Q4 2023 Safe Bulkers Inc Earnings Call
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call on the fourth quarter and December 31st, 2023 Financial Evo. We have with us Mr. Polis Ajuanu, Chairman and Chief Executive Officer; Dr. Lucas Vampari, President; and Mr. Konstantinos Adamopoulos, the Financial Officer of the company. At this time, all participants are in a listen-only mode.
Thank you for standing by ladies and gentlemen, and welcome to the Facebook News conference call on the fourth quarter ended December 31st 2020 to finance or neither.
We have with US Mr. Luis <unk>.
Chairman and Chief Executive Officer.
Dr. Lucas.
President and Mr. Konstantinos at a multiple of <unk>.
After the call.
At this time all participants are in a 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. Please press star one on your telephone keypad and wait for your name to be announced.
Operator: There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. Following this conference call, if you need any further information about the conference call or about the presentation, please contact Capital Link at 212-661-7566. I must advise you that this conference is being recorded today, February 13, 2024. The archived webcast of the conference call will soon be made available on the Safe Bulkers website, www.safebulkers.org. Many of the remarks today contain forward-looking statements based on current expectations. However, actual results may differ materially from the results projected from those forward-looking statements.
Finally, this conference call if you need any further information on the conference or on the presentation. Please contact capital link at 2126617566 I must advise you that this conference is being recorded today February guarantee 13, 'twenty 'twenty four.
The archived webcast of the conference call will soon be made available on the C C.
Baseball cruise website, www Dot sleepwalkers dotcom.
Maybe I'll give you marks today contain forward looking statements based on current expectations actual results may differ materially from those adults with Jackie and builds forward looking statements additional information concerning factors that could cause the actual results to differ materially from those statements is contained in the fourth quarter ended December 31st 122.
Operator: Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter ended December 31, 2023 earnings release, which is available on the Safe Bulkers website, again, www.safebulkers.org. I would now like to turn the conference call to one of your speakers today, President Dr. Lucas Van Bury. Please go ahead.
Which is available on the Spacewalkers website again www dot seek brokers.
I would now like to turn the conference calls with one of your speakers today.
Right back there who choose Vanguard. Please go ahead sir.
Okay.
Dr. Lucas Barbaris: Good morning, I'm Lukas Barbaris, president of Safe Bulkers. Welcome to our conference call and webcast to discuss the financial results for the fourth quarter of 2023. During the last quarter of the year, we operated in an improved charter market environment compared to the previous quarter. The company continues to maintain a strong capital structure while implementing its strategy of gradual fleet renewal, which leads to a decreasing fleet average age. Our ongoing efforts to upgrade our existing vessels, coupled with our fleet renewal, will enable us to remain competitive while reducing our carbon footprint. Yesterday, just before the issuance of our earnings press release, we announced the sale of our oldest vessel, MVE Maritime. This gives me the opportunity to focus on our investment strategy, which takes into account our existing EEC policy and prepares our company for the new, more stringent regulatory environment in relation to carbon emissions. On slide 3, we present the environmental regulations timeline.
Good morning, and Lucas Buddy Buddy potentially look save bucket.
Welcome to our company's call and webcast to discuss the financial results for the fourth quarter of 2023.
The last quarter of the year, we will be at the Canadian charter market environment compared to the previous quarter.
Company continues to maintain a strong capital sexual while implementing each I think youll see that.
At least two decreasing fleet average age.
Our ongoing effort to upgrade our existing ambitious coupled with <unk> will enable students naval actually maintenance therapy, while reducing our carbon footprint.
Yes, really just before the Asia until about adding specialty niche, we announced the sale of our oldest vessel M D.
This gives me the opportunity to focus on our investment strategy, which takes into account.
<unk> and <unk>.
For the new more seats in the regulatory environment in relation to carbon emissions.
In slide three we present environment.
And I think that regulations timeline, we have been trying to be ahead of the market, but its double by placing face see orders when all your phase III, Malaysia, 16, and 10 older vessels and more recently by placing Autodesk waterflood fuel basis.
Dr. Lucas Barbaris: We have been trying to be ahead of the market, for example, by placing phase 3 orders when only phase 2 regulations kicked in, and selling older vessels, and more recently, by placing orders for dual fuel vessels. You can see on slide 4 the challenge that the dry bulk shipping industry faces as we move with steady steps towards 2030. Advanced Phase III energy efficiency vessels are only a few, creating operational and commercial advantages for the early movers.
You see slide, Florida that instead of dry bulk shipping industry faces as we move with steady steps still goes to <unk>.
Advanced the phase three energy efficiency versus how long <unk> acute creating operational and commercial advantage for the early movies.
Dr. Lucas Barbaris: We moved to early, and in slide 5, given our recent deliveries, we have maintained a very competitive average age, and we intend to do the same in the years to come with the remaining orders. All our actions should build up a green fleet at Vandals, as presented in the top right graph of slide 6. Our fleet is comprised of eco-vessels built after 2014, conventional vessels which have been environmentally upgraded, and phase-three lubricants, which now account for 20% of our fleet. Only 6 of our 46 bases in our fleet are scheduled to be upgraded.
We moved to elite eight slide five.
Though recent deliveries we have maintained a very complete ababa in adjacent we intend to do the same in the years to come with any meaningful degree.
All our actions to beat up but has gained fleets advantaged I speak I didn't even get top right graph of slide six.
Our fleet is comprised of eco vessels built up their 2013 conventional vessels, which have been antivitamin there'll be upgraded and phase three will be switched now account for 20% of our fleet.
Can you speak to about a 46 basis, you know fleet basis.
Scheduled to be upgraded.
Dr. Lucas Barbaris: On the bottom graph, a synopsis of our fleet renewal is presented, with 12 vessels sold in the last few years, having an average age of 15 years old, and 16 vessels acquired, 9 of which are new builds and 7 secondhand, with a lower average age of 9 years old. Let's now focus on the market. In slide 7, there has been significant volatility in the cape market. It's worth noting that all 8 of our capes are period chartered with an average remaining charter duration of about 2 years at an average daily rate of about $23,600, with the market currently at about $20,500. On the Panama side, the chatter market remains stable.
On the bottom graph a synopsis of our fleet had a UL is presented with television show to the last few years, having average age of 15 years old and 16 vessels flying nine of which new lease and sale in the second half with lower average age of over 90 years old.
Let's now published on the market.
Slide seven there has been significant volatility in the capes market, it's worth noting that all eight of our gate I'd see it started with an average remaining charter duration of about two years.
Average daily rate of about $23 $6000 hit with the market guidance at about Gladden deep 5000 on the Panamax side, the chartering market remains stable and expectation as dictated by the paper market is optimistic.
Dr. Lucas Barbaris: The expectation, as defined by the paper market, is optimistic. The interesting point here in slide 8 is that the supply side is relatively weak, creating upside potential after the Chinese New Year holiday. The total dry bulk order book stands at single digits.
Interesting point here is slide eight is that the supply stack, the relatively weak creating upside potential through the Chinese new year three days.
The dry bulk order book stands at single digits. We remain we remain cautiously optimistic about the medium term prospects to create market in the coming years is due to this healthy order.
Dr. Lucas Barbaris: We remain cautiously optimistic about the medium-term prospects for the freight market in the coming years due to this healthy order book. About 25% of the medium-sized fleet is older than 15 years, so the effect of fleet age and environmental regulations is expected to accelerate scrapping. We are one of the very few driven bulk companies with a phase 3 order book ahead of our peers, timely placed at lower than the present market values, signifying our intention to compete on the basis of operational and environmental performance. Moving to slide 9, we present the development of the CRB Commodity Index, reflecting the basic commodities futures prices, which represent the leading indicators for shipping, including energy, agricultural, and industrial networks. We continue to witness the rise in intensification of geopolitical tensions, noting the Middle East region, the Red Sea, and Ukraine. We witnessed greater than expected resilience in the U.S. and several larger emerging markets and developing economies, as well as significant fiscal support in China. Inflation, falling faster than experienced in most regions, is in the midst of unwinding supply-side issues and restrictive monetary policies.
About 25% of the medium sized fleet is older than 15 years, that's the type of fleet age and environmental regulations are expected to accelerate scrapping.
I need to be versus kind of more efficient design and to at least know that 82% about really step I need speeds versus 40% of the global fleet, which means that they can compete better in the covenant limit of <unk>.
At the market.
We had one of the very few today by companies with the Phase III order book.
Next time, we placed at lower than the best in the market values, signifying our intention to compete on the basis of operational and environmental performance.
Yeah.
Moving to slide nine.
We present the development of this year to become more of a ceded reflecting the basic commodities commodities futures <unk> futures prices.
And believing in it is shipping including energy.
And that job mix, we continue to weakness.
Oh, the intensification of the geopolitical patients for noting the middle East region.
Again, we witnessed the greater than expected to resiliency Jewish and fit it into several lunch in emerging markets and developing economies.
That's a significant piece that's important in China.
Inflation falling faster than externally is most in most regions.
In the midst of unwinding supply side issues.
It is $50 monetary policy.
Dr. Lucas Barbaris: The January forecast of IMF rates matches the projected global GDP growth for 2024 to 3.1%, as the global inflation projection for 2024 stands at 5.8%, lower than the previous forecast. According to BIMCO, the forecasted global dry bulk demand growth stands at a 1% increase for 2024. Yet, the battle against inflation is not clearly won, with inflation expectations well anchored in major economies.
Really focused on <unk> the project the persistent global GDP growth for 2024 to three 1% as global inflation projection for 2020 for Sunset that five 8% lower than the previous forecast.
Turning to <unk>, the forecasted global dry bulk demand growth stands at 1% increase for 2024, yet the battle against inflation is not clearly wanted with inflation expectation will uncork in major economies.
Dr. Lucas Barbaris: In China, the IMF's January projection of GDP growth for 2024 stood at 4.6%. China's recovery seems stable, even after taking into account fiscal support, even though Chinese inflation is near zero due to the existing domestic difficulties, such as the elevated debt, weakness in the property sector, and structural factors such as aging, which weigh on growth. On the other hand, India's growth is set to remain resilient, despite the global challenges underpinned by robust domestic demand, strong public infrastructure, investments, and a strengthened financial sector, as we said in the IMF's January projection for a 6.5% increase in GDP for 2024. Concluding our market view, on Slide 10, there has been increased industry-wide volatility driven by tight monetary policies and rising geopolitical conditions.
In China, the IMF generally predictions of GDP growth for 2020 close to that four 6%.
And have you got any seems stable even after taking into account the fiscal support the dividend.
Though this benefit based on <unk> due to the shift in domestic difficulties such as the elevated debt weaknesses in different sectors, such as auto such as aging which weigh on coal.
On the other hand Indias growth is set to remain resilient. Despite the global challenges underpinned by a robust domestic demand.
Strong public infrastructure investments and strengthen financial agitated.
January prediction for a six 5% increase in GDP for 2024.
Concluding our market view you'd flagged that there has been any increased industry wide volatility driven by tight monetary policies and the rising fuel.
And patients the science of just inflation and forecast of stable growth for the next few years demand for technological efficiencies create opportunities for those willing to envision as a bug is has done. It is evident that there is yes, <unk> becomes increasingly important for the years to come.
Dr. Lucas Barbaris: There are signs of deflation and forecasts of stable growth for the next two years. Demand for technological efficiency creates opportunities for those willing to invest, as Safe Bulkers has done. It is evident that ESG adherence will become increasingly important for the years to come. Environmentally efficient bleach may lead to a two-tier market with differentials in earning capability. We believe that the combined effect... The aging of the flea, the low order one.
Environmentally efficient bleached may lead to a two tier market with differentials in adding capability, we believe that the combined effect.
Of the aging of the fleet, the LOE or business.
Dr. Lucas Barbaris: Lowest selling stakes of the new regulations and the GAG targets will favor fleets comprising efficient businesses tightening the market. I will conclude on slide 11, where we will present certain of our key characteristics which can save us from our fears. The key fundamentals are our strong alignment of interests with a significant percentage of management ownership, the comfortable leverage, the ample liquidity and contracted revenues, our track record, and, of course, the quality and competitiveness of our fleet. Our operating model is positioned to capitalize on the new Morse-Fritz and environmental regulations with assets focused on environmental competitiveness and ESG strategies. At the same time, we are committed to rewarding shareholders with meaningful dividends while actively building our future fleet competitiveness with a substantial fleet expansion. Our Chief Financial Officer, Kylianos Adamopoulos, will continue the presentation. Kylianos, the floor is yours.
Lowest state.
Each of the new regulations.
Thank God we.
We favor fleet comprising of efficient business tightening the market.
I will conclude and slide 11.
And second about key characteristics.
From our peers, the keeping the minutes that our strong alignment of interest with a significant percentage of management ownership the comfortable leverage the ample liquidity and contracted revenues our track record and of course, the quality and competitiveness of our fleet.
Our operating model is positioned to capitalize on the new more CDN environment of regulations with assets focused on environmental competitiveness and ESG strategy.
At the same time, we are committed to reward shareholders with meaningful diminish while actively building our future competitiveness.
Substantial fleet expansion.
All right.
This activity, our Chief financial Officer.
Multiple Moshe we continue the presentation.
Thank you Luca and good morning to all other than I have notes during the fourth quarter of 2023, when we operated in a weaker charter market environment compared to the same period in 2022 with decreased revenue as you know which are the highest degree of spending from CIBC Division.
Konstantinos Adamopoulos: Thank you, Lukas, and good morning to all. As a general note, during the fourth quarter of 2023, we operated in a weaker charter market environment compared to the same period in 2022, with decreased revenues due to lower charter hires, decreased earnings from scalable feed diversions, decreased operating expenses, and higher interest expenses due to higher interest rates. Let's focus now on our liquidity, our cash flows, and our capital structure, which is presented in slide 12. We are maintaining a comfortable leverage of around 57%. Our debt of $516 million remains comparable to our fleet's scrap value of $341 million, although our fleet is only 10 years old. Our weighted average interest rates stood at 6.3, 6.31% for our consolidated debt.
Increased operating expenses and higher interest expenses due to higher in their face.
Let's focus now on our liquidity or cash flow.
Capital structure, which is presented on slide three.
We're maintaining a comfortable leverage of around 37%.
Our debt of 516 billion remains comparable to our fleet scrap value of $341 million, although our figures only yes.
Our weighted average interest rate stood at $6 80, 671% for our consolidated debt. This is inclusive of the opening up low margin with a portion.
For 100 million euros being fixed up two at a coupon of 295% with another unsecured five year bumps.
We have paid 85 million for capital expenditures as Glenn mentioned in relation to our existing vulnerable to the remaining capex was $223 million.
Our liquidity and capital resources stand on strong at approximately $612 million, which together with the conduct of revenue of about 270 million provides flexibility to our management and capital allocation.
Konstantinos Adamopoulos: This is inclusive of the applicant's below margin, with a portion of 100 million euros being fixed at a coupon of 2.95% with an unsecured 5-year bond. We have paid 85 million euros for our capital expenditure requirements in relation to our existing order book. The remaining CAPEX was $223 million. Our liquidity and capital resources stand strong at approximately $312 million, which together with the contracted revenue of about $270 million provide flexibility to our management in capital allocation. Furthermore, we have additional borrowing capacity in relation to 8 existing unencumbered vessels and 6 and 7 new builds upon their delivery. Moving on to slide 13, our quarterly financial highlights for the fourth quarter of 2023 compared to the same period in 2022. Our adjusted EBITDA for Q4 2023 stood at $50.7 million, compared to $56 million for the same period in 2022. Our adjusted earnings per share for the fourth quarter of 2023 was $0.25.
Furthermore, we have additional borrowing capacity in the nation to eight existing unencumbered vessels and six and seven new builds upon their delivery.
Moving on to slide 13, our quarterly financial highlights for the fourth quarter of 2023 compared to the same period of 2022.
Adjusted EBITDA for the fourth quarter of 2023 stood at $57 million compared to 56 million for the same periods in 2022.
Our adjusted earnings per share for the fourth quarter of 2023 was 25.
This was calculated on a weighted average number of $111 6 million shares.
Compared to 29% during the same period in 2022 and that was calculated in a weighted average number of 118 point.
9 million shares.
We will be then to slide 14, our quarterly financials.
Highlights for the fourth quarter of 2023.
Compared to the same period of 2022.
During the fourth quarter of 'twenty to 'twenty three we operated on average 45 magically vessels ending and average.
I think we will end of $18321.
Compared to 44 vessels.
And then average TCE of $25 $78 during the same periods in 2022.
Our net income for the fourth quarter of 2003 was $27 $6 million compared to net income of $54 $9 million during the same period in 2022.
Konstantinos Adamopoulos: This was calculated on a weighted average number of 111.6 million shares, compared to 29 shares during the same period in 2022, and that was calculated on a weighted average number of 118.9 million shares. We present slide 14, our quarterly operational highlights for the fourth quarter of 2023, compared to the same period in 2022. During the fourth quarter of 2023, we operated on average 45.93 vessels, earning an average time chart equivalent of $18,321, compared to 44 vessels and an average TCE of $21,078 during the same period in 2022. Our net income for the fourth quarter of 2023 was $27.6 million, compared to net income of $34.9 million during the same period in 2022.
In conclusion in slide 15, we present, our recent newbuild deliveries based on our financial performance the company's board of directors.
Five cent dividend per common share.
I would like to emphasize that the company is maintaining a healthy cash position.
Working capital facilities and at their own boarding capacity.
Altogether, our combined liquidity and capital resources north of $300 million.
Moreover, we have contracted revenue from our non constant over to sports and PTO time charter contracts are more of a $240 million.
And this is net of commission said before and describe the revenue.
Additionally, bordering capacity in relation to eight unencumbered existing ships and seven.
On the delivery.
We believe our strong liquidity and are comfortably levered us will enable us.
To expand the fleet, while rewarding our shareholders.
Thank you and we're now ready to accept questions.
Okay.
Thank you we will at this time, we will be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
Information Paul will indicate your line is in the question queue you.
Konstantinos Adamopoulos: In conclusion, on slide 16, we present our recent new build deliveries. Based on our financial performance, the company's board of directors declared a 5 cent dividend per common share. We would like to emphasize that the company is maintaining a healthy cash position. The Evolving Ready Facility is an adrenaline-boring capacity.
You May press Star two if you would actually move your questions well. Thank you for participating using speaker equipment. It may be necessary to pick up your handset before pressing.
Sure.
Yeah.
Our first question comes from the line of Omar Knockdown with Jefferies. Please proceed with your question.
Thank you Hey, guys good afternoon.
Just had a couple of questions maybe just on the last point you made right before the Q&A session. Just wanted to ask about uses of free cash in this market environment, clearly <unk> was with a with a stronger period than we anticipated or at least a lot of us anticipated <unk> is off to a solid start.
Konstantinos Adamopoulos: Altogether, we have combined liquidity and capital resources of north of 300 million dollars. Furthermore, we have contracted revenue from our non-cancelable spot and period-time charter contracts of more than $240 million, and this is net of commissions and before any scrapped revenue and additional bordering capacity in relation to 8 unencumbered existing ships and 7 new bids upon their delivery. We believe our strong liquidity and our comfortable leverage will enable us to expand the fleet while still rewarding our shareholders. Thank you; we are now ready to accept questions. Thank you.
There's a lot of disruption globally.
So that's in general as you think about things.
How are you thinking about the uses of cash at this point or at least have the main use of cash is it to lower debt at this point or do you still see opportunities for further expansion beyond the current scope.
Yes, Hello, good morning to you and look the situation depends on how the market develops at the moment, we see the market. This is.
Stephanie are quite positive.
Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue, for participating in this and speaker equipment. It may be necessary to pick up your handset before pressing the button.
For the next yeah, it'll show an even more intensive identified was Lucille show America economy doing really well.
So the car they yourself casuals b would be.
Split for new buildings with literally new onwards on we don't exclude the sale of all the ships are to be replaced by.
More modern ships. So it's not only the new builds of the economy, there will be more modern ships in the fleet will be some share buy back I know, we didn't do in the last quarter.
Omar Nocta: Our first question comes from the line of Omar Nocta with Jefferies. Please proceed with your question. Thank you.
We didn't have that we didn't have enough evidence of the market.
But for right now we have enough evidence that the market is performing at a well know they do social all Nevertheless, we don't want to increase the leverage from the current percentages as the new ships are coming in so we want to keep it around the current levels hold.
Omar Nocta: I just had a couple of questions, maybe just on the last point you made right before the Q&A session. I just wanted to ask about the use of the free cash in this market environment. Clearly, 4Q was a stronger period than we anticipated, or at least a lot of us anticipated. 1Q is off to a solid start.
Omar Nocta: There's a lot of disruption globally. And so, just in general, as you think about things, how are you thinking about the uses of cash at this point, or at least the main use of cash? Is it to lower debt at this point?
Once that's up to 758% are so so.
We will use cash for all of these things.
Of course, everything depends on how the market will perform a bit at the moment the signs are positive.
Polis Ajuanu: Or do you still see opportunities for further expansion beyond the current scope? Yes, hello, good morning to you, and look. The situation depends on how the market develops. At the moment, we see the market turning quite positive for the next year or so and even more in 2025 as we see the American economy doing very well. So the use of cars will be split for new buildings with fleet renewal. We don't, we don't exclude the sale of all the ships to be replaced by more modern ships, so it's not only the new builds that they are coming, there will be more modern ships added to the fleet. There will be Right now, we have enough evidence that the market is performing.
Okay.
And you know all the geopolitical.
Situations.
Uh huh.
Panama Canal.
Is this are they just drops and then.
No no no comps.
Come so much surplus panamax are passing now through the canal.
Coupled with the problem of the Red Sea and.
And I need to say he has got the same bulk as well as one of the first companies to declare as Charles said is after the first sketch of the merchandise sales and beginning December that we will not stop going through that then let's see simply because we don't believe that Oh semen.
All of our Oh, what a cute work this inevitable de recognize cement us keep workers ought to be used for transporting throw military areas. So like we don't trade in the Black Sea for the last two years, we decided not to trade that lets see.
Polis Ajuanu: And we will also reduce our leverage; we don't want to increase the leverage from the current percentages as new ships are coming in. So we want to keep it around the current levels, one-third, 37-38%. We will use cash for all these things. Of course, everything depends on how the market will perform. At the moment, the signs are positive, and you know all the geopolitical situations and www. Flydreamers.com Panama Canal, is reduced drafts and no... No Kamsa Max or Postpana Max are passing through the canal now, coupled with the problem of the Red Sea.
For the foreseeable foreseeable future and this I want to save that is very well received by all the crew members.
Our ships.
We control all the spot ships, we have in the spot market is solid decision, but also I'm pleased to say that.
The majority of our charter is accepted me definitely this this condition.
So it's very important this company to be doing business with the a rated charter list.
Who share the share there.
Let's say their responsibility against the semen.
Polis Ajuanu: And I need to say here that Safe Bulkers was one of the first companies that declared to its charters after the first strikes on the merchant vessels in the beginning of December that we would stop going through the Red Sea, simply because we don't believe that our seamen, who are key workers, and everybody recognizes seamen as key workers, are to be used for transporting goods through military areas. So, like we haven't traded in the Black Sea for the last two years, we decided not to trade in the Red Sea for the foreseeable future. And this, I want to say, is very well received by all the crew members of our ships. We control the spot ships we have in the spot markets; it's our decision. But also, I'm pleased to say that... The majority of our charters immediately accepted this condition.
Avoid at least for the next two three months until things clear out.
It's not good to participate and confidence and we say that cement our key workers.
Like we did during Covid and nobody was accepting all seeming to get off either in Singapore or in China or in any other country in there what we have to deviate ships too many loved the time to disembark all Shimon.
Shoppers, one little thing deviation cluster or calling close split it especially have to take the ships the money and the only country in there was that that loud save corridor for seeming to be decent bump up that time in the first half of 2021 type of a small country.
I'm not saying this because I come from science, because well located at Oh, we have a lot of headquarter in a cycle, but I have to admit that there was the only country that allowed or a change of growth.
Polis Ajuanu: So, it's very important for this company to be doing business with A-rated charters. Kushair...Kushair... Let's say the responsibility against the semen to avoid the Red Sea for at least the next 2-3 months until things clear out. It's not good to participate in conferences, and we say that seamen are key workers, and like we did during COVID, and nobody was accepting our seamen to get off, either in Singapore or in China or in any other country in the world. We had to divert ships to Manila at the time to disembark our seamen. The only country in the world that allowed safe corridors for cement to be disembarked at that time, in the first half of 2020, was Cyprus, a small country. I'm not saying this because I come from Cyprus and because we have our headquarters in Cyprus, but I have to admit that it was the only country that allowed... change, of course, through a safe corridor, because it's a small country where the government is pro-business and can take fair decisions very quickly.
Through a safe corridor.
Because it's a small country if not the government is pro business and can take further decisions very quickly.
The same applies for the let's see until this situation when the short without charters should not pressing ship owners to send the cement food that's C, which are the same and they're not there to watch is the drones flying over the ship oral switch off the lights of the vessels passing through.
The idea, let's start it off with the Navy's as soon as possible. This situation. So we have safe passage and again thrilled that lets see.
Thank you Paul is at the very very good context.
Hum on everything as you kind of related things a bit towards the COVID-19 situation with the crew changes I guess in this market.
It's been I guess, two ways, where I mean, you obviously much closer to it than we are but there's clearly a spot contract and then there's the vessels on time charter is there.
They're a deviation in terms of how charters are looking at transiting to the Red Sea at least from your lens and your ships or are you still having vessels that are in your.
Polis Ajuanu: So, the same now applies for the Red Sea. Until this situation is sorted out, charters should not be pressing ship owners to send seamen through the Red Sea, which the seamen are not there to watch if the drones are flying over the ship or switch off the lights of the vessels passing through the area. Let's sort it out with the navies as soon as possible this situation to ensure a safe passage again through the Red Sea. Thank you, Polis.
Control.
Operationally that are on contract or that are on time charter those ships still in some cases being forced to go to the Red Sea.
By by your customer.
Yes, or no or no lower time charter ships I'm proud to say that al Sharpton has some big names. They all cooperated. Despite there were some cost involved they cooperated we let them know where lead that we will not accept to go slower military Eddie all that was old and we even had.
Omar Nocta: It's a very, very good context for everything as you kind of related things a bit to the COVID situation with the crew changes. I guess in this market, there are two ways where, I mean, you're obviously much closer to it than we are, but there's, you know, clearly a spot contract and then there's vessels on time charter. Is there, is there a deviation in terms of how charterers are looking at transiting through the Red Sea, at least from your lens and your ships? Are you still having vessels that are under your control?
The charter on a road from the continental to the parties that halfway through the Mediterranean tend to ship around and when.
The Cape town, and I'm proud to say that with all of these people will reward them with more business and more ships when with time charter for one year charters or we say from the start we don't close to let's see the charters are happy to accept them. They find the optionality. So we should space with respect to the people who do their job and the people love the they have.
Families send them the semen, they're not military personnel and even if we use got from both dollar shifts.
Omar Nocta: operationally, that are on contract or that are on time charter, are those shifts still, in some cases, being forced to go through the Red Sea by your customer? Yes, on all our time chartered ships. I'm proud to say that our charters have big names. They all cooperated, despite the fact that there was some cost involved. They cooperated. We let them know early that we will not accept to go through a military area or a war zone.
Yeah, that's a good against pilots they have not put against strong and rocket.
So it's a very important milestone and now of course I believe it will not take long to be solved it will not be a month or one year. When we have more like two or three months and.
You know then what the Navy is having the area that's taking care of motto center when the economy, though to safely.
Polis Ajuanu: And we even had a charterer on a route from the continent to the Far East who, halfway through the Mediterranean, turned the ship around and went via Cape Town. I'm proud to say that with all these people, we reward them with more business and more ships. When we time charter for one-year charters, we say from the start, we don't cross the Red Sea. The charterers are happy to accept, and they find the optional routes. So we should pay respect to the people who do the job. And the people, they have families, and they are seamen. They are not military personnel. And even if we use armed guards on board our ships, the armed guards are no good against pirates. They are not good against drones and rockets.
Stop busing again, hopefully in the next two or three months.
Yes.
Yep definitely okay that makes sense and then maybe just a final one for me and it's just more of a follow up to make sure I understood correctly. So that you know in terms of the share buyback that you haven't yet put to work clearly it was at a time of transition and uncertainty, but given how things are at this point you have the conviction.
With respect to the dry bulk market that now is the time to buy stock.
And look yes, we believe that at this time because now we have clear signs of the market is pushing up yes.
Okay. Thank you I'll turn it over thank you.
Thank you.
Thank you and as a reminder, if anyone has any questions. You May press star one on your telephone keypad to join the question and execute.
Polis Ajuanu: They can do nothing. So it's a very important matter, and, of course, I believe it will not take long to be solved. It will not be a matter of one year. More like two or three months.
Our next question will come from.
The lineup of clinic mines with value investor's edge.
Please proceed with your question.
Polis Ajuanu: And you know, the world's navies are in the area. They are taking care of matters. And when the corridor is safe, we will start passing again. Hopefully, in the next two or three months.
Good morning. Thank you for taking my questions you've provided ample commentary on your fleet renewal approach, but I was wondering could you provide some insight on the reasoning for bulk.
Omar Nocta: Yep, definitely. Okay, that makes sense. And then maybe just one question for me, and it's just more of a follow-up to make sure I understood correctly. So in terms of the share buyback that you haven't yet put to work, clearly, it was in a time of transition and uncertainty, but given how things are at this point, you have the conviction, at least with respect to the dry bulk market, that now is the time to buy stock. Look, yes, we believe that it is time because now we have clear signs that the market is pushing up. Okay. Thank you. I'll turn it over to you.
Are there any.
Instead of Cape sizes is it because of pricing or because you have a relatively more positive view on comes from axis.
What did you say because the line was not good.
Why are we investing the mid size vessels.
Yes, instead of States Tigers.
Yes, yes, well not the Capesize trade that always we're feeling over there yeah little bit uncomfortable with that with the with the type of vessels after realizing one commodity, namely iron ore and a little bit of coal we want it to be more versatile and be able to trade on more routes.
Omar Nocta: Thank you. And as a reminder, if anyone has any questions, you may press star one on your telephone keypad to join the questioning. Our next question comes from the line of Clement Morins with Value Invested Edge. Please proceed with your question. Good morning, thank you for taking my questions. You've provided ample commentary on your fleet renewal approach, but I was wondering if you could provide some insight on the reasoning for focusing on ordering mid-size vessels instead of cage sizes? Is it because of pricing or because you have a relatively more positive view on cancer management? What did you say, because the line was not good? Why do we invest in mid-sized vessels? Yeah, instead of fake sizes.
And I haven't noticed pro let's say China China.
Depending.
Depending on the Chinese economy of course now we are I believe we're having the right face social for Cape size.
Fortunately this of course the competition there is huge.
The order book is very low and very positive for Capesize as well, but are we a little bit I'm afraid that maybe the high capital cost of ordering it keeps us in a good shipyard like a drop on the shipyard, it's more than $70 million.
You know you.
You make all the the calculation of interest rate of 6%.
Clement Morins: Yes, yes, we are not a Capesize trader; we have always felt, over the years, a little bit uncomfortable with a type of vessel that relies on one commodity, namely iron ore and a little bit of coal. We wanted to be more versatile and be able to trade on more routes, and iron ore is pro, let's say, China, China, depending on the Chinese economy. Of course, now I believe we are in the right phase also for cape-size opportunities, although of course, the competition there is huge. The order book is very low.
And you will understand that this is a big risk for a company like ours, so to step up.
Any major investment in that.
We did that in 2021 we bought for Capesize bulk carriers, which other than consumer but it's what is now in the mid Twenty's, we'll see yes.
For two years or things like that we fitted scrubbers on them that they're allowed to and they've got a million and a half per vessel per year. So did our small investment there.
Polis Ajuanu: I'm very positive about cape size as well, but we are a little bit afraid that maybe the high capital cost of ordering a cape size in a good shipyard like Japanese shipyards is more than 70 million dollars. You know, just do the calculation of the interest rate at 6%, and you will understand that this is a big risk for a company like ours to step up any major investment in that sector. We did achieve that in 2021.
No I don't believe we will get opportunities in the next six months.
We will try to inspect a couple of ships, but I'm hearing interest.
15, 20 bias on every shape I don't think we will be the winning so many of those bids.
But you know were happy that we have invested in the right time, starting in 2020 in the come so much new buildings.
Polis Ajuanu: We bought four Cape-sized bulk carriers which are earning handsome rates for us now in the mid-20s for three years or two years or things like that. We fitted scrubbers on them, and they are adding a good million and a half per vessel per year. So we did our small investment there. Now, I don't believe we'll get an opportunity in the next six months, you know. We will try to inspect a couple of ships, but I'm hearing interest from 15-20 buyers on every ship. I don't think we will be the winners of any of those bids. But, you know, we're happy that we have invested at the right time, starting in 2020, in the Kamsa Max new buildings, Japanese Kamsa Max Phase III new buildings. The price we started investing was around $28 million.
It's up on these comes how much phase III new buildings in places, we start investing was around $28 million.
There's the same ships are worth over 14, there toward dinner.
From those yet, but we're happy we have done our work continues in the in their business. We know we are the total.
16 units and we're already well place a since we have de Levered at a nine month Roche already in a good market in the <unk>.
Seven more are coming including two methanol or shift so we're in a good position Oh, well, let's say, we're happy with our more so far.
And thank you for the color I also wanted to ask a bit about the.
'twenty 'twenty four outlook for coal.
China recently reinstated.
And I was wondering whether you expect this to have an impact on your broad market.
Okay.
Could you repeat the question because I actually think they are absolutely lane.
Polis Ajuanu: Today, the same ships are worth over $40 million to order from those yachts. So, we're happy we have continued in the business we know. We ordered a total of... 16 units, and we are very well placed since we have delivered nine of those already in a good market, and Seven more are coming, including two methanol ships, so we're in a good position overall. Let's say we're happy with our moves so far. Hey, thanks. Thank you for the cover letter. I also wanted to ask a bit about the 2024 outlook for COVID. China recently reinstated tariffs, and I was wondering whether you expect this to have an impact on the overall market. Could you repeat the question, because they are setting their actions on the line?
Yeah. The question is about China tariffs on coal, which were recently reinstituted and whether you expect that to have an impact on the overall market.
Yeah, China Chinese coal imports.
The highest in the last in 2023.
It's a vital vital commodity for the Chinese who we know about the certain point they will consider the environment.
Consequences and they will stay back but is it the Chinese I think consumer one 4 billion tons of coal a year so they they imported.
Quantity.
So 10% of that amount is not is not all.
Oh, that's big and I don't think they will deescalate.
Clement Morins: The question is about China's tariffs on coal, which were recently reinstituted, and whether you expect that to have an impact on the overall market. Yes, Chinese coal imports were at the highest level in the last year in 2023. It's a vital, vital commodity for the Chinese. But we know that at a certain point, they will consider the environmental consequences, and they will step back. But it's not, the Chinese, I think, consume around 4 billion tons of coal a year. So the imported quantity of around 10% of that amount is not that big.
They escalate from Colo.
In the next let's say five to 10 years later all of course, we may see it.
The action of coal into into China, and we will see increase in coal into other areas like India, Malaysia.
Vietnam Southeast Asia countries. So so I think Paul will always be there.
And the thing is Steve that is cleaner coal from other areas or technologies to fit to.
To make it a more friendly to the environment, but they don't think coal will be.
Reducing a lot in the years to come.
Polis Ajuanu: And I don't think they will de-escalate from coal in the next, let's say, 5 to 10 years. Later on, of course, we may see a reduction in coal consumption in China, and we will see an increase in coal consumption in other areas like India, Malaysia, Vietnam, and Southeast Asian countries. So I think coal will always be there, and the thing is if there is cleaner coal from other areas or technologies to make it more friendly to the environment, but I don't think coal will be decreasing a lot in the years.
Yes.
Thanks for the color adult from me I'll pass it over thank you for taking my questions and congratulations for the quarter.
Thank you.
Thank you we have reached the end of the question and answer session I'll turn the call back over to Bob.
I have one for.
For closing remarks.
So thank you very much for attending now.
A presentation.
That's going to be assumed.
Okay.
Capital of next quarter.
And we'll have a nice day.
Clement Morins: Thanks for the color. That's all from me. I'll pass it over.
And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Clement Morins: Thank you for taking my questions and congratulations on the work. Thank you. Thank you. We have reached the end of the question and answer session. Therefore, I'll turn the call back over to Fotis Giannakoulis for a closing remark. So, thank you very much for attending our... presentation, and we are going to start again with you in the next quarter. Thank you all and have a nice day. And this concludes today's conference; you may disconnect your lines at this time. Thank you for your participation.
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