Safe Bulkers announced its unaudited financial results for the three and six month periods ended June 30, 2023. The Board of Directors of the Company also declared a cash dividend of $0.05 per share of outstanding common stock.
| Financial highlights | |||||||
| In million U.S. Dollars except per share data | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Six Months 2023 | Six Months 2022 |
| Net revenues | 70.6 | 66.8 | 86.7 | 93.7 | 91.6 | 137.5 | 169.3 |
| Net income | 15.4 | 19.3 | 34.9 | 51.0 | 50.3 | 34.7 | 86.7 |
| Adjusted net income1 | 15.3 | 14.2 | 37.0 | 48.8 | 50.4 | 29.5 | 82.7 |
| EBITDA2 | 34.4 | 38.2 | 53.8 | 69.1 | 66.5 | 72.6 | 117.5 |
| Adjusted EBITDA 2 | 34.3 | 33.1 | 56.0 | 66.9 | 66.5 | 67.4 | 113.5 |
| Earnings per share basic and diluted3 | 0.12 | 0.15 | 0.28 | 0.41 | 0.40 | 0.27 | 0.67 |
| Adjusted earnings per share basic and diluted 3 | 0.12 | 0.10 | 0.29 | 0.39 | 0.40 | 0.22 | 0.64 |
| Average daily results in U.S. Dollars | |||||||
| Time charter equivalent rate4 | 17,271 | 15,760 | 21,078 | 23,403 | 25,050 | 16,514 | 23,247 |
| Daily vessel operating expenses5 | 6,477 | 5,550 | 5,323 | 4,949 | 4,981 | 6,017 | 5,343 |
| Daily vessel operating expenses excluding dry-docking and pre-delivery expenses6 | 5,224 | 5,132 | 4,822 | 4,571 | 4,648 | 5,179 | 4,782 |
| Daily general and administrative expenses7 | 1,435 | 1,493 | 1,437 | 1,360 | 1,382 | 1,464 | 1,449 |
1 Adjusted Net income is a non-GAAP measure. Adjusted Net income represents Net income before impairment and loss on vessels held for sale, gain/(loss) on sale of assets, gain/(loss) on derivatives, early redelivery income/(cost), other operating expense and gain/(loss) on foreign currency. See Table 4.
2 EBITDA is a non-GAAP measure and represents Net 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 income/(cost), other operating expenses and gain/(loss) on foreign currency. See Table 4.
3 Earnings per share (“EPS”) and Adjusted EPS represent Net Income and Adjusted Net income less preferred dividend divided by the weighted average number of shares respectively. See Table 4.
4 Time charter equivalent (“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 the number of 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 the number of 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 the number of ownership days for such period. See Table 5.
| Selected financial highlights | |||||
| In million U.S. Dollars | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 |
| Total cash8 | 88.5 | 98.7 | 123.3 | 121.7 | 139.4 |
| Undrawn revolving credit facilities9 | 128.5 | 109.0 | 145.0 | 144.3 | 135.4 |
| Financing commitments10 | 80.7 | 148.2 | 51.0 | — | 20.0 |
| Unsecured debt11 | 106.7 | 106.5 | 104.6 | 95.4 | 101.8 |
| Secured debt12 | 339.0 | 316.0 | 309.8 | 344.2 | 322.9 |
| Total debt13 | 445.7 | 422.5 | 414.4 | 439.6 | 424.7 |
| Number of vessels at period end | 45 | 44 | 44 | 44 | 42 |
| Average age of fleet | 10.60 | 10.59 | 10.72 | 10.47 | 10.47 |
| Net debt per vessel14 | 7.9 | 7.4 | 6.6 | 7.2 | 6.8 |
Management Commentary
Dr. Loukas Barmparis, President of the Company, said: “Key developments of the second quarter, include the weakening of the chartering market, which we believe is reflective of economic growth uncertainties, and the delivery of our fourth newbuild. Our strong liquidity and comfortable leverage enable us to be flexible with our capital, and at the same time reward our shareholders with a dividend of five cents per share of common stock.”
Environmental Social Governance – 2022 Sustainability Report
In July 2023, the Company issued its 2022 Sustainability Report describing the progress of its environmental, social and governance (“ESG”) practices and its vision towards a continual enhancement of its ESG standards. The 2022 Sustainability Report has been prepared in accordance with the standards provided in the new Global Reporting Initiative (“GRI”) Sustainability Reporting Guidelines, and the Sustainability Accounting Standards Board (“SASB”) recommendation for maritime transport, alongside additional indicators that are materially important to us and our stakeholders. We also support the UN Sustainable Development Goals and have focused on areas which we believe have the greatest impact. The report is available for download and can be accessed from the Company’s website.
Environmental Social Governance and Responsibility – Environmental investments – Dry-dockings
The Company is continuing the environmental upgrade program of its existing fleet in relation to International Maritime Organization (“IMO”) greenhouse gas (“GHG”) emission regulations. As of July 21, 2023, 14 vessels in total have been upgraded, with 7 more vessels targeted for upgrade by the end of 2023. The low friction paint applications that are part of the environmental upgrades are recorded as operating expenses, while energy saving devices are capitalized and recorded as capital expenditures.
During the second quarter of 2023, the Company completed environmental upgrades on six vessels, namely the MVs Koulitsa 2, Maritsa, Kanaris, Andreas K, Marina and Aghia Sophia, including exhaust gas cleaning device (“Scrubber”) installation on the Capesize class vessel Aghia Sophia. During the second quarter of 2023, the Company commenced environmental upgrades, which were still ongoing as of July 21, 2023, on the MVs Pedhoulas Commander and Lake Despina, including Scrubber installation on the Capesize class vessel Lake Despina. During the third quarter of 2023, the Company has scheduled in total environmental upgrades during dry-dockings on four vessels, with an estimated aggregate number of 120 down-time days. The Company continues to use biofuels in certain voyages, targeting a lower carbon factor and lower environmental impact through the consumption of less fossil fuel.
Furthermore, the Company has a newbuild program of 12 vessels in aggregate, of which 10 are Japanese-built and two Chinese-built, designed to meet the IMO regulations related to the reduction of GHG and NOx emissions (the ”IMO GHG Phase 3 – NOx Tier III”). Four of such newbuild vessels have already been delivered to us. The aggregate capital expenditure of the newbuild program is approximately $409.6 million, of which $209.3 million are remaining as of July 21, 2023.
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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 Unsecured debt represents the five year tenor unsecured non-amortizing bond, net of deferred financing costs, maturing in February 2027.
12 Secured debt represents Long-term debt plus current portion of long-term debt, net of deferred financing costs.
13 Total Debt represents Unsecured debt plus Secured debt.
14 Net debt per vessel represents Total Debt less Total Cash divided by the number of vessels at periods end.
Fleet update
As of July 21, 2023, we had a fleet of 44 vessels, consisting of 11 Panamax, 7 Kamsarmax, 18 Post-Panamax and 8 Capesize vessels, with an aggregate carrying capacity of 4.5 million dwt and an average age of 10.6 years. Twelve vessels in our fleet are eco-ships built after 2014, and four vessels are IMO GHG Phase 3 – NOx Tier III ships built 2022 onwards.
Orderbook
As of July 21, 2023, we had an orderbook of eight IMO GHG Phase 3 – NOx Tier III Kamsarmax class newbuilds, with three scheduled deliveries in 2023, three in 2024 and two in the first half of 2025.
Newbuild delivery
In June 2023, the Company took delivery of the Post-Panamax class vessel MV Climate Justice, its fourth IMO GHG Phase 3 – NOx Tier III, Japanese newbuild.
Vessel sale
In March 2023, the Company entered into an agreement to sell MV Efrossini, a 2012 Japanese-built, Panamax class vessel to an unaffiliated third party at a gross sale price of $22.5 million with a forward delivery date and charter her back at a gross daily charter rate of $16,050 for a period of ten to fourteen months. The sale was consummated in July 2023.
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 flows, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions as well as provide an opportunity for a potential upside in our revenue when charter market conditions improve. The chartering of our vessels is arranged by our Managers15 without any management commission. As of July 21, 2023, we employed, or had contracted to employ, (i) 13 vessels in the spot time charter market (with up to three months original duration) and (ii) 32 vessels in the period time charter market (with original duration in excess of three months). Of the vessels chartered in the period time charter market, 12 have an original duration of more than one year, 11 of which have an original duration of more than two years. As of July 21, 2023, the average remaining charter duration across our fleet was 0.9 years.
As of July 21, 2023, we had contracted revenue of approximately $212.3 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit. Given the volatility associated with the Capesize charter market, as of July 21, 2023, all eight of our Capesize class vessels have been chartered in period time charters, five of which have remaining charter durations exceeding one year. As of July 21, 2023, the average remaining charter duration of our Capesize class vessels was 2.4 years and the average daily charter hire was $22,178, resulting in a contracted revenue of approximately $153.4 million net of commissions, excluding the additional compensation related to the use of Scrubbers. During the second quarter of 2023, we operated 44.01 vessels, on average earning a TCE of $17,271 compared to 41.04 vessels earning a TCE of $25,050 during the same period in 2022. Our contracted fleet employment profile as of July 21, 2023, is presented in Table 1.
Table 1: Contracted employment profile of fleet ownership days as of July 21, 2023
| 2023 (remaining) | 58 | % |
| 2023 (full year) | 79 | % |
| 2024 | 26 | % |
| 2025 | 13 | % |
Debt
As of June 30, 2023, our consolidated debt before deferred financing costs was $453.2 million, including the €100 million – 2.95% p.a. fixed coupon, non amortizing, unsecured bond issued in February 2022, maturing in February 2027. As of June 30, 2023, our consolidated leverage16 was approximately 35% and our weighted average interest rate during the three-month period ended June 30, 2023 was 5.94% inclusive of the applicable loan margin. During the three-month period ended June 30, 2023, we made scheduled principal payments of $6.2 million, voluntary debt prepayments of $10.0 million and drawings of $39.0 million on our revolving facilities. The repayment schedule of our debt as of June 30, 2023, is presented in Table 2 below:
Table 2: Loan repayment Schedule as of June 30, 2023
(in USD million)
| Ending December 31, | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030-2032 | Total |
| Secured debt | 36.9 | 22.0 | 72.3 | 93.7 | 36.1 | 50.4 | 5.6 | 27.4 | 344.4 |
| Unsecured debt | 0.0 | 0.0 | 0.0 | 0.0 | 108.8 | 0.0 | 0.0 | 0.0 | 108.8 |
| Total debt | 36.9 | 22.0 | 72.3 | 93.7 | 144.9 | 50.4 | 5.6 | 27.4 | 453.2 |
| Fleet scrap value17 | 385.1 |
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15 Safety Management Overseas S.A., Safe Bulkers Management Monaco Inc., and Safe Bulkers Management Limited, each of which is referred to herein as “our Manager” and collectively “our Managers”.
16 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, as provided by independent broker valuers on quarter-end, 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.
17 The fleet scrap value is calculated on the basis of fleet aggregate light weight tons (“lwt”) and market scrap rate of $557.5/lwt ton (Clarksons data), on June 30, 2023.
Liquidity, capital resources, capital expenditure requirements and debt as of June 30, 2023
We had $88.5 million in cash, cash equivalents, bank time deposits and restricted cash, $128.5 million in undrawn borrowing capacity available under existing revolving reducing credit facilities and $80.7 million in undrawn borrowing capacity available under two loans relating to two newbuild vessels as well as one sale and leaseback agreement with purchase obligation in relation to a newbuild vessel. We had paid $73.8 million for our capital expenditure requirements in relation to our orderbook. Furthermore, we had contracted revenue of approximately $232.1 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit, and additional borrowing capacity in connection with the financing of seven unencumbered vessels and four newbuilds upon their delivery.
We had a fleet of 45 vessels, an orderbook of eight newbuilds and a contract to sell one vessel. The remaining capital expenditure requirements were $210.1 million in aggregate, consisting of $209.3 million relating to the eight newbuilds on order, and $0.8 million relating to two Scrubber retrofits. The schedule of payments of the remaining capital expenditure requirements is $92.6 million in 2023, $74.5 million in 2024 and $43.0 million in 2025.
We had $453.2 million of outstanding consolidated debt before deferred financing costs, including the unsecured bond issued in February 2022.
Liquidity, capital resources, capital expenditure requirements and debt as of July 21, 2023
We had $96.7 million in cash, cash equivalents, bank time deposits, restricted cash, $152.5 million in undrawn borrowing capacity available under existing revolving reducing credit facilities and $80.7 million in undrawn borrowing capacity available under two loans relating to two newbuild vessels as well as one sale and leaseback agreement with purchase obligation in relation to a newbuild vessel. We had paid $73.8 million for our capital expenditure requirements in relation to our orderbook. Furthermore, we had contracted revenue of approximately $212.3 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit, and additional borrowing capacity in connection with the financing of seven unencumbered vessels and four newbuilds upon their delivery.
We had a fleet of 44 vessels and an orderbook of eight newbuilds. The remaining capital expenditure requirements were $210.1 million in aggregate, consisting of $209.3 million relating to the newbuilds on order and $0.8 million relating to two Scrubber retrofits. The schedule of payments of the remaining capital expenditure requirements is $92.6 million in 2023, $74.5 million in 2024 and $43.0 million in 2025.
We had $431.6 million of outstanding consolidated debt before deferred financing costs, including the unsecured bond.
Common Stock Repurchase Program
In June 2022, the Company authorized a program under which it may from time to time in the future purchase up to 5,000,000 shares of its common stock. In March 2023, the Company authorized the increase of the share repurchase to a total of up to 10,000,000 shares of its common stock, of which all had been repurchased and canceled. In May 2023, the Company authorized a program under which it may from time to time in the future purchase up to 5,000,000 shares of its common stock. As of July 21, 2023, 139,891 shares of common stock, representing approximately 3% of the program, had been repurchased and canceled, and the program has been suspended.
Dividend Policy
In April 2023, the Board of Directors of the Company declared a cash dividend of $0.50 per share on each of its Series C preferred shares (NYSE: SB.PR.C) and Series D preferred shares (NYSE: SB.PR.D) for the period from January 30, 2023 to April 29, 2023. The dividend was paid on May 1, 2023 to the shareholders of record as of April 20, 2023. In July 2023, the Board of Directors of the Company declared a cash dividend of $0.50 per share on each of its Series C preferred shares (NYSE: SB.PR.C) and Series D preferred shares (NYSE: SB.PR.D) for the period from April 30, 2023 to July 29, 2023. Each dividend will be paid on July 31, 2023, to all shareholders of record as of July 20, 2023 of the Series C Preferred Shares and of the Series D Preferred Shares, respectively.
On July 26, 2023, the Board of Directors of the Company declared a cash dividend on the Company’s common stock of $0.05 per share which is payable on September 1, 2023 to the shareholders of record of the Company’s common stock at the closing of trading on August 18, 2023. As of July 21, 2023, the Company had 111,596,253 shares of common stock issued and outstanding.
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.
War in Ukraine
As a result of the war between Russia and Ukraine which commenced in February 2022, the US, the EU, the UK, Switzerland and other countries and territories 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 crews, our vessels currently do not sail in the Black Sea and we 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.