Q2 2020 Safe Bulkers Inc Earnings Call
Please continue to stand by feel confident well begin shortly.
[music].
Funding by ladies and gentlemen, and welcome to the say focused company.
You discussed the second quarter 2020 financial results.
Today, we have witnessed from say focus chairman and Chief Executive Officer Mr.
President Dr. Lucas Bob.
Chief Financial Officer Mr. Constantino.
I.
Officer, Mr. Younis Fortuna.
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<unk> followed by a question answer session at which time, if you wish to ask a question you wouldn't each press star one on your telephone Keith [noise].
<unk>.
During this conference call if you need and he said the engine on the conference call. The presentation piece contact capital link to one.
6175.
I must advise you that this conference is being.
Before we begin please note that this presentation contains forward looking statements as defined in section 20, Sevena Securities access 19th.
As amended on section 21.
Securities Exchange Act, just 19 cents useful.
Concerning future events, the company's growth strategy in measures to implement such strategy, including expected vessel acquisitions and entering into the time.
Words, such as he expects intends plans believes anticipates.
Estimate.
Reactions of the wage and similar expressions are intended to identify.
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Well the company believes the expectations reflected in such forward looking statements a reasonable no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks on a based upon an embedded assumptions and estimates which are inherently subject to significant.
On contingencies.
Many of which are beyond the control if the company [laughter] actual results may differ materially from those expressed or implied by such forward looking statements.
It could cause actual results to differ materially include such a not limited to changes in the demand for dry bulk.
[laughter] Sunny days in the market in which the company operates so they may seem to that.
Operations outside the United States and other factors you got any time in the Companys filings with the Securities and Exchange Commission. The company expressly disclaims any obligation to undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the company.
These expectations with respect statue any change in events conditions or circumstances.
These statements these days.
I now pass the floor jumped up on risks. Please go ahead.
[noise] [noise] morning, because my body, but I didn't know she thought I guess.
Welcome to open in school and webcast. The disgusting I know some results for the second quarter was granted Blaine.
I would like to stop my thinking all she fars score they commitment and dedication that throughout this because.
The difficulties for crude changes continue and I would like to see that in many places the situation.
You see several people think on board would extend thedeal supporting this little bit Asian supply teachers.
Oh results when a second quarter, what negatively impacted by the that shooting Saturday.
I think oh they.
And number of taught us a dr. Paul Dircks, that's hard to expire in the previous period.
That's being replaced by lower to talk to it.
Besides that.
He is a small increase you know I'm going to get that anything you. You described but then they fit into that vision of the U.S.
Well, what I Wouldnt expect is deducted from the revenue.
What are the calculate the PC were substantially increased due to basically producing high of course, but I guess [laughter] assumption of course, it's going up [noise].
Oh, that's usually these uncertain environment is to maintain somebody really piece, which was 111.3 million I should realize that that's they'd be doing.
He's got to be if we shouldn't execution with going up I was just because of negatively or a strong school that we will allow us to duplicate music Moca windy situation.
Moving to slide three we were able to develop six fights yet.
Since the one thing I bet, it's Jason Niobium does but we should it be sent a substantial change you know trotting fortis.
Together with three gapes, we've got fixed about one quarter out.
I'll lead in medium to long time charters.
She <unk> total revenue on the basis of interface is about 15.7, New York and importantly cities that liquidity is provided.
[laughter] second point is that it's out that says that we [laughter] in July.
Hi, it's not that how Ya 15.8 thousand bumped up to those she may live including 75000.
Let's move into analyzing the market conditions.
Slide five we are presenting it somebody said of the gate income. So much is something that age that's probably by the Baltic exchange between drink drinking drinking 19.
The corporate 19 affecting tend to have seasonality coincides with the lower walked over the shipping market.
Therefore, following a low first couple of the idea that might get started improving after may and nothing to lie at about 14000 foot subset analysis into about 4000 foot capes.
Well, they suddenly come to the Mcus upgrading that easy enough good thousand and Gibson Division of 12 20.5 thousand.
Main reasons for that he got any of them I get the city sumption over they cannot make up the PBT up to the locked down and especially the assumption China, providing for increased volumes, so vital node Holden greatest blades.
Thank you for what the implementation of the humorous sign that they deem. He is an important factor for the shipping markets. We used the public 19, and he makes sense it.
[noise] that means just like six we provide the morning.
In relation to Chinese you quoted me to got economic recovery.
You didn't they look down period in Q1, China's economy, Qantas contracted by almost 7%.
Exceptional because I don't think activity and he's got the measures to stimulate Chinese economy have led to the V shape. It he ghobadi with a GDP growth in June two of about 50.3 0.2, They said.
Model that.
Shown it bottomed out saying this is that something together, it's a show continued to be got it.
According to Chinese National Bureau of Statistics data shows that the the industrial output grew by 4.8. Besides the here yet in June.
Not that likely to about minus 15% getting we looked out.
The fixed asset investment.
Actually selling by 1.2% as compared with a decrease of a boat <unk> minus 50% during Q1.
The fixed asset investment in manufacturing is down by 11.7%.
Compared with the degrees of a boat [laughter] minus 50% getting cure.
Yeah actually effect of these.
He got ladies and expected increased volumes of Chinese seaborne dry bulk commodities.
[laughter] settings like number seven of the get out in the June 20, <unk>, what's on their major dry bulk commodities June 20, iron ore imports increased by 16.8% Muslim up and 55.3% young here.
<unk> <unk>.
Generally jumped 20, I don't know increased by 9.2% doesn't assume you didnt thinking 19.
Oh got somebody who didn't major or minor leading layered into good markets remain unchanged seems like it's upsize. It introduces data set going to upgrade <unk> grain volumes.
He made by the sitting on at least a bottle should go this is shipments of would need to what I see the civil heavily year basis.
Lumpiness investors the first couple of but he at minus so she did slow a target for success.
Then we would get up pretty sensing studies, one cents important settlement quote and the lignite digital dumped imports increased cycle. Once it's been sent them up a month and by then.
Well in Columbus, and yet on here.
Well before the deal from generally don't blame imports increased by 54.5% as compared to the same beauty to strengthen 19.
The lower definitely since English once that is implicit Philadelphia.
The June 20, so you'll be imports, a by 19% muffins and by 71.4% year on here.
For the data from January to join in piece it increased by 17.7% that's compared the same theater deploying to 90.
That's it isn't the important done this would be dealing with what we've been 19 sports important guestroom is showing in the month when relating to book like we'll be able snowbirds then to the here.
Furthermore, according to market relation increased exports would range from us Gulf already scheduled a spot limitation on page one crazy.
Well, it's up Lysa sizing slide number eight and build the move things a bit remained unchanged legally no new orders.
That's one day the order book for Capes does that 80% of the total fleet and six Mrs for Panamaxes.
Okay, [laughter] evenly spread we think blanking think drinking water.
Sleeping sleep, that's all cancellations what was 19 I think creating extensive delays.
I believe that emotionally locally they any these topics are complying with him in a minute ago Relations man I scrapping activity when do more do you shouldn't gundy senior Butler this be getting recovering from Golden I think.
Scrapping activity is expected to increase [noise].
I think don't going is that I'm under discussions for their mission to cannibalize issue, we're not able to you all.
Definitely the next like another nine we make a big presentation on the status of the goods market.
Well look down somewhat weaker decisions have is usually the month listen you split that products asking about look don't he's he's only been why do we go into the future market indicates that I guess, but I guess, but I just would be covering 20 cents you won it didn't didn't get any too.
The spread differential between beautiful inside the they LOE says, it's gonna node, which is a blind fuel and 3.5 up a sense. The I said, but who are loyal they show called Hi type that's not massively.
If you just kind of indicated high five will be the gathering in excess of Layby Goalless Incidentally trains one and then Btwenty two eventually they together with global economies. The food restoration of Mobiuss isn't a subsequent the English well doing dresses.
Similarly, who is this I didn't have the was pretty cold and 19 letters.
Turning to slide 10 in the Baltic. So then about and that in minutes based socially school should be policies, we undertake significantly by the middle investments by retrofitting Scrabulous and the ballast water treatment systems on our fleet.
Already invested 58.2 me, you're not something that be drinking granting and how that's what we didn't I describe us out of slightly scheduling dog and 36 ballast water treatment systems by the end of the third quarter into JV size more ballast water treatment systems in the last could I thought it would have been strong.
On the bottom stable with he made the expected downtime in days for Q3 in Q4 22, and he noted while she's done at least we pay projections.
Like 11, it sounded as if you'd like to pick out ways. It's Amy fiscal stimulus pockets may see and it'd be shape might get to the gathering.
Got a declining more than <unk> didn't get grant you on won't.
We don't going good Tonight discussions are not able to you all this see but eight more please no place today sitting vision that them at the Gsix man [laughter] dropping a baby.
Look I don't know this yet, but we must go to <unk> and this its fluids. We may have a we may help slow all your monthly bone age in the second quarter of 22, Andy US global of Downspace. Eventually the bid prices. He got any may lead to a thought it why that high five spreads the friendship.
Oh, well getting like Brad, let some of that I see bogucki pick out ways.
You know these old liquid exceeding it kind of 10 million, which gives us flexibility there, but it's not on stable is uncertain market environment.
What kind of entity, but fell into eight loans thatll be a charges during the second quarter evidence of accident relationships. We have taught us how would I be do come.
Oh and by the with investments in is and maybe this will both technical expertise.
Oh smooth.
Smoothened debt profile for the next two years in evidence of let us, but I've been support.
No I wouldn't bus the blow dog Chief Financial Officer, well said he was the locals who will present the quarterly financial results.
Thank you look I sat there good morning, everybody. Let me continue with our liquidity slide 14, we charge. So yeah that would you like when it went away so about $111.3 million.
On shifting away from $9.9 million and gosh in front of time deposits and $19.4 million humanistic cars.
In $2 million I mean, nothing on the unsecured revolving credit facility.
Well comedy probably not a large portion of our debt.
And your slide 15, we present, our repayment schedule as of June 2nd rented right.
It goes corporation.
Well spark long payments to the rent expense due at the management team.
Which was originally scheduled for this year in.
When do you want.
Responding we operated sterno, creating it's one of the payment schedule for granted went the antiquated when do you want and maintaining the same carbon and so are there whiting CUDC got to actually be during this is for free.
Moving on to slide 16, because they're not an orderly daily office, which stood up $4799.
Let's start unfortunately.
Daily GE and they would still though.
<unk> was up $374.
I think if not better for more topics and DNA for.
Second third quarter at a blended rent they were $66 a $130.
They want to saving our focus on lean operations.
We believe that this figure for most opex in DNA when competing offers dropper is one of interest is lower.
Given the fact that are we going on we include in our opex or not drydocking expenses and the knowledge and they are director's compensation.
And not expenses related to our administration.
[laughter] bids on the slide 17, we present, our quarterly D C, which do not a 8009 before dawn us.
Clearly affected by corporate 19, lessors, Unfortunately, orbitz it stood at $4709.
Let's move to slide 18, we unfortunately financial highlights for the second quarter like addressing compared to the same below the 29.
Net revenues increased by 5% $49.3 million from $45.5 billion.
Despite the it and I think we've we've tried to mark if you look organizing the fixed yes. They did you do you have this is not having as anybody else going up if we didn't vessels the additional vessels, which was the LIBOR.
Maybe this year.
During the second quarter went to do anything we operate within a week, it's out there market environment compared to the same people didn't recognize.
This was evident from the U.S.P.C. over 3009 or not.
Compared to $11907 doing the same <unk> 19.
Not that I've tried to convert entered in previous periods expire anyway. It moves by contrast, with no what's out there that higher.
However that the revenues were supported by the benefit from start to see the this is despite the user right right before actually on between heavy fuel oil, but I am sure.
Which one do you do they always price war.
And by your revenue contributed by our movies Delever.
Well good expense is substantially increased due to increased resonated well eastern expenses higher loss from might get serious did you mean oil price war and one assumption of course for described if he does this.
Daily vessel Opex increased by 2% 4799.
Compared to 4006 continues to see though that's for the same period last year.
Where they live restaurant operating expenses, excluding dry docking and be the related expenses decreased by 2%.
Before talking about $207 for the second quarter, <unk>, Randy compared to $4253 for the same <unk> Black Knight.
Our adjusted EBITDA for the second quarter of demand that they believe the $6.3 million compared to 21, New York for the same feeling like Nike.
Our adjusted loss per share for the second quarter blended family was 16 cents I can make it in a way to dive in its nominal 100.2, 0.1 funded and 2.8 million shares.
Compared to adjusted loss per share to watch and getting a shame Peter maybe 19.
Calculated on a weighted average nominate over 101, one female shares.
The only thing representation on the slide 19.
We present, our quantification data in Providence really gave those compared to the same field of went to 90.
Like there for US I think this be other we have worked extensively despite the tough partially fund this yes.
How quickly they thought domain lump and build on tottus, including six five year charters I think from northern cash flows.
What do you find out and that's part of what they really like 20, providing us with additional liquidity.
And then we took a step further to push back to when it's ready to do anything legacy loan payment schedule.
This year in next year.
Hi, Mystore 19, scrubbers would just one remaining.
[noise] harvest from balance sheet, it softens up never not a small federal fine for the next two yes.
We did deal $111.3 million.
Lastly, we took measures to protect oxy fans and shown employees.
When being.
And get all the aggressive saving continuously servicing our charters.
Once again, including like the thank Archie fast for their commitment and dedication and therefore, it's a lot this stuff we do.
Our press release presents and mortgage finance kind of operating results and not wanted to take your questions.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star and one on your telephone I'm weight. So your Oh to makes it message advising your line is open. Please state. Your question last name before asking your question. If you wish to conceal request. Please press star <unk>.
We will take effect question from the line of Chris Wetherbee Citi. Please go ahead. Your line is now as Ben.
Hi, This is Lee in for Chris Thanks for taking my question.
So just starting off on the the rate side. It does seem like as you guys mentioned that there's kind of at least increase in some of the shorter term rights and you've got you've been able to obtain the spot market. So I'm just wondering how sustainable you think this increase is it that you had any sense of what was positive and negative factors will be better.
Patch outreach.
That's right.
Yes, the Hello.
Morning.
Yes that it's as we speak a in the last.
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Increasing sizably and the right now the spot market.
Is that fair performing or outside on the pleasant at $5000 today.
Since we have Ah.
The majority of our ER ships in the spot market, we are able to stop short of these Ah.
The increase.
Very very quickly.
So we I didn't have very good position or who enjoy this improvement of the market, which as we've said in previous calls we wed expect the expecting it to stop after China announced a big stimulus plan.
And is happening now with a very strong role playing the export in South America. The last three months and now with a very strong.
Good day next fall from U.S. golf and from August West Coast.
Got it and you think that that's a recent increase annual rates will kind of lead to a.
Sustainable increase in vessel values I know that they've also been covered a little bit recently, but obviously has remained fairly low levels.
Yes, we think that are less as well you always thought affected by increase their freight rates.
And we think that ER. This wouldn't be the case again I think the that is total shuffled from mall banks over the last a year or so and the they are there to finance. The project is more technical problem slots or technicalities up to that involved.
With the acquisition of vessels at the moment you know that.
ER difficulty to conduct inspections on behalf of the onus pretty pretty pretty bachus inspections because of this study Sean. So onboarding vessels. This is the only negative thing otherwise I thought I think that.
Awesome freight market this improving things that are prices.
Well you stopped vettest from to improve as well.
Hi, and a one other question I had was I know you guys have discussed of increasing voyage expenses that was just I think in place, but they also did step up from the first quarter second quarter as well a lot about a student reducing expenses and also for rolling off sites and that's why don't you will provide some sense of where do you expect that expense lines and.
Oh and that will make or the year should we expect it to kind of be at the first half averaged around 17 million or should it be stepping down.
Hey, look we'll get to expenses have increased.
In the past four.
Three reasons, mainly because the one was a they evaluation of a a although she was that a couple of both of which Ah well. It was nice clothes shoes that are markedly it was quite lower in the previous months due to the fuel oil a war the sick.
Well the was repositioning of a basis as we said and that if it was.
A.
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Right no. The fuel that is used for a scrubbers is is included in the eighties flow yet.
Expenses.
Okay.
Reported nibble use expenses.
But it does show that's why we will maintain the some some how high year.
Well, yes expenses in the future.
Yeah, One park, which is a huge Tuesday.
What I said snowy prices.
Believed that the it will not yes. It does show much in the future undisciplined <unk>, which is basically a very positioning will be lower which was it may be lower the last but we just due to the recognition of.
A sure Scrabulous they will get expenses will remain.
Got it. Thank you and just finally I know you guys have a $100 million debt maturing in the remainder of 2020 answer it twice I. Once I'm just wondering if you get a touch on the.
The finances.
Yes.
Yes.
Hey, if would you be repeat the question a little bit slower because.
Some noise.
Apologies about that so I'm, just referring to slide 15, where it shows your debt repayment profile and it looks like you guys have 100 million, Rick maturing and they're made or 2020 and 2021 and I was just wondering what your plans are to refinance these payments.
This is because I'm not too much movies that schedule is done.
We don't have any that's maturing study of took us the booking.
This year at our next year.
But there are intended to it independently.
The first a much would be I believe it seems twentytwenty city.
Alright, well take the Starbucks electrocution, but I appreciate you answered all my questions.
Your next question comes from the line of Randy European of Jefferies. Please go ahead and ask your question light on clearly.
Hi, gentlemen, it's Randy I get into from Jefferies How're you.
Hi.
Okay got you know you booked the six long term charters second quarter.
Oh, that's more of the same are you going to let to lock in additional longer term charters are now that the spot market has improved focusing more on that the short term charters in spot going forward well most the rationale for the five year charters on the last couple of months.
Look.
That I shall not alone the five year charter was up a we'd get the good premium in the first two yes above the current spot market at the time, we did the fix shows.
So this is a very good total cash flow injection the during.
An uncertain time, a with the until we get over these said Sunday Mikkel call. It 90 August when fuel whatever that will be the polishing, though that the market. This improving is too low paying into some.
More video chop, that's when we get the opportunity of course they cannot.
All be five year shot at this all the same structural could be one or two year charters.
As we approach or or or exceed Blake given elevens it makes sense.
So chalk that up this short short of level should put it.
It will then make sense.
Yeah, the goal or six months ago to chart, the one or two yes video thought the eight nine or $10000 today.
Now that the way out we've done a secure numbers Saddam though $13000 today. It makes sense for the company to try and the with the with appropriate the charter there's still a secular sum up video charters.
Oh, we have a many ships in the spot market then that we've done or we can play a more balanced that take a more balanced though.
Approach.
Okay.
And then following the the swaps weaker.
That's very attractive here for green for five years, what is your weighted average interest rate terms at the.
Premium or the margin as well as what your swapping it out.
Yeah.
The other its oh this looks nothing we've done so far is.
And it would be below half how person.
So we fix that owns a 55% of bar.
<unk>.
Yep and then the margin.
We don't disclose a.
Yes.
Okay.
[noise] fine.
[noise], what do you get your the number of figures or not I guess spot the it's nothing to report but.
Is there, but it's about the each about a two let's send it Elizabeth just kind of 2% about a two than the average.
Okay. So all in all and interest expense sounds like it's below 3%.
Yes, yes, yes.
Yes.
So that it's a very comfortable level based we say, we can make a our four climbing.
Yeah No correct.
Oh I got my final question.
Now that you have kind of the recall has done in swaps and what have you know what is your first use the Clos are you looking about curves heard that purchases you know those are yielding.
11, 12%, but having revolved so is that a is that an option do you have some authorization. There what is your appetite for the preferred share repurchases.
The most important thing Guy thing is the there to keep a strong go up cost position in that in the balance sheet.
Because a there's a lot of uncertainty I kid were optimistic about the market them the stimulus, but there's no guarantees or we have already.
Second threats from all this brought on a wider so this is not the we don't know what though how it will be the lab developed in the winter months.
They are I'm more loans down so part of some locdown showed other things so we intend to keep a stronger cash position.
And if possible no use part the little due to the leverage or to de lever at Ace ER and the pre pay and there are some ah installments over their launch.
We we want to focus right now on all on handling their situation with the with the with the all with the 19 and probably 20.
With that at least for ship all little damage to companies operations right now we face a very big Charlotte's all companies out of phasing and I think this also may may may help a their freight market were facing a lot of delays in various parts of the world with.
The growing them out this week changes so cruel with the testing of the grow with delays imports to bear before they test that group.
Also we the their limitation of the ports around the world, where we can make crude changes.
Because all stricter regulations and the then no not really not really feel for flights.
International flights, we also I'm very disappointed.
To sum pointed to shave dot Oh, the onus I'm not having the support of chop that is when it comes down to.
Oh, social responsibility into that well being all ball ship at UBS.
We have to face all the cost ourselves, which I mean is their lease but yeah. We have lots of corporation by many chart. The this including major ones. When there is a need to make a small deviation from the incentive to root in order to disembark our crew and put on board. So.
Well, that's cool even the even beacon names big shop that is not the they should have a supported the such a small deviations of course I told US close they are not a willing to to collaborate and losses.
Because they need their clinical fostering the destination and the they are creating a lot double hospital and a lot of problems to the owners to make such small deviations, which are primarily due to combat shown at the resumption humanitarian business for outgrew I think this is at the time ball for the shipping into.
Actually it will explode, one day and it will hit all of US it making all of US one day, what is happening right now and it's not good for the major shot that us only to put it in their reports in their reports in the end the and mentioned that social responsibility that they haven't the.
Well, how well they feel about though there was a that well being of the crew and the all the people associated in that in that in that chain novel, All see transportation.
And.
This and this.
These are they ship out of sub they stayed in they are a in they are but also sent in there and in they are both of ethics. They don't pass it onto they are chartering departments water existing whenever it all noticed asking to make make a small deviation.
For all four crude changes I think there there's a lot of people perceive that market, we all need to sit down together and the cooperate in order to save.
Time bombed out there's going to hit that will top transportational chain.
So I have seen only two or three.
Shot the Saturday and understanding that problem and the operating the good names like a car Gaylord Bondi they are doing their best losses.
Some other names that they are really well really disappointed and I cautioned that these are the biggest problem of the shipping industry.
The next six to 12 months people how about the fault.
People they have to make.
And therefore.
Losses owners in all data this that proves out there on board more than 12 or 14 months to get off to get the relief and to go back to their homes and the new growth to be able to join the vessels otherwise.
Ah things will explode I'm afraid then.
I want to say these things that are you know we all have to.
Who face our social responsibility is not only the owner himself.
He can do it we need that population level that part is that kind of bonus the chart that us everyone.
Got it okay and how much is outstanding on the preferred right now.
Is it still the 137.
Look at Liberty families. It part of it part of our US It got that's that actual and there we will continue to maintain it put me foreseeable future.
Okay simply because we feel that the having one of the best operating expenses in market. One a very comfortable mine. It's been a fee and are also NV and a reset dividends it with quite competitive.
Yeah, I think that they need right now is liquidity and said I show US Mr. Agenda should just before that two points here. The one is liquidity needs in this low parts of the market, which can be huge I suppose show me the market.
Second wave heat or I said soon if.
There is an improving their market and the second point <unk> de leveraging.
Because we always say that the we intend to the next three to five years to bring today net debt of the company close to their see by your so basically we have a specific staggered of our leveraging policy and we also mean gearing up liquidity I think these she said actually before a good.
Company for the following years, it's is more important to bring that down tool that scrap value of the vessels.
Dual let it be only the pretty fair, which is a equity perpetual or liquidity and can be rebate that any time in the future when a freight rates really all that perform all that got and the situation. So I think this time wouldn't be the next few years will get.
The opportunity as the world trade increases and I'll say well freight fleet is not increasing will give they'll portion, but the market's tools stopped or reducing not prepared.
For the time being there is no blunted users prefer.
And I'm, just asking me outstanding amounts on the preferred.
Yes. It is one how did that that'd be 7 million.
Got it okay.
Okay, just making sure well that's it for me Thanks again pellets.
Thank you.
There are no further questions at this time, so Abraham back to the speakers for closing.
I now hand back to the speaker Mr. claims off the call do you have any closing remarks.
Thank you very much for attending these are all.
During the summer month of August and.
Okay and stay safe all of you and new hope that the and we believe that will exceed better marketing the second half a frenzy brand safety Dawn.
That does conclude our conference for today. Thank you all for participating and you may now disconnect.
[noise] [noise].
[music].