of assets, gain/(loss) on derivatives, early redelivery cost, other operating expense and gain/(loss) on foreign currency. See Table 1.
4 Adjusted Earnings/(loss) per share is a non-GAAP measure and represents Adjusted Net income/(loss) less preferred dividend and preferred deemed dividend divided by the weighted average number of shares. See Table 1.
Fleet and Employment Profile
In August 2018, the Company acquired a second hand, Japanese, 181,400 dwt, Capesize class dry-bulk vessel the Mount Troodos, built in 2009, at what we consider an attractive price. The acquisition was financed from cash on hand and subsequent to quarter end with a new loan facility (see section ‘Update on credit facilities’). Following delivery the vessel was placed into dry docking upon completion of which in early October, the vessel commenced spot employment at a gross daily charter rate of $18,000.
As of October 31, 2018, our operational fleet comprised of 41 drybulk vessels, 11 of which eco-design, with an average age of 8.2 years and an aggregate carrying capacity of 3.8 million dwt. Our fleet consists of 14 Panamax class vessels, 10 Kamsarmax class vessels, 13 post- Panamax class vessels and 4 Capesize class vessels, all built from 2003 onwards.
Set out below is a table showing the Company’s vessels and their contracted employment as of October 31, 2018:
|Vessel Name||DWT||Year Built||Country of
|Gross Charter Rate
|Maria||76,000||2003||Japan||$13,000||August 2018||December 2018|
|Koulitsa||76,900||2003||Japan||$15,250||September 2018||December 2018|
|Paraskevi||74,300||2003||Japan||$13,000||August 2018||November 2018|
|Vassos||76,000||2004||Japan||$13,550||October 2018||February 2019|
|Katerina||76,000||2004||Japan||$9,000||May 2018||April 2019|
|Maritsa||76,000||2005||Japan||$10,100||September 2017||November 2018|
|Zoe||75,000||2013||Japan||$8,200||November 2017||February 2019|
|Kypros Land||77,100||2014||Japan||$14,850||October 2018||November 2018|
|Kypros Sea||77,100||2014||Japan||$13,900||August 2018||February 2019|
|Kypros Bravery||78,000||2015||Japan||$14,200||September 2018||May 2019|
|Kypros Sky||77,100||2015||Japan||$16,550||October 2018||January 2019|
|Kypros Loyalty||78,000||2015||Japan||$12,850||January 2018||March 2019|
|Kypros Spirit||78,000||2016||Japan||$14,000||June 2018||November 2018|
|Pedhoulas Merchant||82,300||2006||Japan||$14,500||April 2018||May 2019|
|Pedhoulas Trader||82,300||2006||Japan||$14,125||September 2018||January 2019|
|Pedhoulas Leader||82,300||2007||Japan||$12,500||August 2018||November 2018|
|Pedhoulas Commander||83,700||2008||Japan||$14,150||June 2018||July 2019|
|Pedhoulas Builder||81,600||2012||China||$9,900||June 2018||August 2019|
|Pedhoulas Fighter||81,600||2012||China||$13,000||July 2018||January 2019|
|Pedhoulas Farmer 3||81,600||2012||China||$15,300||September 2018||December 2018|
|Pedhoulas Cherry||82,000||2015||China||$15,250||November 2018||January 2019|
|Pedhoulas Rose 3||82,000||2017||China||$10,000||March 2018||May 2019|
|Pedhoulas Cedrus||81,800||2018||Japan||$15,500||June 2018||July 2019|
|Xenia||87,000||2006||Japan||$12,500||June 2018||November 2019|
|Sophia||87,000||2007||Japan||$7,250||April 2016||November 2018|
|Martine||87,000||2009||Japan||$16,900||October 2018||November 2018|
|Andreas K||92,000||2009||South Korea||$13,400||September 2018||November 2018|
|Panayiota K||92,000||2010||South Korea||$13,750||August 2018||May 2019|
|Agios Spyridonas||92,000||2010||South Korea||$13,150||September 2018||December 2018|
|Venus Heritage||95,800||2010||Japan||$13,200||November 2017||August 2019|
|Venus History||95,800||2011||Japan||$14,750||January 2018||June 2019|
|Venus Horizon||95,800||2012||Japan||$13,950||January 2018||March 2019|
|Troodos Sun||85,000||2016||Japan||$15,950||March 2018||June 2019|
|Troodos Air||85,000||2016||Japan||$12,500||May 2018||September 2019|
|Mount Troodos||181,400||2009||Japan||$18,000||October 2018||November 2018|
|Kanaris||178,100||2010||China||$25,928||September 2011||June 2031|
|Pelopidas||176,000||2011||China||$38,000||January 2012||January 2022|
|Lake Despina||181,400||2014||Japan||$24,376⁴||January 2014||January 2024|
|Total dwt of existing fleet||3,777,000|
1. Charter rate is the recognized gross daily charter rate. For charter parties with variable rates among periods or consecutive charter parties with the same charterer, the recognized gross daily charter rate represents the weighted average gross daily charter rate over the duration of the applicable charter period or series of charter periods, as applicable.
2. The start date represents either the actual start date or, in the case of a contracted charter that had not commenced as of October 31, 2018, the scheduled start date. The actual start date and redelivery date may differ from the referenced scheduled start and redelivery dates depending on the terms of the charter and market conditions and does not reflect the options to extend the period time charter.
3. Vessel sold and leased back on a net daily bareboat charter rate of $6,500 for a period of 10 years, with a purchase obligation at the end of the 10th year and purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and predetermined purchase prices.
4. A period time charter of ten years at a gross daily charter rate of $23,100 for the first two and a half years and of $24,810 for the remaining period. The charter agreement grants the charterer an option to purchase the vessel at any time beginning at the end of the seventh year of the charter, at a price of $39 million less a 1.00% commission, decreasing thereafter on a pro-rated basis by $1.5 million per year. The Company holds a right of first refusal to buy back the vessel in the event that the charterer exercises its option to purchase the vessel and subsequently offers to sell such vessel to a third party. The charter agreement also grants the charterer the option to extend the period time charter for an additional twelve months at a time at a gross daily charter rate of $26,330, less 1.25% total commissions, which option may be exercised by the charterer a maximum of two times.
The contracted employment of fleet ownership days as of October 31, 2018 was:
|2018 (full year)||96||%|
As of October 31, 2018, we had liquidity of $64.0 million consisting of $55.4 million in cash and bank time deposits, $8.6 million in restricted cash. In addition, as of today, we have $36.3 million of incremental borrowing capacity under offer letters which are subject to completion of loan documentation.
Update on sale and leaseback transactions
In May 2018, we exercised the option under a sale and leaseback agreement to purchase one Kamsarmax class vessel at a predetermined price of $22.7 million. The transaction consummated in August 2018, and the Company financed the acquisition of the vessel through cash on hand. Following the exercise of the purchase option, related deferred finance costs of $0.5 million were written off. This was the third purchase option the Company has exercised out of five sale and lease back arrangements previously entered into by the Company.
Update on Dry-docking schedule, Ballast Water Treatment System and Scrubbers installation
As of September 30, 2018, the Company has installed Ballast Water Treatment System (“BWTS”) in four vessels. We expect to install BWTS in four additional vessels during their scheduled dry-dockings within the 4th quarter 2018. The aggregate down time of these dry-dockings is expected to be approximately 90 days out of expected 3,772 ownership days this quarter.
We have scheduled to install BWTS in one vessel within the first quarter of 2019 and BWTS and Scrubbers in four vessels during the second quarter of 2019, concurrently with scheduled dry-dockings. The anticipated aggregate down time is approximately 20 days for the 1st quarter 2019 and 140 days for the second quarter 2019. All contracted BWTS are International Maritime Organization (“IMO”) and United States Coast Guard (“USCG “) compliant.
Update on credit facilities
In October 2018, the Company signed an amendment to an existing loan facility of $32.0 million initially intended for two vessels, upsizing it to a total of $52.4 million expiring in 2023: i) substituting one vessel by the recently acquired Capesize class vessel and ii) refinancing the existing facility for two other vessels. As a result the new facility will be secured by four vessels, and the balloon payments for the refinanced two vessels will be pushed back by one year from 2022 to 2023.
In addition, subsequent to September 30, 2018, the Company has accepted offer letters, which are subject to completion of loan documentation, to refinance certain loan and credit facilities as described below:
The Company agreed to amend an existing loan facility of $90.7 million expiring in 2021 secured by 6 vessels by extending the tenor by 3 years, and pushing back balloon payments to 2024.
The Company agreed to amend and expand existing loan facilities of $71.3 million expiring in 2022 secured by 5 vessels to a total of $101.3 million secured by 6 vessels, extending the tenor of the initial facilities by two years, and pushing back balloon payments to 2024.
The Company agreed to refinance an amount of $47.8 million being part of an existing loan facility expiring in 2022 secured by 4 vessels by extending the tenor by 2 years and pushing back balloon payments to 2024.
The Company agreed to refinance a $50.6 million loan facility secured by 4 vessels, downsizing it to $40.0 million secured by three vessels and extending the tenor by three years and pushing back balloon payments to 2025. Two of the encumbered vessels under the original agreement were released and refinanced by the loan facility of $52.4 million and one unencumbered vessel was added.
As a result of the above actions, we pushed back $132.4 million balloon payments scheduled in 2021 and 2022 to 2023 and 2025, expanding the average tenor, creating a smoother repayment schedule for the following 5 years, reducing the average margin and maintaining the same covenants of our debt, while as of September 30, 2018, our consolidated leverage6, representing total consolidated liabilities divided by total consolidated assets, was 55%.
The Company has not declared a dividend on the Company’s common stock for the third quarter of 2018. The Company had 101,564,700 shares of common stock issued and outstanding as of October 31, 2018.
The Company declared in October 2018 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 July 30, 2018 to October 29, 2018 payable on October 30, 2018 to the respective shareholders of record as of October 22, 2018.
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.
Dr. Loukas Barmparis, President of the Company, said: ‘‘In the last quarter, we worked extensively in refinancing a large part of our debt maturing in 2021 and 2022 and smoothening the debt profile for the following 5 years, in reducing our break-even point by buying back one more vessel under a sale and lease back agreement, in expanding our fleet by one cape size vessel and in progressing environmental investments including scrubbers and ballast water treatment systems. Our investment in scrubbers for half of our fleet is designed so that we will be aligned timely with the IMO 2020 SOx emissions regulation, being in the forefront of technological developments and offering to our charterers reliable solutions from first class manufacturers ahead of the competition”.
6 Consolidated leverage is a non-GAAP measure and represents total consolidated liabilities divided by total consolidated assets. Total consolidated assets are based on the market value of all vessels (before BWTS and scrubber installation), owned or leased on a finance lease taking into account their employment, and the book value of all other assets.