Safe Bulkers remains in the black for fourth quarter

safe bulkers

Safe Bulkers, an international provider of marine drybulk transportation services, announced its unaudited financial results for the three and twelve months period ended December 31, 2018.

Summary of Fourth Quarter 2018 Results

  • Net revenues for the fourth quarter of 2018 increased by 24% to $52.6 million from $42.4 million during the same period in 2017.
  • Net income for the fourth quarter of 2018 was $9.5 million as compared to a net loss of $86.6 million, during the same period in 2017. Adjusted net income1 for the fourth quarter of 2018 was $9.8 million as compared to $5.5 million, during the same period in 2017.
  • EBITDA2 for the fourth quarter of 2018 was $28.9 million as compared to a loss of $68.1 million during the same period in 2017. Adjusted EBITDA3 for the fourth quarter of 2018 increased by 22% to $29.1 million from $23.9 million during the same period in 2017.
  • Earnings per share4 and Adjusted earnings per share4 for the fourth quarter of 2018 were $0.07 and $0.07 respectively, calculated on a weighted average number of 102,100,829 shares, compared to a Loss per share4 of $0.88 and Adjusted earnings per share of $0.02 during the same period in 2017, calculated on a weighted average number of 101,531,352 shares.

Summary of Twelve-Months Ended December 31, 2018 Results

  • Net revenues for the twelve months of 2018 increased by 31% to $193.2 million from $148.0 million during the same period in 2017.
  • Net income for the twelve months of 2018 was $27.7 million as compared to a net loss of $84.7 million, during the same period in 2017. Adjusted net income for the twelve months of 2018 was $28.4 million as compared to Adjusted net loss of $1.7 million, during the same period in 2017.
  • EBITDA for the twelve months of 2018 amounted to $102.3 million as compared to loss of $8.4 million during the same period in 2017. Adjusted EBITDA for the twelve months of 2018 increased by 38% to $103.1 million as compared to $74.7 million during the same period in 2017.
  • Earnings per share and Adjusted earnings per share for the twelve months of 2018 were $0.16 and $0.17, respectively, calculated on a weighted average number of 101,604,339 shares, as compared to Loss per share and Adjusted loss per share of $0.98 and $0.16 respectively, during the same period in 2017, calculated on a weighted average number of 100,932,876 shares.

Common Stock Repurchase Program

As of February 14, 2019, the Company had purchased and cancelled 1,677,194 shares of the Company’s common stock pursuant to previously announced repurchase program, which has been terminated.

Fleet and Employment Profile

In November 2018, the Company entered into a Memorandum of Agreement with an unaffiliated seller to acquire a Japanese built, dry-bulk, Post-Panamax class, resale, newbuild vessel, expected to be delivered within the first half of 2020. The Company has the option to finance up to 50% of the purchase price of the vessel through the periodic issuance of the Company’s common stock to the seller. In November 2018, the Company exercised its option and issued 1,441,048 shares of common stock of the Company to the seller, to finance the first instalment of the purchase price of the vessel. Any such common stock issued by the Company is subject to a restriction on transfer for a period of six months from the date of such issuance.

As of February 14, 2019, our operational fleet comprised of 41 drybulk vessels, 11 of which are eco-design, having an average age of 8.5 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 February 14, 2019:

Vessel Name DWT Year Built Country of construction Gross Charter Rate  [USD/day]1 Charter Duration2
Panamax
Maria 76,000 2003 Japan $4,750 February 2019 February 2019
Koulitsa 76,900 2003 Japan $12,500 January 2019 May 2019
Paraskevi 74,300 2003 Japan $12,750 December 2018 April 2019
Vassos 76,000 2004 Japan $7,935 February 2019 July 2019
Katerina 76,000 2004 Japan $9,000 May 2018 March 2019
Maritsa 76,000 2005 Japan $4,034 January 2019 March 2019
Efrossini 75,000 2012 Japan $8,750 February 2019 April 2019
Zoe 75,000 2013 Japan $8,200
$9,100
November 2017
February 2019
February 2019
July 2019
Kypros Land 77,100 2014 Japan $5,873 February 2019 March 2019
Kypros Sea 77,100 2014 Japan $13,900
$13,850
August 2018
April 2019
April 2019
December 2019
Kypros Bravery 78,000 2015 Japan $14,200 September 2018 May 2019
Kypros Sky 77,100 2015 Japan
Kypros Loyalty 78,000 2015 Japan $12,850
$13,850
January 2018
March 2019
March 2019
November 2019
Kypros Spirit 78,000 2016 Japan $10,536 February 2019 April 2019
Kamsarmax
Pedhoulas Merchant 82,300 2006 Japan $14,500 April 2018 April 2019
Pedhoulas Trader 82,300 2006 Japan $9,400 February 2019 April 2019
Pedhoulas Leader 82,300 2007 Japan $9,083 February 2019 June 2019
Pedhoulas Commander 83,700 2008 Japan $14,150 June 2018 April 2019
Pedhoulas Builder 81,600 2012 China $9,900 June 2018 August 2019
Pedhoulas Fighter 81,600 2012 China $13,000 July 2018 March 2019
Pedhoulas Farmer 3 81,600 2012 China $12,750 December 2018 April 2019
Pedhoulas Cherry 82,000 2015 China $15,250 October 2018 February 2019
Pedhoulas Rose 3 82,000 2017 China $10,000 March 2018 May 2019
Pedhoulas Cedrus 81,800 2018 Japan $15,500 June 2018 April 2019
Post-Panamax
Marina 87,000 2006 Japan $14,500 November 2018 June 2019
Xenia 87,000 2006 Japan $12,500 June 2018 June 2019
Sophia 87,000 2007 Japan $14,400 November 2018 April 2019
Eleni 87,000 2008 Japan $14,950 January 2019 June 2019
Martine 87,000 2009 Japan $6,054 February 2019 March 2019
Andreas K 92,000 2009 South Korea $3,137 February 2019 March 2019
Panayiota K 92,000 2010 South Korea $13,750 August 2018 May 2019
Agios Spyridonas 92,000 2010 South Korea $13,950 January 2019 February 2019
Venus Heritage 95,800 2010 Japan $13,200 November 2017 March 2019
Venus History 95,800 2011 Japan $14,750 January 2018 April 2019
Venus Horizon 95,800 2012 Japan $14,500 January 2019 May 2019
Troodos Sun 85,000 2016 Japan $15,950 March 2018 February 2019
Troodos Air 85,000 2016 Japan $12,500 May 2018 April 2019
Capesize
Mount Troodos 181,400 2009 Japan BCI+3.5%4 November 2018 September 2019
Kanaris 178,100 2010 China $26,5625 September 2011 June 2031
Pelopidas 176,000 2011 China $38,000 January 2012 January 2022
Lake Despina 181,400 2014 Japan   $24,3766 January 2014 January 2024
Total dwt of existing fleet 3,777,000
Orderbook
TBN 85,000 1H 2020 Japan
  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. In case a charter agreement provides for additional payments, namely ballast bonus to compensate for vessel repositioning, the gross daily charter rate presented has been adjusted to reflect estimated vessel repositioning expenses. In case of voyage charters the charter rate represents revenue recognized on a pro-rata basis over the duration of the voyage from load to discharge port less related voyage expenses.
  2. The start date represents either the actual start date or, in the case of a contracted charter that had not commenced as of February 14, 2019, 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 favour of the Company after the second year of the bareboat charter, at annual intervals and predetermined purchase price.
  4. A period time charter at a gross daily charter rate linked to the Baltic Capesize Index (“BCI”) plus a premium.
  5. Charterer agreed to reimburse us for part of the cost of the scrubber and BWTS to be installed on the vessel, which is recorded by increasing the recognised daily charter rate by $634 over the remaining tenor of the time charter party.
  6. 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. In January 2017, the period time charter was amended to reflect substitution of the initial charterer with its subsidiary guaranteed by the initial charterer and changes in payment terms; all other charter terms remained unchanged.  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 February 14, 2019 was:

2019 (remaining) 33%
2019 (full year) 41%
2020 7%
2021 7%

Order book, newbuilds capital expenditure requirements and liquidity

As of December 31, 2018, the remaining order book of the Company consisted of one Post-Panamax class vessel with scheduled delivery date in the first half of 2020 and aggregate remaining capital expenditure of $30.4 million of which $7.0 million is payable within 2019 and $23.4 million is payable within 2020. The Company has the option to finance up to $13.2 million of the remaining capital expenditure of the vessel through the periodic issuance of the Company’s common stock to the seller.

As of December 31, 2018, we had liquidity of $92.5 million consisting of $81.8 million in cash and bank time deposits, $10.7 million in restricted cash.

As of February 14, 2019, we had liquidity of $94.4 million consisting of $84.0 million in cash and bank time deposits and $10.4 million in restricted cash, while orderbook and capital expenditure requirements remained unchanged since year end 2018.

Leverage

As of December 31, 2018, our consolidated leverage5, representing total consolidated liabilities divided by total consolidated market adjusted assets, was 56% versus 60% as of December 31, 2017.

The debt repayment schedule as of February 14, 2019, following the conclusion of all formal arrangements in connection to the previously announced refinancings, is presented in Table 1:

Table 1: Repayment Schedule on an annual basis
($ in millions)

2019 2020 2021 2022 2023 2024 2025 2026 2027 TOTAL
Repayment schedule as of February 14, 2019 35.5 62.9 81.5 83.1 72.3 193.8 32.9 1.3 14.4 577.7

Update on Dry-docking schedule, Ballast Water Treatment System and Scrubbers installation

As of February 14, 2019, the Company has installed Ballast Water Treatment System (“BWTS”) in eight vessels. During 2019, we expect to install BWTS in 12 vessels concurrently with their dry-docking or scrubber installation.

As of February 14, 2019, the Company has completed the detailed engineering study for scrubber installation for five vessels and is in the final stage of completion, within the first quarter of 2019, of the study for another eight vessels. During 2019, we expect to install scrubbers in 19 vessels, the majority concurrently with their dry-docking, targeting to install four in the second quarter, nine in the third quarter and six in the fourth quarter of 2019.

During 2020, we expect to install an additional scrubber on one of our Capes chartered under a long period time charter at the request of the charterer, the cost of which will be reimbursed by the charterer.

The anticipated aggregate down time per quarter is approximately zero days, 191 days, 315 days and 210 days for the first, second, third and fourth quarter of 2019 respectively.

Dividend Policy

The Company has not declared a dividend on the Company’s common stock for the fourth quarter of 2018. The Company had 102,564,901 shares of common stock issued and outstanding as of February 14, 2019, having cancelled 1,790,270 treasury shares acquired through buy back programs.

The Company declared in January 2019 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 October 30, 2018 to January 29, 2019, which was paid on January 30, 2019 to the respective shareholders of record as of January 23, 2019.

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.

Management Commentary

Dr. Loukas Barmparis, President of the Company, said: ‘‘We closed 2018 profitably, having refinanced a large portion of our debt, targeting smooth debt profile for the next five years and gradual deleverage. We acquired one second-hand vessel and one resale newbuild for 2020 and bought back one vessel under sale and lease back agreement. We implement BWTS investments. In view of IMO 2020 sulphur cap regulation we are installing scrubbers in about half of our fleet during 2019, while we have selected to compete on the basis of vessels’ fuel consumption for the remaining part of our fleet. Since the beginning of 2019 the charter market has shown material weakness amid trade-war concerns, disruption of trade patterns and seasonality. Overall we remain confident that our Company is well positioned ahead of uncertainties and opportunities that the present environment will offer.”

 

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