Safe Bulkers to distribute dividend following profit surge

SafeBulkers

Safe Bulkers announced its unaudited financial results for the three and twelve months periods ended December 31, 2021. The Board of Directors of the Company also declared a cash dividend of $0.05 per share of common stock.

Financial highlights
In million U.S. Dollars except per share data Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Twelve Months 2021
Twelve Months 2020
Net Revenues 92.4       92.5       81.6       62.5       52.2     329.0     198.2
Net income/(loss)       65.2       55.4       32.4       21.3         7.6     174.3      (12.9 )
Adjusted Net income/(loss)1       50.4       50.7       36.3       16.7         7.7     154.0      (12.3 )
EBITDA2       82.4       72.4       50.2       39.3       26.2     244.3       63.7
Adjusted EBITDA 2       67.6       67.7       54.1       34.6       26.3     223.9       64.3
Earnings/(loss) per share basic and diluted3       0.51       0.44       0.27       0.18       0.04       1.44      (0.25 )
Adjusted earnings/(loss) per share basic and diluted 3       0.39       0.40       0.31       0.14       0.04       1.26      (0.24 )
Average Daily results in U.S. Dollars
Time charter equivalent rate4   26,180   24,427   21,098   15,567   12,319   21,752   10,559
Daily vessel operating expenses5     5,149     4,608     4,874     4,702     3,978     4,830     4,591
Daily vessel operating expenses excluding dry-docking and pre-delivery expenses6     4,666     4,570     4,539     4,350     3,955     4,529     4,226
Daily general and administrative expenses7     1,517     1,590     1,488     1,440     1,469     1,508     1,408
In million U.S. Dollars
Total cash8     112.3     108.6     127.4     130.1     124.0
Revolving credit facilities9     137.7       88.9       67.0         6.6         1.0
Financing commitments10       46.2       46.2       54.7       54.7       46.2
Total debt11     355.7     413.8     491.4     603.2     611.7

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1 Adjusted Net income/(loss) is a non-GAAP measure. Adjusted Net income/(loss) represents Net income/(loss) before gain/(loss) on derivatives, early redelivery income/(cost),gain on sale of assets  and gain/(loss) on foreign currency. See Table 4.
2 EBITDA is a non-GAAP measure and represents Net income/(loss) 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, other operating expenses and, gain/(loss) on foreign currency. See Table 4.
3 Earnings/(loss) per share and Adjusted Earnings/(loss) 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 Undrawn borrowing capacity under revolving reducing credit facilities.
10 Secured financing commitments for loan and  sale and lease back financings.
11 Total Debt represents Long-term debt plus Current portion of long-term debt and Liability directly associated with assets held for sale, net of deferred financing costs.

Management Commentary

Dr. Loukas Barmparis, President of the Company, said: ”2021 was a very good year for our Company.  We were able to renew our fleet with environmentally advanced vessels, enter into several favorable time charters, substantially deleverage and improve our liquidity. As a result of our strong performance the Company is declaring a  $0.05 dividend per share.”

Update on COVID-19, company’s actions and status

There has been a negative effect from the COVID-19 pandemic on the Company’s results of operations and financial condition during the fourth quarter, due to crew repatriation and related costs of about $0.2 million. Any future impact of COVID-19 on the Company’s results of operations and financial condition and any long-term impact of the pandemic on the dry bulk industry, will depend on future developments, which could impact world trade and global growth.

The COVID-19 pandemic has had a significant impact on the shipping industry and seafarers in general, as port lockdowns were imposed globally during 2020 and 2021. The Company has worked extensively to find solutions focusing on effectively managing crew changes despite the ongoing port closures and travel restrictions imposed by governments around the world. The Company has also taken measures to protect its seafarers’ and shore employees’ health and well-being, keep its vessels sailing with minimal disruption to their trading ability, service its charterers and mitigate and address the risks, effects and impact of COVID-19 on its operations and financial performance.

Conflict in Ukraine

As a result of the conflict between Russia and Ukraine, Switzerland, the US, the EU, the UK and others have announced unprecedented levels of sanctions and other measures against Russia and certain Russian entities and  nationals.  We intend on complying with these requirements and addressing their potential consequences.  While we do not have any Ukrainian or Russian crew, our vessels currently do not sail in the Black Sea and we otherwise conduct limited operations in Russia and Ukraine, we will continue to monitor the situation to assess whether the conflict could have any impact on our operations or financial performance.

Issuance of €100m 5-year Unsecured Bond at 2.95%

In February 2022, the Company through its wholly owned subsidiary Safe Bulkers Participation Plc. the (”Issuer”), issued and listed a bond in the amount of 100 million Euro (the “Bond”) on the Athens Exchange. The Bond has a tenor of five years, is guaranteed by the Company, is unsecured and pays a coupon of 2.95%, due semi-annually. The trading of the Bond commenced on February 14, 2022. The Company plans to use the net proceeds of the offering received from the Issuer (estimated at about €97.0 million) for the repayment of debt and/or redemption of preferred shares and/or acquisition of vessels and/or general corporate purposes.

At-the-market equity offering program

In August 2020, the Company filed a prospectus supplement with the Securities and Exchange Commission (“SEC”), under which it could offer and sell shares of its common stock (“Shares”) from time to time up to aggregate sales proceeds of $23.5 million through an “at-the-market” equity offering program (the “ATM Program”). In May 2021, the Company filed a supplement to its prospectus supplement to increase the capacity under the ATM Program to allow for sales of Shares for aggregate gross offering proceeds of up to $100.0 million.

During the three month period ended December 31, 2021, the Company did not sell any shares of common stock under the ATM Program. Since the inception of the ATM Program and until September 30, 2021, the Company had sold 19,417,280 shares of common stock under the ATM Program with aggregate net offering proceeds to the Company of $71.5 million. Shares of common stock with aggregate sales proceeds of up to $28.5 million remain available for sale.

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. Our customers represent 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 provide an opportunity for a potential upside in our revenue when charter market conditions improve. As of March 4, 2022 we employed, or had contracted to employ, 10 vessels in the spot time charter market (with up to 3 months original duration) and 30 vessels in the period time charter (with original duration in excess of 3 months), 7 of which have  original duration of more than 1 year, and 9 have original duration of more than 2 years. As of March 4, 2022, the average remaining charter duration across our fleet is 1.2 years.

During the fourth quarter of 2021, the Company has entered into the following period time charters with original durations longer than 2 years:

  • in October 2021, the Company entered into a long-term period time charter for the Capesize vessel MV Stelios Y, for duration of 3 years at a gross daily charter rate of $24,400. The contract grants the charterer an option to extend the period for an additional year at a gross daily charter rate of $26,500. This employment is anticipated to generate approximately US$26.7 million of gross revenue for the minimum scheduled 3-year period of the time charter. The charter commenced in November 2021.
  • in October 2021, the Company entered into a long-term period time charter for the Capesize class vessel MV Lake Despina, with forward delivery date, for duration of 3 years at a gross daily charter rate of $22,500 plus a one-off $3.0 million payment upon charter commencement. The charter agreement also grants the charterer an option to extend the period time charter for an additional year at a gross daily charter rate of $27,500. This employment is anticipated to generate approximately US$27.6 million of gross revenue for the minimum scheduled 3-year period of the time charter. The charter commenced in February 2022.

During the fourth quarter of 2021, we operated 39.23 vessels on average earning a TCE12 of $26,180 compared to 42.00 vessels earning a TCE of $12,319 during the same period in 2020. Our contracted employment profile is presented below in Table 1.

Table 1: Contracted employment profile of fleet ownership days as of March 4, 2022

2022 (remaining) 55 %
2022 (full year) 62 %
2023 24 %
2024 18 %

The detailed employment profile of our fleet is presented in Table 6.

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12 Time Charter Equivalent (“TCE”) rate represents charter revenues net of commissions and voyage expenses divided by the number of available days.

Fleet update

Newbuild orders

As of March 4, 2022, the orderbook of the Company consisted of 9 Japanese, dry-bulk newbuilds of which six were Kamsarmax class vessels and three were Post-Panamax class vessels, with scheduled deliveries of two within 2022, five within 2023 and two within 2024. All newbuilds on the Company’s orderbook are designed to meet the Phase 3 requirements of Energy Efficiency Design Index related to the reduction of green house gas emissions (”GHG -EEDI Phase 3”) as adopted by the International Maritime Organization, (“IMO”) and also comply with the latest NOx emissions regulation, NOx-Tier III (IMO, MARPOL Annex VI, reg. 13). The first Kamsarmax class newbuild on the Company’s orderbook is scheduled to be delivered in May 2022.

Second-hand acquisitions

In November 2021, the Company took delivery of the MV Stelios Y, a 2012-built, Japanese, dry-bulk, 181,400 dwt, Capesize class vessel. The vessel was acquired by the Company under a twelve-month bareboat charter agreement, with a down payment of $4.5 million on signing, a payment of $4.5 million on delivery of the vessel to the Company, payment of a daily charter rate of $14,500 over the period of the twelve month bareboat charter and payment of $18.0 million at the end of the bareboat charter with concurrent transfer of ownership of the vessel to the Company; in aggregate the acquisition cost for the vessel being $32.3 million before commissions. All payments have been funded from the cash reserves of the Company.

In February 2022, the Company took delivery of the MV Maria, a 2014-built, Japanese, dry-bulk, 181,300 dwt, Capesize class vessel. The vessel was acquired at a price of $33.8 million before commissions, which was funded from the cash reserves of the Company. MV Maria is sister-ship with the MV Stelios Y.

On aggregate, during 2021 and until March 4, 2022, the Company acquired five second-hand vessels with total deadweight of 0.61 million tones and of 8.8 years average age at an aggregate acquisition cost of $125.3 million before commissions and other expenses, all five acquisitions being funded from cash reserves of the Company. All five vessels have been delivered to the Company:

  • the 2011-built, Panamax class MV Paraskevi 2 acquired for $14.1 million before commissions and other expenses in March 2021,
  • the 2013-built Panamax class MV Koulitsa 2 acquired for $22.0 million before commissions and other expenses in July 2021,
  • the 2013-built Post-Panamax class vessel MV Venus Harmony acquired for $23.1 million before commissions and other expenses in October 2021,
  • the 2012-built, Capesize class MV Stelios Y acquired for $32.3 million before commissions and other expenses in November 2021,
  • and the 2014-built, Capesize class MV Maria acquired for $33.8 million before commissions and other expenses in February 2022.

Vessel sales

In September 2021, the Company entered into an agreement for the sale of the Kamsarmax class MV Pedhoulas Fighter, built 2012, at a gross sale price of $23.7 million. The sale was consummated in November 2021.

On aggregate, during 2021 the Company sold seven older, or, Chinese-built vessels, all of which were delivered to their new owners within 2021. In addition to the MV Pedhoulas Fighter noted above the following vessels were sold:

  • the Panamax class MV Paraskevi, built 2003, sold at a gross sale price of $7.3 million, was delivered to her new owners in April 2021,
  • the Panamax class MV Vassos, built 2004, sold at a gross sale price of $8.7 million, was delivered to her new owners in May 2021,
  • the Chinese 2012 built Kamsarmax class MV Pedhoulas Builder, sold at a gross sale price of $22.5 million, was delivered to her new owners in June 2021,
  • the Chinese 2012 built Kamsarmax class MV Pedhoulas Farmer, sold at a gross sale price of $22.0 million, was delivered to her new owners in September 2021,
  • the Panamax class MV Maria, built 2003, sold at a gross sale price of $12.0 million, was delivered to her new owners in September 2021,
  • the Panamax class MV Koulitsa, built 2003, sold at a gross sale price of $13.6 million, was delivered to her new owners in November 2021.

The aggregate sale proceeds from the seven vessels with total deadweight of 0.55 million tones and of 14.3 years average age before commissions, other expenses and amounts outstanding under associated credit facilities amounted to $109.8 million.

New credit facilities

In December 2021, the Company entered into a new credit facility of $100.0 million with a five-year tenor secured by six vessels, comprising of a term loan tranche of $50.0 million and a revolving credit facility tranche providing for a draw down capacity of up to $50.0 million reducing from its fourth year onwards. This agreement represents the Company’s second sustainability linked credit facility and incorporates an incentive discount or increase on the facility margin, linked to independently verified predetermined emission targets. The proceeds from the credit facility were used to refinance loan facilities of an aggregate outstanding amount of $50.0 million secured by five of these vessels and maturing up to 2024, and the repurchase of one vessel under a sale and leaseback agreement for an amount of $20.7 million. The Company has not made any drawing under the reducing revolving credit facility tranche. The agreement contains financial covenants in line with the existing loan and credit facilities of the Company.

Debt Profile

  1. Secured Debt

As of December 31, 2021 our consolidated secured debt before deferred financing costs was $360.3 million. During the fourth quarter of 2021, we prepaid debt in relation to vessels sales or debt refinancing in the aggregate amount of $99.6 million, made scheduled principal payments of $8.9 million and made loan drawings of $50.0 million. The repayment schedule of our secured debt as of December 31, 2021 is presented in Table 2 below:

Table 2: Loan repayment Schedule
(in USD million)

Ending December 31, 2022
2023
2024
2025
2026
2027
2028
2029-2031
Total
41.2 41.6 71.7 76.0 76.2 31.1 3.9 18.6 360.3

Since the beginning of 2022 and until March 4, 2022, we have made aggregate loan prepayments of $58.8 million, in addition to scheduled repayments of $2.1 million and loan drawings of $30.0 million, thus reducing our consolidated secured debt before deferred financing costs to $329.4 million. The repayment schedule of our secured debt as of March 4, 2022 is presented in Table 3 below:

Table 3: Loan repayment Schedule
(in USD million)

Ending December 31, 2022
2023
2024
2025
2026
2027
2028
2029-2031
Total
23.3 38.6 71.7 76.0 66.2 31.1 3.9 18.6 329.4
  1. Unsecured Debt

The €100 million bond issued in February 2022 is non-amortising and matures in February 2027. It may be redeemed at our option in part or in full after February 2024, subject to the payment of a premium ranging from 1.5% to 0.5% of the redeemed amount depending on the timing of the redemption.

Liquidity and capital resources, capital expenditure requirements and debt as of December 31, 2021

We had $112.3 million in cash, cash equivalents, bank time deposits and restricted cash, $137.7 million in undrawn borrowing capacity available under revolving reducing credit facilities and $46.2 million in secured commitments for loan and sale and lease back agreements, in relation to two newbuild vessels. Furthermore, we had additional borrowing capacity in relation to four unencumbered vessels and seven newbuilds upon their delivery.

We had a fleet of 39 vessels and had placed orders for nine newbuild vessels. The remaining capital expenditure requirements were $247.7 million in aggregate, consisting of $247.4 million in relation to the nine newbuild vessels and $0.3 million in relation to one exhaust gas cleaning device (‘Scrubber’) and several ballast water treatment systems (‘BWTS’) retrofits. The schedule of payments of the remaining capital expenditure requirements is $58.7 million in 2022, $141.6 million in 2023 and $47.4 million in 2024.

We had $360.3 million of outstanding consolidated debt before deferred financing costs.

Liquidity, capital expenditure requirements and debt as of March 4, 2022

We had $194.0 million in cash, cash equivalents, bank time deposits, restricted cash, $147.7 million in undrawn borrowing capacity available under revolving reducing credit facilities, $46.2 million in secured commitments for loan and sale and lease back agreements, in relation to two newbuild vessels. Furthermore, we have additional borrowing capacity in relation to four unencumbered vessels and seven newbuilds upon their delivery.

We had a fleet of 40 vessels, and had placed orders for nine newbuild vessels. The remaining capital expenditure requirements were $245.0 million in aggregate, consisting of $244.4 million in relation to the nine newbuild vessels and $0.6 million in relation to Scrubber and several BWTS retrofits. The schedule of payments of the remaining capital expenditure requirements is $55.8 million in 2022, $142.8 million in 2023 and $47.4 million in 2024.

Including the Bond issued in February 2022, we had $438.7 million of outstanding consolidated debt before deferred financing costs.

Derivatives

During the fourth quarter 2021 the Company terminated certain interest rate derivative contracts that were due to mature in 2023 and 2024 with an aggregate notional amount of $51.6 million and received an aggregate payment of $0.6 million from the counterparty banks. All these derivative contracts were related to underlying loan facilities that were fully repaid. As of December 31, 2021, the aggregate notional amount of outstanding interest rate derivative contracts was $300.0 million or about 83% of the aggregate debt outstanding at that date.

In January 2022, the Company terminated several interest rate derivative contracts that were due to mature in 2025 and 2026 with an aggregate notional amount of $240.0 million and received an aggregate payment of $8.3 million. At the same time, the Company entered into pay-fixed, receive-variable interest rate derivative contracts commencing in January 2022 and February 2022 and maturing in January 2024 and February 2024 for an aggregate notional amount of $240.0 million, at an average fixed rate of 1.346%.

In February 2022, the Company terminated all outstanding interest rate derivative contracts with an aggregate notional amount of $300.0 million and received an aggregate payment of $2.8 million.

During the fourth quarter of 2021, the Company entered into forward freight agreements on the Panamax index for 825 days in aggregate for the period to December 2022. In January 2022 and February 2022, the Company entered into forward freight agreements on the Panamax index for 480 days in aggregate for the period to March 2023. The objective of these trades is the reduction of the risk arising from the volatility in the charter rates.

ESG Report

In October 2021, we released our inaugural Environmental, Social and Governance (ESG) Report which records our  efforts to further strengthen the Company’s environmental stewardship, social contribution and corporate governance, and provides a transparent account of our ESG strategy and performance. The ESG Report is accessible on the Company’s website (www.safebulkers.com). The content on our website is not incorporated by reference into this release.

Environmental Social Responsibility – Environmental investments – Dry-dockings

The Company continues the retrofit of its vessels with ballast water treatment systems having installed such systems on 35 existing vessels as of March 4, 2022. In February 2021, the Company entered into an agreement for an additional Scrubber installation in one of its Capesize class vessels, the installation of which initiated in February 2022.

The Company has scheduled six dry-dockings for the first and second quarter 2022 with an estimated aggregate number of 100 down-time days during the first quarter 2022 and 43 down-time days during the second quarter 2022.

Dividend Policy

On March 4, 2022, the Board of Directors of the Company declared a cash dividend on the Company’s common stock of $0.05 per share payable on or about March 28, 2022 to shareholders of record at the close of trading of the Company’s common stock on the New York Stock Exchange (the “NYSE”) on March 21, 2022.

The Company had 121,649,103 shares of common stock issued and outstanding as of March 4, 2022.

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 October 29, 2021 to January 29, 2022, which was paid on January 31, 2022 to the respective shareholders of record as of January 20, 2022.

The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. There is no guarantee that the Company’s Board of Directors will determine to issue cash dividends in the future.  The timing and amount of any dividends declared will depend on, among other things: (i) the Company’s earnings, fleet employment profile, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to the Company’s growth, fleet renewal 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.

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