Safe Bulkers, an international provider of marine drybulk transportation services, announced its unaudited financial results for the three and six months period ended June 30, 2020.
|In million U.S. Dollars except per share data||Q2 2020||Q1 2020||Q4 2019||Q3 2019||Q2 2019||Six Months 2020||Six Months 2019|
|Adjusted Net (loss)/ income 1||(13.3||)||(10.2||)||3.5||5.9||1.7||(23.5||)||7.3|
|Adjusted EBITDA 2||6.3||9.4||23.1||25.1||21.0||15.7||45.9|
|(Loss)/Earnings per share basic and diluted 3||(0.16||)||(0.12||)||0.01||0.02||(0.01||)||(0.29||)||0.01|
|Adjusted (loss)/earnings per share basic and diluted 3||(0.16||)||(0.13||)||0.01||0.03||(0.01||)||(0.29||)||0.01|
|Average Daily results in U.S. Dollars|
|Time charter equivalent rate 4||8,094||9,089||13,707||13,311||11,970||8,585||12,126|
|Daily vessel operating expenses 5||4,729||4,771||5,103||4,448||4,615||4,750||4,385|
|Daily vessel operating expenses excluding dry-docking and pre-delivery expenses 6||4,207||4,285||4,540||4,053||4,283||4,246||4,217|
|Daily general and administrative expenses 7||1,374||1,371||1,414||1,363||1,366||1,373||1,370|
|In million U.S. Dollars|
|Total Cash 8||118.8||109.3||120.1||87.0||90.2|
|Total Debt 10||625.4||605.2||601.0||563.8||568.5|
1 Adjusted Net (loss)/income is a non-GAAP measure. Adjusted Net (loss)/income represents Net (loss)/income before gain/(loss) on derivatives, early redelivery cost, loss on inventory valuation and gain/(loss) on foreign currency. See Table 4.
2 EBITDA is a non-GAAP measure and represents Net (loss)/income plus net interest expense, tax, depreciation and amortization. See Table 4. Adjusted EBITDA is a non-GAAP measure and represents EBITDA before gain/(loss) on derivatives, early redelivery cost, loss on inventory valuation and, gain/(loss) on foreign currency. See Table 4.
3 (Loss)/Earnings per share and Adjusted (Loss)/Earnings per share represent Net Income and Adjusted Net income less preferred dividend and mezzanine equity measurement divided by the weighted average number of shares respectively. See Table 4.
4 Time charter equivalent rate, or TCE rate, represents charter revenues less commissions and voyage expenses divided by the number of available days. See Table 5.
5 Daily vessel operating expenses are calculated by dividing vessel operating expenses for the relevant period by ownership days for such period. See Table 5.
6 Daily vessel operating expenses excluding dry-docking and pre-delivery expenses are calculated by dividing vessel operating expenses excluding dry-docking and pre-delivery expenses for the relevant period by ownership days for such period. See Table 5.
7 Daily general and administrative expenses are calculated by dividing general and administrative expenses for the relevant period by ownership days for such period. See Table 5.
8 Total Cash represents Cash and cash equivalents plus Time deposits and Restricted cash.
9 Liquidity represents Total Cash plus contracted undrawn borrowing capacity under revolving credit facilities and secured commitments.
10 Total Debt represents Long-term debt plus Current portion of long-term debt, net of deferred financing costs.
Dr. Loukas Barmparis, President of the Company, said: ‘Our results for the second quarter were negatively impacted by the reduction in charter rates that resulted from the COVID-19 outbreak. In the second quarter we entered into six five year period time charters that had premium rates in the first two years followed by floating rates at a discount to the market for three years. These charters have enhanced our liquidity for the next two years. At quarter end we had liquidity of $119.8 million which we believe provides a significant cushion during the difficult conditions our industry is experiencing due to the pandemic.’
Update on Covid-19, Company’s actions and status
The COVID-19 pandemic has had significant impact on the shipping industry and our seafarers. Port lockdowns were imposed globally and certain ports that had opened have subsequently closed again for crew changes. Availability of air transportation for crew is also limited. The Company is working at all levels to find solutions without restricting our trading ability, focusing on crew changes despite the ongoing hurdles and travel restrictions imposed by governments around the world. 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 charter market has improved during the second quarter and as a result we were able to enter into new contracts at improved rates compared to the contracts entered in the first quarter of 2020 that have substantially impacted negatively our financial results in the second quarter of 2020. However, an estimate of the extent to which COVID-19 will impact the Company’s results of operations and financial condition and of the long-term impact of the pandemic on the dry bulk industry, our operations and financial performance 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 and therefore cannot be made at this time.
Common stock issuance and repurchase program of common and preferred shares
As of July 31, 2020, the Company as part of an ongoing repurchase program, has repurchased 3,624,283 shares of common stock all of which have been cancelled. As of July 31, 2020, the Company had 102,122,399 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 and have a potential upside in our revenue when charter market conditions improve.
As of July 31, 2020 as compared to May 29, 2020, the Company has further increased its employment profile mainly with 5-year period time charter contracts to 25% from 17% for 2021 and to 19% from 12% for 2022, of its ownership days.
More specifically, following three 5-year period time charters for non-scrubber fitted Panamax class vessels contracted in May at a daily charter rate of $11,750 for the first two years , in July the Company entered into three further new 5-year period time charters for non-scrubber fitted Panamax class vessels at a gross daily charter rate of $13,800 for the first two years, all with a forward delivery date in the third quarter of 2020. For the remaining three years, all six contracts have a gross daily charter rate linked to the Baltic Exchange Kamsarmax Index (“BPI-82 5TC”) times 97% minus $2,150.
During the second quarter of 2020, we operated 41.82 vessels on average earning a TCE11of $8,094 compared to 41.00 vessels earning a TCE of $11,970 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 July 31, 2020
|2020 (full year)||78||%|
Our detailed employment profile is presented in Table 6. The scrubber benefit for scrubber fitted vessels is calculated on the basis of fuel consumption of heavy fuel oil and the price differential between the cost of heavy fuel oil and compliant fuel for the specific voyage and is either presented as part of the daily charter hire in Table 6, or in cases where it can not be calculated is not part of the stated daily charter hire.
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. As of July 31, 2020, the Company does not have any other newbuilds on order or capital expenditure requirements in relation to orderbook.
As of June 30, 2020, we had liquidity of $119.8 million consisting of $99.1 million in cash and bank time deposits, $19.7 million in restricted cash and $1.0 million available under the unsecured revolving credit facility.
As of July 31, 2020, we had liquidity of $111.3 million consisting of $89.9 million in cash and bank time deposits, $19.4 million in restricted cash, and $2.0 million available under the unsecured revolving credit facility.
Debt Profile – Leverage
As of June 30, 2020, our consolidated debt before deferred financing costs was $630.3 million and our consolidated leverage12 was 68% versus 63% as of March 31, 2020.
The loan repayment schedule of the Company as of June 30, 2020, is presented below in Table 2.
Table 2: Loan repayment Schedule on an annual basis
( in USD millions)
|June 30, 2020||27.8||72.4||113.6||120.0||171.9||66.8||16.2||41.6||630.3|
11 Time Charter Equivalent (“TCE”) rate represents charter revenues net of commissions and voyage expenses divided by the number of available days.
12 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 scrubber installation), owned or leased on a finance lease taking into account their employment, and the book value of all other assets. This measure assists our management and investors by increasing the comparability of our leverage from period to period.
Interest rate derivatives
During the second quarter of 2020, the Company entered into seven pay-fixed, receive-variable interest rate derivative contracts with inception ranging from May 2020 to August 2020 and with maturity ranging from August 2023 to June 2025 at fixed rates ranging from 0.275% to 0.50%, for an aggregate notional amount of $77.6 million.
In July 2020, the Company entered into eight pay-fixed, receive-variable interest rate derivative contracts commencing July to August 2020 with maturity ranging from May 2025 to August 2025 at fixed rates ranging from 0.33% to 0.40% for an aggregate notional amount of $80.0 million.
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. As of June 30, 2020, the Company has completed the installation of 19 scrubbers out of 20 scheduled and of 26 Ballast Water Treatment Systems (‘BWTS’) out of 41 scheduled with aggregate cost as of quarter end of $58.2 million.
The scheduled number and estimated down-time for dry-dockings and environmental investments as of June 30, 2020, is presented in Table 3.
Table 3: Scheduled number and estimated down-time for dry-dockings and environmental investments.
|Down time in Days **|
|Q3 2020||Q4 2020|
|Number of vessels||5*||1**|
|Total down time||137||25|
* Installation of one scrubber and of five BWTS to be performed concurrently with the scheduled dry-dockings.
** Installation of BWTS to be performed concurrently with the scheduled dry-docking.
The Company has not declared a dividend on the Company’s common stock for the second quarter of 2020. The Company had 102,122,399 shares of common stock issued and outstanding as of July 31, 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 April 30, 2020 to July 29, 2020, which was paid on July 30, 2020 to the respective shareholders of record as of July 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 April 1, 2020 to June 30, 2020, which was paid on June 30, 2020, was $0.1 million. The aggregate cash dividend declared for the Series A shares for the period from July 1, 2020 to September 30, 2020, payable on September 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.