Safe Bulkers, an international provider of marine drybulk transportation services, announced its unaudited financial results for the three and nine month period ended September 30, 2019.
|Summary of Third Quarter 2019 Results||Three-Month Period Ended
|(In millions except for per share data)||2018||2019||%|
|Adjusted net income1||8.2||5.9||(28||)%|
|Earnings per share basic and diluted4||$||0.05||$||0.02|
|Adjusted earnings per share basic and diluted4||$||0.05||$||0.03|
|Average Daily results in U.S. Dollars|
|Time charter equivalent rate5||$||13,265||$||13,311||–|
|Daily vessel operating expenses6||4,151||4,448||7||%|
|Daily vessel operating expenses excluding dry-docking and pre-delivery expenses7||4,022||4,053||1||%|
|Daily general and administrative expenses8||1,425||1,363||(4||)%|
|Summary of Nine-Months Ended September 30, 2019 Results||Nine-Month Period Ended
|(In millions except for per share data)||2018||2019||%|
|Adjusted net income||18.7||13.2||(29||)%|
|Earnings per share basic and diluted||$||0.09||$||0.04|
|Adjusted earnings per share basic and diluted||$||0.10||$||0.04|
|Average Daily results in U.S. Dollars|
|Time charter equivalent rate||$||12,833||$||12,513||(3||)%|
|Daily vessel operating expenses||4,362||4,406||1||%|
|Daily vessel operating expenses excluding dry-docking and pre-delivery expenses||4,152||4,162||–|
|Daily general and administrative expenses||1,299||1,368||5||%|
Dr. Loukas Barmparis, President of the Company, said: “In the third quarter of 2019 we entered into charters at higher rates than the first half of 2019. As a result we had a profitable quarter despite the down time of several vessels due to scrubber retrofitting. We remain focused in implementing our environmental investments installing scrubbers on approximately half of our fleet and completing tank cleaning in the other half in anticipation of the effectiveness of the IMO sulphur cap regulations in 2020.”
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 relatively stable cash flow and high utilization rates, while the vessels we deploy in the spot market allow us to enhance our profitability if we expect relatively stronger market conditions, or, maintain our flexibility in relatively low charter market conditions. Our contracted employment profile is presented in Table 1. Presently, for 2020, 11% of the fleet has contracted employment. Detailed employment profile is presented in Table 2.
Table 1: Contracted employment profile of fleet ownership days as of October 18, 2019
|2019 (full year)||90%|
Table 2: Detailed fleet and employment profile as of October 18, 2019
|Vessel Name||DWT||Year Built||Country of construction||Daily Gross Charter Rate1||Charter Duration2|
|Koulitsa||76,900||2003||Japan||$10,800||May 2019||December 2019|
|Paraskevi||74,300||2003||Japan||$15,250||September 2019||December 2019|
|Vassos||76,000||2004||Japan||$12,900||September 2019||March 2020|
|Katerina||76,000||2004||Japan||$13,250||September 2019||November 2019|
|Maritsa||76,000||2005||Japan||$10,325||March 2019||December 2019|
|Efrossini||75,000||2012||Japan||$14,433||August 2019||November 2019|
|Zoe||75,000||2013||Japan||$14,500||October 2019||December 2019|
|Kypros Land||77,100||2014||Japan||$17,750||July 2019||November 2019|
|Kypros Sea||77,100||2014||Japan||$13,850||May 2019||February 2020|
|Kypros Bravery||78,000||2015||Japan||$14,615||September 2018||October 2019|
|Kypros Sky||77,100||2015||Japan||$14,000||May 2019||February 2020|
|Kypros Loyalty||78,000||2015||Japan||$13,850||March 2019||February 2020|
|Kypros Spirit||78,000||2016||Japan||$19,904||October 2019||December 2019|
|Pedhoulas Merchant||82,300||2006||Japan||$11,350||March 2019||April 2020|
|Pedhoulas Trader||82,300||2006||Japan||$12,000||May 2019||May 2020|
|Pedhoulas Leader||82,300||2007||Japan||$9,696||February 2019||October 2019|
|Pedhoulas Commander||83,700||2008||Japan||$10,850||April 2019||June 2020|
|Pedhoulas Builder||81,600||2012||China||$16,100||September 2019||October 2019|
|Pedhoulas Fighter||81,600||2012||China||$15,900||August 2019||October 2019|
|Pedhoulas Farmer 3,6||81,600||2012||China|
|Pedhoulas Cherry||82,000||2015||China||$13,650||October 2019||December 2019|
|Pedhoulas Rose 3||82,000||2017||China||$13,000||October 2019||October 2019|
|Marina||87,000||2006||Japan||$15,250||September 2019||November 2019|
|Xenia||87,000||2006||Japan||$12,500||June 2018||October 2019|
|Eleni||87,000||2008||Japan||$17,000||October 2019||November 2019|
|Martine||87,000||2009||Japan||$13,348||August 2019||October 2019|
|Andreas K||92,000||2009||South Korea||$15,750||October 2019||November 2019|
|Panayiota K7||92,000||2010||South Korea|
|Agios Spyridonas||92,000||2010||South Korea||$17,850||September 2019||October 2019|
|Venus Heritage7||95,800||2010||Japan||$18,900||October 2019||November 2019|
|Venus History||95,800||2011||Japan||$17,563||September 2019||October 2019|
|Venus Horizon||95,800||2012||Japan||$21,500||August 2019||November 2019|
|Troodos Sun||85,000||2016||Japan||$15,250||September 2019||October 2019|
|Troodos Air||85,000||2016||Japan||$23,843||October 2019||November 2019|
|Mount Troodos||181,400||2009||Japan||$18,000||July 2019||January 2020|
|Kanaris||178,100||2010||China||$26,5624||September 2011||June 2031|
|Pelopidas||176,000||2011||China||$38,000||January 2012||January 2022|
|Lake Despina||181,400||2014||Japan||$24,3765||January 2014||January 2024|
|Total dwt of existing fleet||3,777,000|
- 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.
- The start date represents either the actual start date or, in the case of a contracted charter that had not commenced as of October 18, 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.
- MV Pedhoulas Farmer and MV Pedhoulas Rose were sold and leased back, in 2015 and 2017, respectively, 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.
- Charterer agreed to reimburse us for a fixed amount for 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.
- 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.
- Vessel installing scrubber.
- Vessel installing scrubber and ballast water treatment system concurrently with dry-docking.
As of October 18, 2019, the remaining order book of the Company consisted of one Post-Panamax class vessel with scheduled delivery date in the first half of 2020.
Capital expenditure and financing requirements related to order book
As of October 18, 2019, the aggregate remaining capital expenditure in relation to the order book was $30.1 million, of which $6.6 million is payable within 2019 and $23.5 million is payable within 2020. The Company has the option to finance up to $13.2 million of the remaining capital expenditure related to the order book through the periodic issuance of the Company’s common stock.
As of October 18, 2019, we had liquidity of $92.8 million consisting of $82.1 million in cash and bank time deposits and $10.7 million in restricted cash. In addition, we have secured a commitment from a bank for the post-delivery financing of our newbuild Post-Panamax class vessel in an amount of up to $26.4 million.
Leverage and repayment profile
As of September 30, 2019, our consolidated leverage9, representing total consolidated liabilities divided by total consolidated assets, was 59%, compared to 56% as of December 31, 2018, mainly due to prevailing market conditions affecting vessels’ market values. The repayment schedule of our total debt is presented in Table 3.
Table 3: Repayment Schedule as of September 30, 2019, on an annual basis
($ in millions)
Environmental Social Responsibility – Environmental investments
In the context of our Environmental Social Responsibility policies the Company is undertaking environmental investments mainly by retrofitting scrubbers in 20 vessels and ballast water treatment systems (‘BWTS’) in 38 vessels in total, the progress of which is presented below in Table 4. The aggregate cost of our environmental investments is expected to be in the region of $70 million, having incurred and capitalized $35.5 million as of September 30, 2019.
Table 4: Environmental investments progress and schedule
|Expected installations by October 31, 2019||Remaining expected
installations within 2019
* MV Martine, MV Venus Horizon, MV Venus History, MV Andreas K, MV Pedhoulas Cherry, MV Eleni, MV Pedhoulas Farmer, MV Venus Heritage, MV Panayiota K.
The expected scheduled scrubber installations until the completion of the project and the expected down time is shown in Table 5 on quarterly basis.
Table 5: Expected Scrubber Installation and related down time per quarter
|Scrubbers||Q4 2019||Q1 2020|
|Total Scheduled installations||9||5|
|Expected down time in days**||315||175|
** Down time includes scheduled dry-docking or special surveys for 9 vessels to be performed concurrently with their scrubber installation.
The Company has not declared a dividend on the Company’s common stock for the third quarter of 2019. The Company had 101,287,990 shares of common stock issued and outstanding as of October 18, 2019.
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 July 30, 2019 to October 29, 2019, payable on October 30, 2019 to the respective shareholders of record as of October 22, 2019.
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 July 1, 2019 to September 30, 2019, which was paid on September 30, 2019, was $0.1 million. The aggregate cash dividend declared for the Series A shares for the period from October 1, 2019 to December 31, 2019, payable on December 31, 2019, 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.