Q1 2020 Safe Bulkers Inc Earnings Call
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[noise], ladies and gentlemen, thank you for standing by and welcome to the safe Bulkers comforts called to discuss the first quarter Twentytwenty financial results today, we have with us from safe Bulkers.
Chairman and Chief Executive Officer.
Mr. Hollis Mcgee Hollow, President Dr., Lukas Embarrass Chief Financial Officer Mr. Constantinos.
Most populous and chief operating office.
Officer Mr. illness, 17 knows at this time all participants are in listen only mode. There will be a presentation followed by a question and answer session at which time. If you wish to ask a question you will need to press star one on your telephone keypad.
Wait for your name to be announced following this conference call. If you need any further information on the conference call on the presentation. Please contact capital link at two one to 6617566 I must advise you that this comfort.
<unk> is being recorded today.
Before we begin please note that this presentation contains forward looking statements as defined in section 27 eight of these Securities Act of 1933 as amended and section 21 E. UBS Securities Exchange Act of Nike.
34, as amended concerning future events.
The company's close strategy and measures to implement strategy, including its specked in vessel acquisitions and entering into further time charters words, such as it specs intends plans believes anticipate hopes.
Estimates and variations of such words and similar expressions are identified.
Are intended to identify forward looking statements. Although the company believes the expectations reflected in such forward looking statements are reasonable no assurance can be given that such expectations will prove to happen correct.
These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies many of which are beyond the control of the company.
Actual results may differ materially from those expressed or implied by such forward looking statements.
Actors that could cause actual results to differ materially include but are not limited to changes in the demand for dry bulk vessel.
Competitive factors in the market in which the company operates risk associated with operations outside the United States and other factors listed from time to time in the company's filings with the Securities and Exchange Commission.
The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the companys expectations with respect their two or any change in event.
Conditions or circumstances.
Which any statement is space and now I pass the floor to Constantinos Ana Paula. Please go ahead Sir.
Hi, Good morning, Dawn, I am something or something I'm open to shuffle safe Bulkers wake up to our corporate school anyway.
Scott the financial results for the first quarter vendors.
I would like to start quite frankly, and got a seafarers for their commitment and dedication for Walgreens Hartsfield.
Accordingly, we continue to save our charters.
Moving to slide for.
We are hoping RPV noted for onshore finish my brain function and commercial taking measures to easypark covert 90.
You bet, it's about a full from.
After the nation's once you finish on board the company's Colby Nike Monotonic long has been disseminated with investors incorporating measures to protect seafarers and shorter and shorter employee health and wellbeing.
And to keep all our vision sailing continuously said anything.
[noise] did not have sort of but it's something we have conducted remotely I think that's it efficiently.
She's marks granted rented Wendy and he opened offices or May four two anyway.
So far.
No.
Nice incidents for <unk> industrial [noise].
We have secured and almost supplier bunkers provisions in portable water.
And then bolt onto the specific procedures to avoid contract with bought personally.
All critical thinking about as it is our main thing.
And Oh, no changes have been suspended we have developed and they did they plan or such exchanges.
No that we could each grew up in ability and meet the replacement the mom wants it changes or did you.
Who had been also acting in our environmental investments I've seen in slide five.
From the beginning of a year ended up being made recognized vantage Wendy even doing that people. They told me like in front me a broken will drydockings minus one I didnt see FEMSA scarping, a nascent husband being.
Well, how cool <unk> fixed I tokens fiveg wireless work that installations.
For scrapping installations, and consequently, the shape, you'll be very to delever.
In the financial overall in slide six following the refinancing go get any twentytwenty, which provided us with 53.1 million of additional liquidity.
And to go down affinity on from our Arctic Good Archie here.
We look at first it includes corporate answers with our lenders to be pretty thereby from financial position by pushing back to back up 22, Anthematic fantasy you put on a 39 point you want to begin a bonus a loan repayments scheduled for two ended ramping up to 80 to 91.
And also by drawing down 56, one for me you don't.
Existing over 11 facilities.
Moving to slide seven integral makeshift broke drunk well have reached an agreement with a broken it's out there for Fourk video time charters Oh non scrap at featured Phenomics glass visits.
He five year charters are the baby girl stuck at higher well never thousand 750.
Oh, that's for the first two years and for the next three years have board exchange Kamsarmax based 82 five PC.
Thanks, Nice, 7% NIS $2150.
Nothing of that India headquarters Twentytwenty.
And one yeah, I do want to get a topic on the daily Girls Saturday.
Linked to the Baltic exchange this hated to fight it seemed to six times, a 100 at 9%.
Nothing in the first couple of any brandy.
That's brought launching our future cash flows.
We anticipate I'm going to get closer to having it'll be shortsighted.
54.7 billion on things like a 25 basis calculations of they've got anticipate good.
Let's move now into analyzing the market conditions.
Slide nine we present, the I'll pick up in market I was at the beginning of June.
So it's not that AIDS for games, it got sandboxes as compared to win Tonight.
So far that market is mainly driven by Corbett 19, and it's affecting globally Quantums. Most advanced economies have already announced stimulus packages to address the base effect or the bump there.
Another important but I bet. So funny that you were signed the trade war.
The long anticipated the implementation of phase one thing, which was struck a buck exactly.
She's analyses have gotten driving this hitting the market.
Sitting there with what the way the here are the weakening pencil Saturdays.
Turning to the slight then we present secondly presented they don't sign up with seems to be the fed copy pretty Cabot from there, but let me.
Chinese economy contracted by almost 7% in Q1.
As far as China has announced that he started measuring it depends a day to stimulate the economy back to growth territory.
And these include fiscal stimulus package is a one was 3.6 billion yen that's equivalent to about a half that they don't go nuts.
At age and to find out the government's form, especially on the fourth quarter reporting 75, they do have UAN.
In issuance or want Pedro you on the central government, especially once I get it.
I'll go get and I didn't they need.
And finally business, but Scott and fee reductions were 500 billion Yuan.
Okay.
I was evident in the bottom graph try and using that then production in the gates are indicators are evolving sticking on the Bobby.
Signaling what seems to be hopefully it V shaped like at the company.
The especially on paper was born shouldn't be the carpet is for the most things I kept production and watching what before they uplifting the amount of money into sports station commodities winter conditions in China normalize.
Slide 11, we analyzed the developments on imports will be made toward right back on mortgages.
As shown on the book it out, but I don't know imports.
Not that it's I noted draping videos were up 5%.
This is the same <unk> went to 90.
I've been spirit of probably nine thing in Brazil is how does that exports for white or no which are down to within Griffin young here.
This explains partially that depressed charter rates on capes.
In the dropping their middle of the page, we presented and my cold and ignite imports to China.
For the dynamic do 80 billion.
Which would increase by 46.6% divested the same billions went to 90.
It's on the bottom graph, we see that soybean exports to China and the same four months within modular increased rents is the same period the fits nicely.
We believe that the positive news coming from China, and the graduated comedy of an important companies worldwide will eventually increased demand for park.
It's likely we present this topic so the order book on Capes and Panamaxes post Panamaxes.
Order book is declining off the blended rent it was slippage and cancellations viewed the corporate 19, creating a fancy delays.
The combination of raising hopefully no charter rates increased capex for complying with it and environmental regulations.
Okay. That's you five scrapping activity, which has diminished you dropped onset demolition countries like India, but at this.
Lastly, I am going and Biomet doesn't Scott, just putting museums and be carbonation.
No not favor new orders.
On slide 15, we present the effect of the global look bouncing won't really good 60 on some of the Mt. Holly nephew it.
I was presented on that broke ground. According to the N.V. The global oil demand is also expected people when they reshape.
The middle and bottom graphs, we presented the U.S. implied always been mom and the graduating demand.
We believe that the odds nobody nobody else is pointing bond will continue to improve in the second half will do anything.
Slide 14, who presented price over the spread differential or saw no not it's I find.
Between the I am more twentytwenty compliance UN matches, the heavy fuel oil.
Which is used now on me.
I'll describe it if we did visit in coordination with then prices.
Compliant Hewitt and this is a product are closely related to the open up undercover they'll global economies.
Glad to the prices aggressors, the age of fuel prices.
Uh huh.
I was evident from the Gulf H.I., five spread disclosed laden with Ben prices.
Especially to the end of the global growth looked down we live mobility. This big jumps and hence the demand for oil in a few and this probably lead to the comedy events prices into wider it's eyeq five spread differential.
[noise] vending and slide 15, well that they've gone takes a while I invite on meant on social is good.
Despite the top in mind on I do have but it'll be that they've been scrubbers.
Five front of what the demand systems.
You're not going to give cost of $55.8 billion.
The end of it that wonder blended rate people will have completed those dogs gobbling belligerent program.
Some debut we estimate that expected downtime.
They're used for blue and.
The into any Wendy.
So why do I see on anomaly, there but projects.
Oh that summarized the game the big ways in slide 16.
They decided they did they tend to find out the Chinese new year by the Golden I think funding.
We believe the delays in Chinese shipyards delays imports to the warranting immediate scrapping and excessive environmental and regiments would've been sort of the supply side.
I try not gets introduced the fiscal stimulus buckets of about half a billion dollars.
Its industrial indicator studied bobbing single signaling what.
My question would you be every shade over there that might give it a copy.
It is a declining order book from threat advantage. One ones are the same time, he's got sounds from emissions and pick up when ization would not favorable to new orders.
The combination of sleep, our congratulations to the government I think about them make a defensive delays.
Is it more the aging fleet no freight rates increased environmental topics may enhance the scrapping activity.
The global look down has adversely affected the demand called already that distillate fuel.
We expect to slow the volatile global oil demand the second half of this year I was global Global Downs is always the mine.
I'm good price spread differential has shrunk for these results during the first quarter blended Wendy.
That's been covered US then this bit my discovered as well.
17.
No.
Points on that we did see which is in excess over $107 million, we very much I believe done numerous dry dockings, what they'd be nice silverado and right on mentally invest.
That's liquidity this I saved environment provides us with particularly.
Related to produce don't tend to be the doctors. Despite market conditions are being front bloated cost Protiviti basically is a hot beverage, Pennsylvania, then relations with others.
I believe to complete harder and Wright amendment commitments in the Pico pandemic and everything so what that [noise].
Expertise.
And lastly, our children Federal pro fight for the next years.
But at that age choice comfortably comfortably stands at 62% isn't evidencing the drop in support from our lenders.
They continue with antiquated being slide 19, which I was on May 29.
Mm.
[noise] onetime in nature.
Ben theme would present or the blue columns are the payment schedule on a pro forma basis.
Taking into account the financing activities.
New loan facility from our four I lost a new bid, which was deliberate and they have secured revolving credit facility.
Yesterday, the payment schedule I was over months.
The first when it went.
[noise], Besides who is working.
It has been completed in.
Provides us with an additional liquidity of $53.1 billion.
During the first quarter with little down $10 million by our through I think you would actually has.
Neighborhood Twentytwenty would go down and I'm, just gonna 10 million available under this idea.
I'm, saying Oh Oh.
No. This young girls cooperation with our lenders, we pushed back 39.1 billion on us.
The payment.
Let me do Enventis industry.
Originally scheduled for.
Asked expanding Yamana is.
Taking a smooth they paid in refining and gaining the same got while maintaining the same governance.
Wow that.
[noise] cities are that increasing not flexibility during this.
Overall, the following the quarter then the company go down 56.4 million.
Barack 9.1 billion payments.
[noise] moving to slide 21, who presented orderly daily Opex, which is what that we're talking about 700.
Yes.
This is our quarterly daily DNA so Doug.
$1371.
I can get figure for both.
Uh huh.
But as for the fourth when it went in and Tonight, beginning with 6000, a $142 illustrating our focus on clinical validation.
He believes that these 6.1 of them build outs for both Opex M&A when comparing apples to apples is one of the industry's love it.
Oh the lowest.
The fact that we include in our Opex or Drydocking expenses and done I mean, no gionee.
Direct implementation.
Expected all expenses related to the administration like other companies.
Did not include these numbers.
Moving on to slide 22, we present, our quarterly PC, which stood up $9089 affected by government 19 that you're talking quarterly Opex, which stood at 4007 problems.
Let's move to slide 23, without quarterly financial highlights for the first quarter blended ramping.
At the same fields.
90.
Revenues decreased by 5% $45.7 billion from $48.3 million.
Our time charter equivalent per day per vessel decreased to $9089 per day.
Red flags on on the than he told us they understand deal didn't van being 90.
Hey, the vessel Opex increased bike.
10% or size of has $771.
Bad to $4150 for the same building bentonite be.
Whereas daily Opex, excluding dry docking and pre delivery expenses decreased by 3%.
$4285.
For the first quarter 220, compared to $4150 for the same period last year.
Our adjusted EBITDA for the first quarter of rented ready decreased to $9.4 million.
Compared to $94.9 million for this ambient bentonite.
Our adjusted loss per share for the first for the blended mechanistic reasons are greater than that way to die, but it's not that over 108.4 million shares.
On behalf of adjusted and expect Seattle 50 cents.
During the same video of men Tonight in.
On a weighted average number I'm going into 1.60.
Closing I presentation is like when before.
We did jump out quarterly fleet, they die dominant daily indicators compared to the same be of last year.
I can't my sites up and this because we have worked extensively despite the tough market conditions and we'll have contracted three five yeah field fans out there isn't one you have to be a banks out there I think frontloaded cash flows.
But if I'm not allowed to bother about that.
And then.
Those.
[noise] do.
<unk>, which Bob.
And one of those going to be payments.
We also do down 36, one for me.
Have you thought it didn't stop us with only two remaining.
Our strong balance sheet comfortably minutes this most that profile.
It's ready.
And then maybe do into one.
Liquidity over 100 interest and the 7.2 million brothers.
Finally, with major support because seafarers and store employees health and wellbeing and get.
All of our rest of the sailing previously servicing outsiders.
Once again, we would like the thing or oil our seafarers for their commitment and dedication and efforts throughout this stuff videos.
Going forward, we'll maintain our determination to preserve our strong financial position in which we kinda yada as we believe that they might get signs out there for them I get that he bomb.
Once the probably the nice thing embark is fully.
The way.
I bet at least events in more detail out of financial and operational results.
Well now open today questions.
That's a reminder, if he would like that's good question. Please press Star then the number one on your telephone keypad again that is store one on your telephone keypad well pause for just a moment.
Pilot Kunaev Austin.
And your first question comes from.
Chris Wetherbee.
Hey, guys. Good morning games on for Chris I, just wanted to start with.
Some balance sheet and touch on some of the refinancing I just wanted to get a sense of like where are you were.
There are additional refinancings that you'd like to pursue uh-huh, our you'd be comfortable with what you've done so far just kind of when they get a sense of what sort of the taught <unk> capital structure is right now or would goals you sort of working towards sort of see where you are in that process.
Yes.
Look I say, hey, look we have quite a.
A copy.
Good it very quickly this refinancing a certain facilities or most of the major.
It was done a and B a late last year.
And now you can be.
Let's see what do you suppose payment schedule for the following <unk> spend will we see quite comfortable because we see some substantial liquidity, we can't comment they twentytwenty into anything you want it brings blue payments.
Hey.
Having said that of course, we shouldn't forget about them.
The debts to us It does show is 62%, which is supposed to be quite comfortable.
Okay, and so the company, we feel that the amount. It just seems up that we are very fine up this position the schools.
Yeah and.
Kind of wanted to get a sense of.
The preferred within that context is there anything that you think that you could opportunistically do there was that actually something that you're also.
It could you be do bigger question.
Yes, just also wanted to touch on the preferred are you comfortable with them, where you are right. Given the current environment is there something that you could do opportunistically there, possibly be purchased at a discount or they are fairly high cost of capital. So just to get a sense of if there's anything you could do on that side of the gap.
Well.
Yes, we're quite comfortable with it sounds like being or a nobody said something like a very good or a let's see its obsession.
Okay.
Okay, if we could be company and they I think we should continue to maintain the main all balance sheet for me, let's say next age.
Got it and then.
Looking at Opex I know, it's up about 3% year over year as he said just wanted to get a sense of it that is the right run rate to think of moving forward or if there you have any opportunities to move it down or if there's anything sort of onetime ish in there simply trying to get it outlook for.
Opex per day.
Equally opex or I mean, the dope, except we always said, but he's saying that it's not compatible we said say about a lot of the dump I need to that he wants to be spending and beat it is the Olympics and they took the expenses we put everything together and are you. She does not that we should see that we did there.
It's something that's not going to like dockings in that installations. So during a that's pretty well get despite the fact that the we've had the and he said Corbett 19 outbreak would we be did without people in that China send.
Well, we're quite comfortable in the next quarter somebody we expect to be speaking probably would go down because a lot less.
But I don't <unk> and does the I've done a thing these are the ones that we haven't broken I'm old reducing opex.
During this period <unk> show why things that are well quite copy and.
Even in combining shouldn't be so I'll be is.
Yeah got it, but and I think you'd called out that.
Per day, excluding Drydocking expenses was roughly a 4000 4003 or $4285.
If we look at that moving forward is what should we be thinking of that particular number being and also your ability to reduce that through some of your initiatives just trying to get an ex drydocking and ex delivery expenses <unk> trying to get a sense of what that might do across the next couple of quarters.
Yes, I see that that we should they look quite figured between 4000 and a 4200. This is a reasonable assumption on on that well now they approach.
And Ah well that then you need to don't Bob, but we certainly did I will say they'll get expenses.
As we said.
Got it and then if you're thinking about sort of <unk> or do you look at the moment like what does your expects expectation for rates. The is it do you think it'll be slowing gradual Curt maybe mid next year do you think it'll be sort of sharpened point didn't you could actually see some level recovery in this year just trying to understand.
The outlook for the sort of shape of recovery if you will.
Yes.
This is poppies, so what we expected that several of.
Yes.
Well I don't watch the breakeven 11 small.
Yeah, Bob like even limits, but.
This uncertainties now with the.
You can nobody knows how do we see good luck.
You've got a second around timing already that's about scene.
Oh, maybe.
Well use.
And not will depend on but you've seen school not get normalized.
But nothing we will have a very strong blended rent you want.
Of course, this up my own ball Newbuildings will be much less than a well this is.
My we'd be back on talk show, we believe that are well when we we should have a good next 18 months.
We don't have ER and new supplies from the on that.
[noise] data okay. That's it for me thank you.
Thank you.
Your next question comes from.
[noise] a gentleman has gone.
Yeah, Ryan Thank you.
Excellent we have two questions for me so looking at the kind of yeah.
Yes there.
Good.
No you repurchase different because like 3.3 million shares weighted average price of that.
Oh, you're looking to be more conservative now we're still looking at share repurchases at these levels.
And you quickly.
My agenda is fairly comfortable we are we done by me and that's why the from time to time or repurchase programs.
Okay.
And I think that a into the future me.
I got even talk about assessment or we may continue to do such a bad just broke I'm sure.
Before I get about you need to be ought to support the stock price.
Sure.
And the average price, but he says a repurchase.
[noise], we could you be.
The average Christ shares that are going to repurchase.
[noise] is.
Yeah, we have not to call good job, but it's not huge quite close to what the levels I mean, it's below the level so bad stuff today [noise].
[noise] nothing if I know.
You know.
[noise].
[noise] around let's say there.
[noise] I don't.
No.
So maybe one on a Monday night.
Okay.
So similar to the price to offer.
For the vessel.
Okay can you provide some color on the recent zones and the rates for Capesizes I'm kind of gets that goes into that kind of going forward.
[noise] against size is a they'd start improving or the last two or three weeks.
We expect we expect the that assumed that market.
To get all about 16000 Boes a day the sport market.
That often does not depend so oh wall. So all that plant the now although they may not be deposit.
It is that there's no big surprises there.
We can maintain Ben Saitz built the what gets saying that the mines, we don't get any big somebody small mom from Barclays.
Think about that we'd be any good he's the volume of but I was really on idle ball moving to China.
Yeah, we see that the the demand is down.
She loved the prices going up vital ammonia is more about Uh huh.
I'm not saying at all.
We expect the ball your mobile, but I see that night football Yep.
I get substantially up in the markets.
Although the movie so basic I knew that usually a pickup in demand that we.
The Pos stopping after the Chinese new Yep.
The net.
Yeah because of that dynamic if there wasn't any I mean should be up.
Yeah, you can we see now enjoys a two months' delay.
My mother, yes.
I expect to see a very strong Gol July due December.
BT helpful that all the idle but they.
Sure.
Okay, and then I guess last question with all that.
The reason now that were in almost in the June <unk> guidance from second quarter compared to the first quarter in terms of that daily <unk> I know for the first sporty that not only 100, where do you kind of you the second quarter.
Yes, Yeah, we don't give back guides us outside.
We expect that they've been you said well that would be better about not visible.
Oh Wow okay.
And that's what it sounds good thanks, so much.
No.
Your next question comes from Richard Diamond.
First a great job.
In a difficult.
Environment and you know when the markets Hot it's easy to.
Hi, good but a this is a.
True demonstration of back character.
My question is Oh, my impression is that mining involves you know by its very nature, social distancing, maybe people are wearing masks and they're far apart. So.
It looks like the mines should be able to reopen and Purcell, but I wondered if you could just given some commentary what you see happening on the ground Purcell. Thank you.
When you mean on the ground you may not in the various bought Saddam there was no on the ground in Brazil, what's happening today.
What is your answer I mean, I mean, there shouldn't I mean today.
So we sold the reports over the weekend or that will set some plausible mines in boss really not the because somebody agrees that or you know <unk> 99.
Kits by some what gets them, but I don't think there's we lost a very long haul already bought like gave it he or she wants is up down or their products on the would not be affected it maybe there would be list don't be though.
<unk> and that's more than a lot of good swash Hamas exports out much Tonight I don't think we wouldn't see any great no law change.
Well all of <unk> Oh.
Most lots fall fall export.
<unk>.
Well, yeah, they will not be optimistic and we also think.
Bodies the market.
And gapes would not been lost.
In volume stalls buzzy, they some of them now.
I think we've seen that must see big.
It's a these were given a chance that not all but a dual shape, but most the.
Market, so last year, the several hobbled lots yeah, we enjoy that age old stuff I suppose on one bus but they.
On the on the gauge sizes.
Yeah, we would not be is a is that.
Sovereign age I'll just be follows up on most of the big a whole guilty.
We will be ready copy with there's not much.
I, Yeah sure sign them and thank you very much.
Thank you.
Gentlemen, there no further questions I will turn the call back fill duty.
[noise], so and this concludes our confidence going forward or the gigawatt hadn't inc.'s. Thank you very much longer participation in the window for one.
[noise]. Thank you. Thank you bye.
I think he told me. This concludes today's conference call. Thank you for participating you may now disconnect.
[music].