Q2 2022 Safe Bulkers Inc Earnings Call
To have been 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.
Factors that could cause actual results to differ materially include but are not limited to changes in the demand for dry bulk vessels competitive factors in the market in which the company operates risks associated with operations outside the United States and other factors listed from time to time in the Companys filings.
With the Securities and Exchange Commission.
The company expressly disclaims any obligation 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 thereto or any change in events conditions or circumstances on which any statement is.
Base.
And now I'll pass the floor to Dr. Paris. Please go ahead Sir.
Good morning, Lucas about bodies President Mike is welcome to our conference call and webcast to discuss the financial results for the second quarter of 2022.
The second quarter was a good quarter as we see in slide three.
So it's the 40 <unk> per share and we maintained our dividend policy or five cents per share.
We are different than many of our peers.
The free cash flows not only reward folks had a whole place holders through the dividend policy, but in part it will create intrinsic value.
An extensive fleet expansion program.
And Youll boots, which comply within that amendment regulations after 2025 mode.
Our phase III.
Emissions.
We also comply with more stringent Nox regulations.
Having taken delivery of the first <unk> MD flashers and wed expect the next delivery of the post panamax, namely climate and expect the next few days, we have already seen in the first vessel.
<unk> of <unk> due to impressive savings in fuel consumption.
Tend to compete on this basis without sleep, but the most important is that all of this all of this with deliveries. We think the next couple of years.
Timely and relatively at low prices substantially lower.
Valuations David.
We are maintaining and comfortable leverage in North Africa in the orbit of our fleet scrap value about $6 8 million reversal.
The average age of our fleet, although the <unk>, Inc has stabilized in about 10 five years due to our U S strategy and the delivery of the units.
Our liquidity and capital resources, our maintains strong us at.
$294 8 million, which together with a contracted revenue of 390 million provides flexibility our cloud management and capital allocation.
I also need to highlight the importance of all the scrubber investments in this feel expensive.
Environment.
We have recently sold an additional scrubber to learn about case.
The operation of scrubbers in our fleet further enhances our earnings capability.
During last quarter as we see flight coal will continue.
Certain moves that improve our capital flat in other words, we redeemed 57 3 million of Hep C. C. In preferred dividends, 8% of this amount on an annual basis.
And have initiated the buyback program acquiring from the market 1 million shares.
Of course, all the main focus is lean operations in this inflationary environment.
As a result of our daily operating expenses were $4981 an hour based G&A expenses, which include the management fees.
<unk> hundred $82.
We believe that the increase of fuel prices are reflected in several opex cost components, such as transportation costs.
<unk> cost for tickets for crude changes holdco with overall repatriation costs may gradually reduce non opioid addictions.
For dry docking to chip in it.
Opex I'd also affected as the cost of shipping environment, a great update sets us a friction based applications.
<unk>.
Moving to slide five we would like to highlight additional points that make our management unique compared to our peers.
One of the 10-Q tell by companies with 60 years plus experience at public since 2008, we enjoyed the benefits of a sound corporate governance.
With the alignment of our CEO and chairman of the board of directors fully Scott Yuan, which is achieved through his shareholding percentage of about 40%.
For our management with 40% ownership, even during the extensive loan sector to market conditions and the other supplier bases of the past.
The reverse split we know that.
And consistent.
We have avoided capital increases unless you can get a credit for all our shareholders.
Glad to do that I think.
Examples we have zero percent commissions of starting <unk> and throw the management static relations, we achieved lower average.
Selling commissions to third parties.
As I said compared to the market's down debt, which is 5%.
Our actual skin on the game is what differentiate us doing so shareholders are 40%. When we think we'll be at the low market and create value for our shareholders. When sets will be donors have appreciated by 20% to 25% to date or when we manage <unk> versus <unk> plus <unk>.
<unk> or when we do own such put in actions to make our company stronger.
Yes, that's what we see today is that in the future. There is no holders in the levels of the past short we remain cautiously optimistic despite the global instability caused by invasions energy crisis, or inflationary pressure and well prepared in terms of environmental regulations.
Turning to slide six our second <unk>.
The report was issued on July 25th focused on corporate governance.
Governments support of local communities with scholarship programs supported seafarers during probably distinctions training of personnel.
Since you want immediate investments in 11 phase three new books ahead of BS and vitamin a break upgrades in 2020 to an existing fleet of $2 2 million.
Use of about 2000 Boes of biofuel by end of May 2022, and meeting one present pipe and 50, plus this year too.
Reported also of 35%.
Eli data for 2021.
Please take a look at analysis sustainability reporting our website are staking shows reductions to investments is what differentiates say bikers.
Moving on slide seven productivity for a senior piece of quarterly results.
Our results.
As a general comment our 2022 second quarter profitability exceeded second quarter of 2020 on profitability by $10 million a significant increase of 91 6 million and net income of 53 million.
We have achieved an EBITDA of $66 5 million.
And maintain significant liquidity and capital resources.
I mean, we have redeemed in April 2022, more than a quarter of our eight referred SaaS improving our weighted average cost of capital.
Have a significant cash flow visibility with over $360 million of charter contracts.
Our financial strength as it related to our EPS of <unk> 40 per share enabled.
Enabled our board declared a dividend of <unk> five cents per common share boating, but at the same time, we are renewing our fleet with silicon and phase III Ubuntu relocated the corporate issue.
Moving on to slide eight highlights have been key figures of <unk> buckets.
All numbers.
Which are presented here.
And more specifically on the right graph.
On the right graph, we compare our liquidity.
I'll start with Capex.
We've got the resources.
Okay.
94, 8 million consisting of $159 4 million in gas and enhance $55 4 million in available revolving with Michigan facilities Institute comedians against outstanding Capex reached $319 5 million in relationships.
Remaining 10 phase renewables so enjoyable.
And the second comp case to be FY <unk> numbers.
We have already paid us advances for Capex 58.
$9 million.
Ill talk about liquidity capital resources, we thought Thats reported and an additional borrowing capacity. In addition to seven unencumbered existing this is at one 790 will be appointed David.
On the left graph we can.
Our debt against scrap value is against contracted evolution gas.
Our cash was $159 4 million and our contracted revenue excluding scrubber benefit was $693 7 million net of commissions from noncancelable spot and period time.
At the conference.
Against.
This is against our outstanding consolidated debt.
$132 6 million.
$100 million Bureau unsecured bonds.
We need to see that our feedstock value of $359 3 million, which is present in the last call. It is calculated on the basis of our aggregate lightweight tons and is calculated.
65.
Got it.
Great tone is.
In the same order.
Yes.
Moving on to slide 10.
And the dry bulk market data were presented development.
The commodity index, which got at least that.
At a five year high.
The index reflects basic commodities and future prices.
Example, NMC agriculture based.
<unk> met our 10, industrial maintenance, which represent leading indicators for CPE assay results have been growing collection of plenty in the world will have weakness it added sense of crisis.
The updated forecast of IMF.
Yes.
Downgrades the expected growth of global GDP to two two.
Two lower from $3 six and.
At $2 nine for 2023 lower three six.
In China, Lockdowns and the deepening of real estate.
To be revised downwards by <unk>, 1% with major global Spillovers in U S. Lower growth earlier. This year, you used household purchasing power and tighter monetary policy.
Downward revision of one four.
And the real GDP growth.
With compound great.
With us from the warrant innovate and tied to the monotherapy <unk>.
Global inflation has been revised up due to the war introduced a multi prices increases the built in place.
And then <unk> as well as in getting supply demand imbalances as it is anticipated to reach 66% in advanced economies and nine 5% in emerging markets and developing economies this year.
Revision for global slump of Central AP.
In 2023.
The submission any monetary policy is expected to affect global output.
Specifically increased by two 9% the projected dedicated Chinese GDP stands at three 3% despite the zeal Colby.
<unk>.
You see a bounce and then four 6% for 2023.
We note an increase in <unk>.
GTO and Chinese iron ore demand, even national carbon emission has to be met and distribute domestic oil production exit in mainland China immediate the participating.
<unk> expense at seven 4% and is anticipated to reach six 1%.
<unk>.
Forecasted global dry bulk ton mile demand is expected to increase only by suitable to pertaining to <unk>.
Supported by the industrial materials like iron ore and coal and also both agricultural commodities.
Let's turn to slide 11.
Look at important set of market conditions.
The top graph the capes market for the year to date continues to be healthy.
H lately have been volatile driven by the commodity dynamics, which we have analyzed the affordable trade agreements get presenting the headquarter is about 25000 for 2022.
Similarly for Panamax as seen on the bottom graph <unk> is about 20000 for 2022.
The prevailing commodity market is likely to support the faith market throughout this year.
In slide 12, we present our.
Deliveries.
Look I have one more delivered in 2022, which is $8 million.
Which is the delivery of one post panamax, namely NV glad with respect and extra days. This.
Is the second delivery this year the FASB the MTS vouchers. It comes how much we can make.
We have five newbuild deliveries in 2023, three in 'twenty 'twenty four and one at the beginning of 2025.
A total open label Phase II.
Which will maintain two buckets of its fleet days at 10 eight years in 2025.
In the bottom graph, we present a record low order book and expected go forward yes.
Yes, absolutely utilize each vessel sizes.
Fundamentals are strong as we witnessed a historically low order book.
And the shortage in.
Capacity, which is covered by other sectors August mainly container ships.
Slide 15, we focus on intrinsic value creation as a result of our investments in scrubber technology currently installed on the ATM.
<unk> of our vessels.
<unk> prices for the last months, which is more evident in todays market.
As Bruce with very low sulfur fuel oil.
<unk>.
The differential at high levels, which is that related to increased revenues from the scrubber fitted vessels and essentially the sharpened heightened high five in Singapore, that's at about $690 per tonne in the futures market the balance for 2022 stands at about two.
Dollars per tonne.
Annual average consumption of a bolt on a stream so that hasnt dependability.
Okay.
18th Scrubber fitted Mrs implants club gain potential is about 86.
$6 million per annum in aggregate as of <unk>.
Okay.
At 250 Austrian spread.
Let me note that we have agreed that this was carrabba's installations for our Capesize class vessels. Furthermore, the company's pursuing a visit update during dry dockings in the amount of $2 2 million for 2022, reaching.
Which enforced environmental upgrades, including application of low friction banks.
Installation of energy saving devices.
Concluding this section on slide 14, we will.
Right, good EPA that with our existing liquidity and contracted revenue with our existing order book ahead of the competition and with our strong financial position, we shipped the ground for the dealers.
Where environmental regulations.
The competition, who we.
We believe that we are well prepared.
<unk> will continue.
Opportunities either emulation cloud operations into applicability or in relation to new technologies and flip the viewer.
Now, let me pass the floor to obviously a focus as you mentioned are more bullish.
Okay.
Thank you Luca and good morning to everyone.
Let me start with our quarterly financial highlights on slide 16.
During the second quarter of 2022 we operated in an improved charter market environment compared to the same periods of great run with lower expenses and increased revenues, which also include earnings from scrubber fitted vessels.
Quarterly net revenues stood at 19, $691 6 million bolus upfront.
Up from $81 6 billion for the same period of last year.
Net revenues increased by 12% compared to the same period in 2021, mainly due to the increased time charter equivalent rate a result of the improved market.
Assisted by the additional revenues and by outage copper for good vessels.
The daily time charter equivalent was $25050 compared with $21098.
2021.
The net income from the second quarter of 'twenty, two at $50 $3 million compared to net income of $42 4 million during the same period in 2021.
Our daily Opex was 4900.
<unk> robust retro sport.
$874 last year and the same number excluding dry docking and delivery expenses were about $4648 per.
<unk> 4559 photos.
Daily vessel operating expenses marginally increased by 2% mainly affected by increased repair and maintenance expenses and also introduced globally kind of costs.
All in Opex and G&A for 2022, which we believe is one of the most competitive compared to our peers.
So about 6000 $360 million.
This includes all our dry docking and <unk> expenses as well as our directors and officer implementation.
Our adjusted EBITDA for the second quarter of 2020 through increased to $66 5 million compared to $54 1 million from a same period implemented two antibody.
Our adjusted earnings per share for the second quarter of 'twenty two.
42.
Thanks.
Calculated on a weighted average number of $121 6 million shares compared to 31.
During the same period of 2021.
The weighted average number of 109 7 million shares.
Let me conclude on slide 17, with our quarterly operational highlights for the second quarter 2022.
And in comparison with the same deal that you won.
We are proud of a very satisfactory financial performance of 4% per share and the Companys board of director.
Declared a <unk> <unk> dividend per common share.
During the second quarter, we took delivery of our first aframax.
We believe that.
Will provide us with substantial operational and commercial advantages for the Mastercard.
We would likely have a size of the company is maintaining.
The cash position of about $167 million.
Family Circle in July .
And another $140 4 million in the board of inherited since secured commitments.
<unk> liquidity.
The $300 million provides us with significant firepower.
Furthermore, we have contracted revenue from our noncancelable support in periods of time charter contracts.
Over $360 million net of commissions.
And if.
If not above exclude the look include scope revenue.
We have also additional brewing capacity in relation to seven debt free vessels.
One second content also nine new builds upon their delivery.
We believe that our strong liquidity and low leverage will enable us to be flexible with our capital.
While still rewarding our shareholders.
Our press release presents a more detailed financial and operating results and we are now ready to take your questions.
Thank you Sir.
As a reminder to ask a question you will need to slowly press star one on your telephone.
Please standby, while we compile the Q&A roster.
I show. Our first question comes from the line of Omar <unk> from Jefferies. Please go ahead.
Oh, yes.
Good afternoon.
I think thanks for the overview I think it was pretty good in detail I did want to ask about.
The buyback you guys announced last month, the $5 million buyback.
He put it to work pretty quickly right, so like 1 million already repurchased.
Mark has done fairly well here over the past several weeks how are you thinking about buybacks from here.
Stock's gone up to potentially add some more to go but I just wanted to think about.
Or would you have to say regarding potential further.
With the work here on the buyback.
We have.
<unk> announced that we did buy back up to $5 million, we have done.
We've said $1 million.
This buyback is done.
Although significantly when the market you sell very low end.
Because.
We believe that the.
We believe that our stock.
Okay.
Undervalued.
We expect that.
The program will continue and we make a size this buyback program from time to time, when we feel the guidance Tonight.
Thanks.
And I guess in regards to the dividend.
Obviously, we started that last year.
Thoughts on how you see that that number I'm, just asking where you have.
Obviously, you know this but I think.
The majority of your U S peers have a formulaic payout.
So the dividend based off those quarterly earnings and not saying you have to do that but just wondering.
Are you comfortable leaving the dividend as it is on a nominal five.
For the quarter can you see yourselves migrating to a formulaic payout similar to some of the other players.
If we have that.
40, <unk> and we take a decision of a.
A dividend quarterly.
It seems I mean of course, we would like to see.
A steady dividend, but I would like to remind you that if we add one of the few companies that have an extensive.
A medicine programming, new built and so we direct our.
Three flows to.
Several points. So the one is the investment because we really want to invest in phase three vessels, which as we have already seen from the operation of the first one will.
It will be much more profitable if we can the company compared towards the other vessels, we have because it been substantially less fuel and this is something that you can read the data has shown.
The portal, which is presented in our website.
The siblings of what we want to reward our shareholders.
We pay a meaningful dividend.
It's a unique items at this point there is not.
Good.