Q2 2024 Safe Bulkers Inc Earnings Call
[inaudible]
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call on the second quarter 2024 financial results. We have with us Mr. Polys Hajioannou, Chairman and Chief Executive Officer, Dr. Loukas Barmparis, President, and Mr. Konstantinos Adamopoulos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode.
Speaker Change: Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call on the second quarter 2024 financial results.
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 on the presentation, please contact Capital Link at 212-661-7000.
Speaker Change: Following this conference call if you need any further information on the conference call or on the presentation. Please contact capital link at 2126617566.
Operator: I must advise you that this conference call is being recorded today. The archived webcast of this conference call will soon be made available on the Safe Bulkers website, www.safebulkers.com. 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. Additional information concerning factors that can cause actual results to differ materially from those in the forward-looking statements is contained in the second quarter 2024 earnings release, which is available on the Safe Bulkers website, again, www.safebulkers.com. I would now like to turn the conference call to one of your speakers today, the chairman and CEO of the company, Mr. Polys Hajioannou. Please go ahead, sir.
Speaker Change: Must advise you that this conference is being recorded today.
Speaker Change: The archived webcast of this conference call will be made available on the stay focus website www dot safe Bulker dotcom.
Speaker Change: Many of our remarks today contain forward looking statements based on current expectations actual results may differ materially from the results projected from those forward looking statements.
Speaker Change: Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained in the second quarter 'twenty 'twenty four earnings release, which is available on the seafood group's website again www dot safe Bulker dotcom.
Polys Hajioannou: I would now like to turn the conference call to one of your speakers today are chairman and CEO of the company. Mr. Polis Adriano. Please go ahead Sir.
Loukas Barmparis: Good morning to all. I'm Loukas Barmparis, President of Safe Bulkers. I will do the presentation. Key developments of the second quarter include the stock market compared to the previous year, the implementation of our new integrated management system in compliance with dry BMS standards, the order of two additional phase three new builds consistent with our fleet renewal strategy, and the issuance of our 2023 sustainability report detailing our ESG practices and our vision for the future.
Polys Hajioannou: Good morning to all.
Speaker Change: That's about a body space, let's say buckets I went through that presentation.
Speaker Change: The elements of the second quarter included a smoker market compared to the previous year. The implementation about a new integrated monolithic system in compliance with that idea and they stand at the older. Two additional phase III B school. She said it without putting you on the strategy and the east coast about 'twenty could be sustainability report daily.
Loukas Barmparis: Our strong liquidity and comfortable leverage enabled us to be flexible with our capital allocation, remain focused on long-term value creation, and at the same time reward our shareholders with a dividend of five cents per share of common stock. Following a comprehensive review of the Forum Looking Statements language presented in Slide 2, our attention transitions to the Market Update in Slide 4. The CAPE market segment has been strong throughout the quarter. All eight of our CAPEs are presently period charted.
Speaker Change: Now ESG practices and our vision for the future.
Speaker Change: Our strong liquidity and comfortable leverage enabled us to be flexible with our capital allocation.
Speaker Change: <unk> focused on long term value creation and at the same time the reward our shareholders with a dividend of five cents per share common stock.
Speaker Change: Following a comprehensive review of the portal looking statements language be hidden.
Speaker Change: To our attention to the market update in slide four.
Speaker Change: The Cape market segment has been strong throughout the quarter or eight about capes at present repeat of chocolate.
Loukas Barmparis: Boosting an average remaining charter duration of 2.4 years with an average daily rate of $24,500, this provides us with a considerable degree of cash flow visibility. On the Panama Strait, the total market value is about $15,000.
Speaker Change: Boosting and I bet, it's remaining at a ratio of 2.4, yes, we said either daily at age of $25000.
Speaker Change: This provides us with a considerable degree of cash flow visibility.
Speaker Change: The Panamax film they are talking to Mike about 15000.
Loukas Barmparis: Progressing to slide number 5, we present here an overview of the CRB commodity index fluctuation in basic commodity prices. The geopolitical landscape with tensions in regions such as the Middle East, the Red Sea, and Ukraine underscores the heightened level of global acceptance. Persistently elevated uncertainty around the inflation outlook has led central banks in major economies to become more cautious about the pace of policy easing compared with their positions at the end of the first quarter.
Speaker Change: Progressing through the slide number five would be said he had in northern Europe, but she had to equal more than Phoenix workstation in basic commodities prices.
Speaker Change: Sure.
Speaker Change: Escape.
Speaker Change: In some regions such as the middle East that I'd see it again underscores the heightened level of global.
Speaker Change: Global.
Speaker Change: Yeah, he simply because typically I don't think nation.
Speaker Change: It has.
Speaker Change: Let's central banks major economies become more cautious about the pace or do you see.
Speaker Change: Compared with its position at the end of the first.
Speaker Change: First of all.
Loukas Barmparis: Consequently, markets' expectations of the number of policy rate cuts to be delivered in 2024 have been revised downward, and the upside risk to inflation has increased. Raising the prospect of higher interest rates for longer interest rates in the context of increased policy uncertainty. In terms of dry bulk, we enjoy a positive dry bulk outlook as supply has been outpaced by demand, setting the stage for additional dry bulk market growth. The limited supply of essence on the one hand and the resilient demand on the other enhance rates over the short to medium term.
Speaker Change: Consequently market expectations of the number of 40 <unk> got to be deliberate.
Speaker Change: They report have been revised downward.
Upside this information has been released.
Speaker Change: Raising the cost will go up higher for longer.
Speaker Change: It's in the context.
Speaker Change: All he said.
Speaker Change: In terms of dry bulk we enjoy your positive outlook on supply has been outpaced by demand.
Speaker Change: Secondly, the stage for additional dry bulk market goals.
Speaker Change: The limited supply of basis on one pad.
Speaker Change: Oh got it.
Speaker Change: Thompson said eight over the short to medium.
Loukas Barmparis: We believe that the existing critical decarbonization efforts and the energy efficiency of new builds will gather all focus on the market in the medium term. Overall, on the commodity side, demand for iron ore remains strong, for coal is stable despite energy transition forecasts, and for grains and marrow bulks stands at a healthy level. The IMF April forecast of a 3.2% expansion in global GDP for both 2024 and 2025 is accompanied by control of inflationary pressures. According to BIMCO, the forecasted global dry bulb demand growth stands at a 3% increase for 2024.
Speaker Change: We believe that the existing fleet.
Speaker Change: So some airports and drainage efficiency.
Speaker Change: We've got them all focus on marketing.
Speaker Change: In the medium term.
I'll bet on what on the commodity side demand court, either Lodi named storm quite call them stable. Despite again.
Speaker Change: The forecast for grades at Midas.
Speaker Change: Yes.
Speaker Change: Yeah Yeah.
Speaker Change: Forecast for people, 2% expansion in global GDP for both things you could before.
Speaker Change: Five is that compounded by control of inflationary pressure.
Speaker Change: According to beam called the forecasted global demand the dogs dogs at 2%.
Speaker Change: News Corp's pool.
Loukas Barmparis: China, being the major global importer and key driver of the market, seems to be having a shock landing. Prioritization of energy security, with coal being the fastest way of that, drives a significant expansion of Chinese renewable energy infrastructure, as clearly evidenced by the renewable electricity generation during the first half of 2024, which increased by 12% year-on-year, outpassing, Nevertheless, coal-fired power plants stabilize the demand for coal imports, as steel-coal imports rose by almost 30% year-to-year, a trend we do not expect to continue as steel-coal shipments into China will decrease due to increased electricity generation from renewables and due to stronger domestic mining in the second half of 2024.
Speaker Change: So I left being the major global imported it to drive up the market seems to be having a shock like Facebook.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: With gold being.
Speaker Change: That's the way of that.
Speaker Change: Right.
Speaker Change: I can say in this example.
Speaker Change: Sure.
Speaker Change: He had he evidenced by the renewable generation.
Speaker Change: In addition, during the first half.
Paul: Paul which increased by 12%.
Speaker Change: Oh I see.
Speaker Change: And of course, it's good to know.
Speaker Change: Nevertheless, coal fired power plants stabilize the demand for coal imports.
Speaker Change: Coal imports rose by almost 6% Yep Yep at present, we do not expect to continue our steam coal shipments is the same that would be the thing.
Speaker Change: April can be variable.
Speaker Change: So get the MC mining in the second pool.
Loukas Barmparis: China's growth forecast has been raised to 5% for 2024; however, GDP is expected to slow to 4.5% in 2025 and continue to decelerate over the medium term due to challenges from an aging population and slowing productivity growth.
Speaker Change: <unk> growth forecast has been raised with hypothetical could you said before however.
Speaker Change: As expected to slow to four 5% and think it can be five and continue to sell that as well, but the medium term due to the challenges.
Speaker Change: Aging population and slowing the growth.
Loukas Barmparis: Geopolitical developments, of course, have altered trading patterns and increased miles for drive-back commodities. Rerouting away from the Red Sea and the Panama Canal has also bolstered demand in smaller sectors. The dry bulker market is hanging on despite the weakening and falling global steel and iron ore prices. Safe specialists have been showing an average of $22,000 per day in the second quarter, down moderately from their first quarter average of $24,000 per day and averaging $27,000 per day so far in the third quarter.
Speaker Change: Geo political developments of course have all paid in Boston.
Speaker Change: This combines for dry bulk commodities and you're looking at.
Speaker Change: Away from that at Sea and final Mcdonald has also bolster demand in smaller segments.
Speaker Change: Dry bulk market, you said hugging all despite the weakening and calling global midnight all sizes.
Speaker Change: Thanks, I just have been shortly I bet. It feels good in 2000, a day second.
Speaker Change: Second quarter.
Speaker Change: Down moderately compared first quarter I reported before.
Speaker Change: <unk> thousand dollars per day, but that would've been $37000 that they provided.
Speaker Change: The third quarter.
Loukas Barmparis: A tight supply picture with modest growth this year and tightening effects from the long-haul boxing trade have played a key role. So far, the third quarter is looking similar to the second quarter, with decent earnings. Global coal investment is set to grow by 2% in 2024, led by increases in India, Indonesia, and Australia. The resilience of India's European domestic demand is sustaining constructive investments, and seems to play a stabilizing factor, easing the effects of cell research settings. The growth forecast for India has also been raised to 7.3% for this year, reflecting positive growth and enhanced prospects for private consumption, especially in rural areas.
Speaker Change: A tight supply picks it up with the modest growth this year and patent effects from the low coal boxes trade.
You know so far that the headquarter is looking similar to the second quarter. This is Adam.
Speaker Change: Global coal.
Speaker Change: Set to grow by 2%.
Speaker Change: Led by India, Indonesia, and Australia.
I mean opinions so he gets a whole bunch of domestic demand and sustaining costs, that's investments seem to be stabilizing factor there.
Speaker Change: That's let's say at least a city.
Speaker Change: The growth forecast for India has also been basically seven point people say for this year, reflecting the positive growth in the corporate support private consumption, especially I mean, who that yes.
Loukas Barmparis: Let's proceed now to examine the supply-side dynamics in slide 6. Currently, about 25% of the existing feed is older than 15 years, as environmental regulations are seeking in these vessels, being on the lower end of fuel efficiency, which gradually becomes less competitive, forcing them to be phased out. On top of that, the dry order book remains at about 9%, and the near to medium-term trajectory of the freight market remains optimistic, especially when taking into account the reliability of that space and restraining new orders due to uncertainties in decarbonization technology.
Speaker Change: Let's proceed now to examine the supply side dynamics in slide six.
Speaker Change: You got about 75%.
Speaker Change: Yes, I'd say, let them embedded relationships frequently these days.
Speaker Change: Being on the lower end, you can see which gradually become a less competitive quotes to them being phased out.
Speaker Change: On top of that the driver the driver.
Speaker Change: The order book remains at about 9%, that's the near to medium term, particularly of the freight market remains optimistic, especially when they can get you.
Speaker Change: That space and save the new orders that you got citizens.
Speaker Change: Alright.
Speaker Change: Others say buckets right now.
Loukas Barmparis: The Safe Bulkers fleet now counts 10 Phase 3 vessels on the water, all delivered after 2022, with the last delivery taking place just a few days ago. In addition, 22 vessels have been environmentally upgraded, and 11 are eco-vessels, having superior design efficiency. Eighty-five percent of our fleet consists of Japanese-built vessels, surpassing the global average of 40 percent, with our average fleet age of 9.9 years old.
Speaker Change: Three vessels on the water or they leave it where they like they leave and they can say that's the two days ago.
Speaker Change: In addition, 22 vessels have been environmentally upgraded.
Speaker Change: On equal basis, having shapiro designer pieces.
Speaker Change: Piper Sandler Barclays comparison, so that doesn't seem to be either a support person without I bet, it's eight or 99 years old.
Loukas Barmparis: Overall, our fleet today is fundamentally upgraded and commercially more competitive than two years ago as a result of the ESG strategy implemented throughout this period, underscoring our commitment to sustainable business. We are speaking, we will continue to become even more commercially competitive as we have one. For us, we have on our order book 8 more phase 3 vessels placed at prices well below the prevailing market to be delivered to us within the next 2 years.
Speaker Change: But all our fleet today is fundamentally up greater than any more competitive than two years ago. I said. He says he said I could keep your maintenance.
Speaker Change: This period underscoring our commitment to sustainable business.
Speaker Change: We still we will continue it can become even more commercially competitive wise, we have one though.
Speaker Change: Actually we have a low order book eight more face the vessels at prices well below the prevailing market.
Speaker Change: Lastly, we think the next two years.
Loukas Barmparis: The anticipated combined impact of heat, aging, and seasonal environmental regulations will position our fleet favorably to compete with the environmental-based charter market, the seasonal regulatory framework, and the greenhouse gas target. Moving to slide 8, we present an overview of our Green Fleet Advantages. The breakdown, presented in the top right graph, underscores the environmental credentials of our fleet, comprising 46 vessels, with 22 having undergone environmental upgrades, 10 being Phase III, 11 being Echo, and the remaining three scheduled to be upgraded within this year.
Speaker Change: We anticipate the combined impact of 18 months, he's any vitamin regulations with what you said no fleet favorably to compete with them by the middle of base out there market.
Speaker Change: Celebrity framework and greenhouse gas targets.
Speaker Change: Moving to slide eight we present a lot of you about green fleet advantage debate the breakdown because I think the top right graph.
Speaker Change: Let's go to anybody the window cause denktas about compassion 46 basis with people with it.
Speaker Change: It took us a good environment in a day.
Speaker Change: Phase 311, being equal and that he made them scheduled to be upgraded with him he's here.
Loukas Barmparis: The bottom graph presents our Fleet Renewal Strategy with divestment of 15 older vessels, acquisition of 7 second-hand vessels, delivery of 10 Phase III new builds, and a steadfast order book comprising 8 more Phase III vessels, resulting in a stable 10-year average lead age over the past four years. As confirmed by slide 9, this adjustment of fleet expansion serves as a testament to our commitment towards sustainability. In slide 10, we present Safe Bulkers key attributes such as our sterling 65-year track record, robot management ownership aligned with 48 percent, comfortable leverage of 32 percent, our output liquidity of 276 million, our significant contracted backlog of 250 million, our green fleet abundance evidenced by a 7.4 percent decrease in fleet IR GHG emissions and by our dry BMS standard management system implementation in anticipation of forthcoming environmental regulation.
Speaker Change: The bottom graph because held U S attitude with divestment of all the vessels, where you feel upset a second hand vessel delivery phase.
Speaker Change: They see movements in the Stat Pak order book basis of eight eight vessels.
Speaker Change: Besides being pretty stable, yeah, diabetics fleets as well, but the past yes that's.
Speaker Change: That's called them to buy like nine we said definitely will keep expenses.
Speaker Change: So as I said that the minimum commitment, but what's it going to be.
It's like tell me what he said in the same bucket.
Speaker Change: So it does outstanding 65, yes that correct.
Speaker Change: But all of them aligned with four 3%.
Speaker Change: Comparable liberated from 52% now and where.
Speaker Change: Where do you go.
Speaker Change: The 276 million a significant backlog.
Speaker Change: All Green fleet abundant evidence by seven 4% decrease.
Speaker Change: Yeah, I do yeah, Mutuals and buy outright Mis management system implementation to basically come in and see if anybody window regulations.
Loukas Barmparis: The quality and competitiveness of our fleet is strategically positioned to leverage on the regulatory landscape, remaining true to our commitment to expand by building a resilient company and reward our shareholders with a 21% and about 21% dividend payout ratio. Our effort is not only to have the best fleet in terms of energy efficiency but also to upgrade our company managerially and be able to compete worldwide with anyone. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly financial overview. Konstantinos, the floor is yours.
Speaker Change: Quality competitiveness of our fleet that they'd be People's Houston elaborates on the regulatory landscape you made them through our commitment to expand by building and its media company.
Speaker Change: All shareholders. Thank you.
One it says about pick up a cent dividend payout ratio.
Speaker Change: Airports is not told me who have been.
Speaker Change: The fleet.
Speaker Change: And you can see but also it took us a update to our company materially and be able to cope with it worldwide with Enron I now pass the floor to I'll shift focus I've looked at a multiple of what I'll call. It didn't hurt us at all but of course as you know the floor is yours.
Speaker Change: Yeah.
Operator: Ladies and gentlemen, thank you for waiting. I apologize about the technical difficulties. We will now return to our regularly scheduled conference.
Speaker Change: Ladies and gentlemen, thank you for waiting I apologize about the technical difficulties.
Speaker Change: We will now return to our regularly scheduled conference.
Okay.
Speaker Change: Cool.
Speaker Change: Thank you.
Loukas Barmparis: Loukas, can you hear us? Yes, I can hear you. Did I finish? Did I say everything? User Demo
Speaker Change: So that's kind of yes, yes.
Speaker Change: Yes, I can hear you did finish they said anything more.
Speaker Change: Yes.
Speaker Change: If you said this morning.
Speaker Change: Yes.
unknown: Thank you, Loukas, and... (inaudible)
Speaker Change: Thank you for your question.
Neal: Sure Neal.
Neal: Yeah.
unknown: I can't hear Konstantinos.
Speaker Change: I can check what's ideal.
Konstantinos Adamopoulos: Thank you, Loukas, and good morning to everyone. This is Konstantinos Adamopoulos, the CFO. I will make a presentation about our numbers, the Q2 numbers. As a general note, during the second quarter of 2024, we operated in a stronger charter market environment compared to the same period in 2023, with increased revenues due to higher charter hires, increased earnings from starboard-seated vessels, and higher interest expenses due to increased interest rates. We should focus now on our liquidity, our cash flows, and our capital structure, as presented in slide 12.
Speaker Change: Thank you Lucas good morning to everyone.
Speaker Change: Considering that the market is the CFO.
Konstantinos Adamopoulos: We maintain a comfortable average of around 32%. Our debt of about $500 million remains comparable to our fleet scrap value of around $350 million, although our fleet is only 9.9 years old. Our weighted average interest rate stood at 6.3%, for a consolidated debt of which 100 million euros is fixed at 2.95%, in an unsecured five-year bond.
Speaker Change: He will make a presentation of the.
Speaker Change: Cause our numbers Q2 numbers other than I'll note during the second quarter don't can't get to them before we operated in a stronger charter market environment compared to the same period in 2023.
Speaker Change: With increased revenues due.
Hi, Todd Hyatt Hispanics from Chicago to the admissions and higher interest expenses due to interest rates.
Speaker Change: If we focus now on our liquidity or cash flows and our capital structure as presented this slide 12.
Speaker Change: We maintain a comfortable number that's around 52%.
Speaker Change: Our debt of about $500 million remains comparison to our fleet has dropped by.
Speaker Change: $350 million.
Speaker Change: So our fleet is only nine nine years.
Speaker Change: Our weighted average interest rate stood at six 3%.
Speaker Change: For our consolidated debt, which had a.
Speaker Change: Many of you at all.
Speaker Change: As 95%.
Speaker Change: Akshay you want to hear more five year bonds.
Konstantinos Adamopoulos: So far, we have paid 110 million, or 30% of our capex in relation to the outstanding order. Our liquidity and capital resources stand strong at approximately $281 million, which together with the contracted revenue of about $252 million makes a total of around more than $533 million, which is double the outstanding capex of $252 million. This provides flexibility to our management in capital allocation. Additionally, we have borrowing capacity in relation to four existing unencumbered vessels and nine new builds upon their delivery.
Speaker Change: So far it will have paid the 110 million or 20%.
Speaker Change: For our Capex in relation to the outstanding orders.
Speaker Change: Our liquidity and capital resources.
Speaker Change: Approximately 281 million.
Speaker Change: Which together with the contracted revenue of about 252 million makes a total of one on more than $593 million.
Speaker Change: Which is W or the onstar.
Speaker Change: <unk> Capex of 262 million.
Speaker Change: This provides flexibility to our management and capital allocation.
Speaker Change: Additionally, we will have putting capacity in relation to.
Speaker Change: For existing unencumbered vessels.
Speaker Change: <unk> builds upon their delivery.
Konstantinos Adamopoulos: We ensure that our capital expenditure is adequately covered by our uncontracted future revenues, fortifying our balance sheet towards a trajectory of sustainable growth. Moving on to slides and pins, with our quarterly financial highlights for the second quarter of 2022-2024 compared to the same period in 2023. An adjusted EBITDA for the second quarter of 2024 stood at $41.8 million, compared to 74.3 million dollars for the same period in 2023. I've adjusted earnings per share for the second quarter of 2014 to $0.17, calculated on a weighted average number of 106.8 million shares, compared to $0.12 during the same period last year, calculated on a weighted average number of 112.9 million shares.
Speaker Change: We ensure that our capital expenditure is accurately.
Speaker Change: Adequately covered by our contracted future revenues.
Speaker Change: Our balance sheet towards a trajectory of sustainable growth.
Speaker Change: Moving on to slide 15.
Speaker Change: With our quarterly financial highlights for the second quarter of 'twenty two 'twenty three.
Speaker Change: Then before compared to the same period of 2023.
Speaker Change: Adjusted EBITDA for the second quarter of 2024 stood at $41.8 million.
Speaker Change: Compared to $74 $3 million for the same period of the Internet is legacy.
Speaker Change: Our adjusted earnings per share for the second quarter of 24 Wells 17 calculated on a weighted average number of 106 point there can be no shares.
Compared to 12% during the same period last year.
Speaker Change: The weighted average number of $112 9 million shares.
Konstantinos Adamopoulos: In slide 14, we present an overview of our quarterly operational highlights for the second quarter of 2024 compared to the same period in 2023. During the second quarter of 2024, we operated 45.43 vessels on average, earning a TCE of $18,660 compared to 44.01 vessels, earning an average TCE of $17,271 during the same period in 2023. The company's net income for the second quarter of 2024 was $27.6 million, compared to $15.4 million during the same period last year.
Speaker Change: In slide 14, we presented an overview of our quarterly financial highlights.
Speaker Change: For the second quarter of 24 compared to the same period of 2023.
Speaker Change: During the second quarter 2024.
Speaker Change: This $45 43 vessels from <unk>.
Speaker Change: D C $18600.
Speaker Change: Compared to 44.
Speaker Change: Zero, one vessels and again average TCE or 70000.
Speaker Change: $171 during the same period in 2020.
Speaker Change: The company's net income for the second quarter of 2024 was $7 6 million compared to net income will precede it for me.
Speaker Change: S&P last year.
Konstantinos Adamopoulos: Transcribed by https://otter.ai. Concluding our presentation, we would like to point out that, based on our financial performance, the company's Board of Directors declared a 5% dividend on the common share. 5 Cent Dividend Per Common Share We would like to emphasize that the company is maintaining a healthy cash position of about $77 million as of July 19, 2024, and another 180 million in cash available, and the World Migration Facilities, as well as another 20 million from our held-for-sale vessels, a combined liquidity and capital resources of $276 million.
Speaker Change: Concluding our presentation, we would like to point out that based on our financial performance the company's board of directors declared.
Speaker Change: 5% dividend per common share.
Speaker Change: Okay.
Speaker Change: <unk> dividend.
Speaker Change: Sure.
Speaker Change: We'd like to emphasize that the company is maintaining a healthy cash position of about $77 million.
Speaker Change: July 19th.
Speaker Change: <unk>.
Hi.
Speaker Change: 180 million in available.
Speaker Change: The mortgage facilities.
Speaker Change: As well as <unk>.
Speaker Change: $20 million from our held for sale position.
Speaker Change: Our combined liquidity and capital resources of $276 million.
Konstantinos Adamopoulos: Furthermore, we have contracted revenue from our non-cancelable sporting period and charter contracts, $252 million net of commissions and default scrap revenue and additional borrowing capacity in relation to 5 unencumbered existing vessels and 8 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 for your understanding, and we are now ready for the Q&A session.
Speaker Change: Furthermore, we have contracted revenue from our non content supporting peer bank charter contract.
Speaker Change: <unk> hundred $52 million net of commissions and before Scarborough revenue.
Speaker Change: In addition, our board and capacity in relation to <unk>.
Speaker Change: Five unencumbered vessels youll.
Speaker Change: <unk> appointed delivery.
Speaker Change: We believe our strong liquidity and our comfortable leverage will enable us to expand the fleet, while still rewarding our shareholders.
Speaker Change: Thank you for your understanding and we're now ready for the Q&A session.
Operator: Thank you. We will now 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 busy. You may press start queue if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions, our first from Omar, Nokta from Jeffries. Please proceed.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press Star Q Wuxi wed like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: Our first.
Speaker Change: Omar knocked out from Jefferies. Please proceed.
Omar: Thank you.
Omar Mostafa Nokta: Hi guys, good afternoon. Thanks for the update.
Omar Mostafa Nokta: Guys. Good afternoon, thanks for the update.
Omar Mostafa Nokta: I just wanted to ask, obviously on the fleet, you've been very dynamic here for the past maybe two plus years. You've been adding these modern, perhaps super-eco, dual-fuel CancerMax new buildings. You've been selling the older ships. You have a series of these eight new buildings delivering here over the next three years. I just wanted to ask, you know, what are your thoughts on the Cape fleet at this point? Obviously, it's scrubber-fitted, and you have contracts in place on all the ships.
Omar: Just wanted to ask obviously on the fleet you've been very dynamic here for the past.
Omar: Maybe two plus years.
Omar: Adding these modern.
Omar: Perhaps super Eco dual fuel cancer, Max new buildings and selling the older ships.
Omar: Yes.
Speaker Change: Heres, a new eight new buildings delivering here over the next three years just wanted to ask.
Speaker Change: What are your thoughts on the Capes and at this point, obviously scrubber fitted.
Speaker Change: And you have contracts in place on all of the shifts but just in general as you think about that fleet and invest in going forward and given the low order book, we're seeing in the broader cake market is that something that maybe you are considering investing in here in terms of perhaps free cash versus continuing to look at.
Omar Mostafa Nokta: But just in general, as you think about that fleet and investing going forward, and given the low order book we're seeing in the broader Cape market, is that something that maybe you're considering investing in here in terms of perhaps free cash versus continuing to look at further CancerMax new buildings?
Speaker Change: Further cancer Max new buildings.
Omar Mostafa Nokta: You mean investing in a cape? Yes.
Speaker Change: You mean investing in Cape size.
Speaker Change: Yes.
Unknown Executive: Yes, look, Capesize New Buildings. The prices are really out of the question at the moment. They are hovering over 75 billion dollars in Japan, and as long as interest rates remain at current levels, we cannot proceed with such investments. Maybe in the future, maybe in a year's time, if we see some easing of interest rates, we may revisit that case, but always in relation to the plethora of new ones, so we would have to sell an older cape size to buy a newer one. So, we don't want to touch it for the time being because of high interest rates.
Luke: Yes Luke.
Luke: Buildings.
Speaker Change: If I sorry on the outdoor output.
Speaker Change: Question at the moment.
Speaker Change: Already hold a $75 million.
Speaker Change: <unk>.
Speaker Change: Sure.
Speaker Change: Uh huh.
Speaker Change: <unk>.
Speaker Change: As long as she said as rates remain.
Current levels.
Speaker Change: We cannot perceived weakness such investments.
Speaker Change: Maybe on the future side, maybe in the U S. We see some music Huntington as rates, we may revisit that the case.
Speaker Change: Have we seen in.
Speaker Change: In.
Speaker Change: National to literally nuance, we won't have to shed and all of the Capesize biannual anywhere you want.
Speaker Change #101: So what we don't want to touch over time, many of the social I am for this race.
Unknown Executive: I would like to point out that in the last two years, the flicker has been expanded substantially. So, in the past, we had about three caves, and right now, we have eight.
Speaker Change: I would like to point out.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: <unk> expanded substantially I mean, so in the past we've had about a three Gabe said that right now we have eight so the soldier.
Unknown Executive: So this shows a proactive movement from outside to invest in the Cape size market before prices reach this very high level. Right, yeah, good point. And I guess I wanted to ask you about CAPES because that's been, obviously, that's part of the market, perhaps this year, that's done quite well, and it has that low order book ratio. But yeah, the returns aren't there, as you're mentioning, at least on new buildings; you are acquisitive on the second hand, as you just mentioned. Are there, are there returns there that look interesting? Or is it kind of across the board CAPES was too expensive, relative to say the Cancer Max or midsize segment?
Speaker Change #100: What I keep moving from outside that we invest in the Capesize market before.
Speaker Change #100: The prices.
Speaker Change #102: He said this very high levels.
Speaker Change #102: Alright, yes.
The point and I guess I wanted to ask one on the capes because thats been a.
Speaker Change #103: Obviously, that's part of the market, perhaps this year, that's done quite well and it has a low order book ratio, but yeah. The returns aren't there as you were mentioning at least on new buildings.
Speaker Change #104: You were acquisitive on the second hand versus just mentioned is there are there returns there that looks interesting or is it kind of across the board caseload too expensive relative to say that the cash from axa or mid sized segments.
Unknown Executive: Yes, I think across the board they are too expensive, so you need 50 million to buy an 8-year-old cave site from a good yard, so for us, it's not a good investment at this point. Well, if interest rates were 3%, it would have been a different proposal, but right now, we want to wait for that time.
Speaker Change #105: And I guess I think closer bought them too expensive. So your unit 50 million to buy an 80 year olds.
Speaker Change #105: Capesize Shlomo Goodyear so for us it is not a not a good investment at this point, we're leaving.
Speaker Change #105: 3%.
Speaker Change #105: Dividend proposal right now we want to.
Speaker Change #105: Wait for Buzztime.
Omar Mostafa Nokta: Okay, thank you for that color, and maybe just to follow up, maybe kind of thinking about just the market in general, obviously dry bulk rates across the board this year have been very healthy, much better than last year. We've seen some softer steel prices and a bit more of a tougher, maybe still complex, you know, obviously in China, but globally, it seems like things are under pressure. But caves have generally held up, even though they've eased here recently, but the caves have been very good.
Speaker Change #106: Okay. Thank you for that color and maybe just.
Speaker Change #107: Just a follow up maybe kind of thinking about just the market in general obviously drybulk rates across the board. This year have been very healthy much better than last year.
Speaker Change #108: We've seen yes.
Speaker Change #109: Some softer steel prices and a bit more of a tougher maybe still complex.
Speaker Change #109: In China, but globally it seems like things are under pressure.
Speaker Change #110: The case of generally held up even though they've eased here recently the case have been very good.
Omar Mostafa Nokta: Do you think that's? As we think about this market dynamic, do you think, I guess, overall for Dry Bulk, has it been... Unknown Executive, Climent Molins, Konstantinos Adamopoulos, Loukas Barmparis, Polys Hajioannou, Safe Bulkers Inc., Yes, and I
Speaker Change #111: As we think about this market dynamic do you think I guess overall for Drybulk has it been.
A tight supply picture thats, perhaps insulated the sector from weakness in the steel markets.
Speaker Change #112: Or is it perhaps just eventually weakness will make its way into the drybulk rates. So we're not seeing it yet any any color you're able to perhaps give on what's driving the market here recently.
Unknown Executive: Yes, right now, the market is a little bit on the weak side and traditionally is weak in the summer months, and we expect improvement in the fourth quarter of this year. And what we have not seen in the last few months is we have not seen real congestion in any of the major loading or discharging areas for dry bulk tonnage, and also, we have seen very little backhaul cargoes to Europe from the Far East and generally a bit of We need a bit of a stronger Atlantic market to lift the at least the cum-sum maximum market, but of course, even at 16 or $17,000 a day, the spot market $15,000 to $17,000 is still a healthy market, as far as we are concerned. So we don't really complain about it.
Speaker Change #111: Yes.
Speaker Change #113: Right now the market is a little bit on the weak side.
Shawn Mendez: Shawn Mendez with getting.
Speaker Change #115: In the summer months, and we expect the improvement in the fourth quarter of this year and what.
Speaker Change #116: We have not seen in the last few months is we have not seen any.
Speaker Change #116: Congestion in any of the major.
Speaker Change #117: Loading all of the charging areas for dry bulk Paul niche.
Speaker Change #117: Also we have seen very little very little backhaul cargoes to Europe from all the parties.
Speaker Change #118: Uh huh.
Speaker Change #117: <unk>.
Jeremy.
Speaker Change #117: Weak market in the Atlantic.
Speaker Change #119: We believe that the Atlantic will pick up as we entered in.
Speaker Change #119: Oh, Tom in the September October period, thus hung with us and this will lift the market.
Speaker Change #119: We need a bit of stronger Atlantic market.
Speaker Change #119: The lift.
Tom: The outlet comps on much of market.
Tom: Of course, you cannot even 16 or $17000 a day the spot market.
Tom: We've seen some 17000 still a healthy market.
Tom: As far as we're concerned.
Tom: Sean we don't complain about it.
Unknown Executive: Of course, a key part to it is all the... all the... that's about it, and I think this will guarantee that the market will stay a bit longer at good levels. What is most important for us in the long run as a company, because we don't plan on a quarter-per-quarter basis; we plan on a long-term basis, is the fact that environmental regulations are getting tougher. From 1st of January, trading into European waters will cost 70% of the UETS of the penalty we're paying for CO2 from 40% that it was this year.
Sean: It keeps Basel III shortly.
Sean: The closure.
Sean: The let's see the floor.
Sean: But the restriction of the ratings by the Red Sea in Panama Canal, which.
Sean: Okay.
Sean: Exist at the moment, Panama Canal. This for a number of months and lets see since January and February of this year.
Sean: This will continue to be a fast.
Sean: Casual don't see any dry bulk vessels.
Sean: Awesome for the canal, but maybe one or two every every every week.
Sean: And that's about it.
Sean: In this one.
Sean: Is that the market will stay.
Sean: Longer.
Speaker Change #122: And the absolute leverage what is most important for us in the long run as a company.
Speaker Change #122: We don't plan for on a quarter per quarter.
Speaker Change #122: Basically we're planning on a long term basis is that talking about the environmental regulations.
Speaker Change #123: Well first of January the gradient. So you don't see on what this will be posting 7% Assembly <unk> awful.
Speaker Change #123: Okay.
Speaker Change #124: And I'll tell you where bank for wholesale.
Unknown Executive: This will create demand for younger ships to trade the Atlantic business, which traditionally has been a market for older ships. And these older ships will not find it comfortable to trade cargo from the U.S. Gulf to the continent or Brazil to the continent or U.S. East Coast to the continent because they will simply have to pay extra costs for the EUETS fee. And hence, they will try to find business in the Pacific. In the Pacific, they are not very welcome, especially in Australia, if you are over 15 years old or you're approaching 20 years old.
Speaker Change #125: For comparison, the Warsaw this year this would make demand.
Speaker Change #125: For younger ships like the Atlanta business, which traditionally the Atlantic business was a market for.
Speaker Change #125: For all of their ships.
Speaker Change #126: Vishal the ships would not find these harmful doubled to play cargo from U S Gulf to Continental Brazil Continental.
Speaker Change #127: This is close to the continent, because simply they won't have to pay extra cost for the fourth.
Speaker Change #127: Yes.
Speaker Change #127: C and hence they will try to find business in the Pacific and the Pacific Theyre not very welcome, especially.
Speaker Change #128: In Australia.
Speaker Change #128: <unk> total or approaching 20 years old so they would not be able to play it is really the Atlantic they will not be able to pay this.
Unknown Executive: So they will not be able to trade easily in the Atlantic, they will not be able to trade easily in the Pacific, and some of those ships will head to the scrapyard. So a bit of a weak market will not do us any harm. Because, as you know, Safe Bulkers has already delivered 10 phase 3 vessels, very economical ships, and another 8 are coming through in the next two years. So we are looking more into what will happen in the next two or three years rather than the next two months. Yeah, thank you. That makes sense, and I appreciate the insight.
Speaker Change #128: In the Pacific and some of those ships.
Speaker Change #128: Well then until then.
Speaker Change #129: Crop yet so a bit of a weak market will not do us any harm.
Speaker Change #130: I dunno ship bunkers comfortable they're already delivered and the phase III essence met economic ships and another eight that are coming through in the next few years.
Speaker Change #130: So we're looking more into what will happen in the next quarter, yes, a lot of them. The next four months.
Omar Mostafa Nokta: Yeah, thank you. That makes sense, and I appreciate the insight and the deep detail. That's it for me. Thank you.
Speaker Change #131: Yes, thank you that makes sense.
Speaker Change #132: Appreciate the insight and the deep detail that's it for me. Thank you.
Speaker Change #133: Thank you.
Climent Molins: Our next question comes from Climent Molins from Value Investors. Please proceed.
Speaker Change #134: Our next question comes from command Merrill Lynch from value investors. Please proceed.
Climent Molins: Good afternoon, thank you for taking my call. I wanted to start by asking about the returns on the environmental upgrades you've pursued on your existing fleet. Could you provide some commentary on some of the initiatives you've done? And, secondly, what kind of returns are these investments generating?
Fernan: With our Fernan. Thank you for taking my questions.
Fernan: I wanted to start by asking about the returns and the environmental upgrades <unk> pursuit on your existing fleet.
Fernan: Could you provide some commentary on some of the initiatives you've done.
Speaker Change #136: And secondly, what kind of returns of this investment generating.
Unknown Executive: Yes, look, first of all, we start with the scrubber investment, which we started in 2019 and we completed in 2020. This has been paid off already, and whatever income is generated by the scrubbers now is a profit on the annual result. Right now, the spread is around $80, $90.
Speaker Change #137: Yes first of all we stopped.
Speaker Change #143: We've stopped with the scrubber.
Fernan: Rob.
Speaker Change #138: Investments that we started in 2019.
Fernan: We completed in 2020.
This has been paid off already.
Fernan: Whatever that income is generated by the scrubbers.
Fernan: Profits in the on the.
Fernan: On the annual results.
Fernan: Right now the <unk>.
Fernan: Fred is around $80 $90.
Unknown Executive: It's not at a very good level, but still, on those numbers, the company is earning an extra $20 million a year. So after that, we take this money, and we throw it on environmental investment of the existing fleet by upgrading them on all of them, on dry dockings, even on our older ships. So we just finished a new 6-bit Kamsa Max dry docking where we applied the low friction paints and other improvements on the hull.
Speaker Change #139: The other very good level of scale on those numbers of companies 70, an extra $20 million a year, so that after that but we take this money and with all of them will.
Fernan: Investment.
Fernan: Of the existing fleet.
Fernan: Great and then one on all of them on dry dockings, even though not all of the ships.
Fernan: We've just finished now and no ships.
Fernan: Come so much.
Fernan: Talking about that we apply.
Speaker Change #140: Low fix from banks and other improvements.
Fernan: Hum.
Fernan: User consumption of both ships by two launch.
Unknown Executive: We have reduced the consumption of those ships by 2 tons, so from 24 tons down to 22 tons. So a 17-year-old ship is doing better, and an 18-year-old ship is doing better consumption than the BKI average, which is 23 tons. So with this improvement, the ships are saving around $1,000 a day more because of the fuel saving. You are paying $1,000 higher charter rates, and we will carry on doing this investment on the existing fleet. So basically, we take the scrubber revenue, and we put it back on the remaining ships.
Fernan: 24 pounds down percentage to pulse.
Fernan: Yeah.
Speaker Change #141: A 17 year old ship is doing but the 18 year old ship is doing better and better.
Speaker Change #142: Samsung BK I H.
Speaker Change #142: We'll just 23 funds so.
Speaker Change #142: So we this improvement the shapes of saving.
Speaker Change #142: So.
Dave Moore: All of the calls on bone loss of Dave Moore.
Speaker Change #144: Because of the fee on the savings you paid $101000 charter rates higher.
Speaker Change #144: We will carry on growing this investment on the existing our latest shull President would think described.
Speaker Change #144: Revenue.
Speaker Change #144: Revenue.
Speaker Change #144: Back on the on the remaining shares.
Climent Molins: Thanks for the color. Following up on Omar's question on your fleet positioning, you still have a few 2006-2007 build cancer max and post mana max. Considering that asset pricing has done pretty well over the past year, should we expect the disposal of some of these going forward? Or are you comfortable holding on to them for the foreseeable future, especially after the recent upgrade?
Speaker Change #147: Thanks for the color following up on numerous question. Your fleet positioning you still have a few 2000 <unk> thousand seven Bill comes from Maxim <unk>.
Speaker Change #148: Considering that the pricing has done pretty well over the past year should we expect the disposal of some of these going forward.
Speaker Change #146: First of all are holding on to them for the foreseeable future, especially after the recent upgrades.
unknown: Yes, there is an upgrade that works in two ways. First is the two-fold.
Speaker Change #144: Yes.
Speaker Change #144: There is an upgrade works in two folds.
Speaker Change #144: And two fold one is that the ships come in the next slide.
unknown: The one is that the ships can earn extra income whilst they remain under the company's operation. You have to remember these are ships we contracted as new buildings 17-18 years ago, so they are very well looked after. Of course, the company is not selling them at any price.
Speaker Change #144: Income whilst the they remain under the company.
Speaker Change #144: And the Sulfonation now you have to remember this all ships, we contracted those new buildings 17 18 years ago.
Speaker Change #144: But it will get.
Speaker Change #144: Yes.
Unknown Executive: When we get the right buyer at the right price and we get a premium over market rates because we believe the ships are worth the premium, we can sell them. Of course, we are not in a hurry to sell all of them. We are selling one ship or a quarter of one ship every six months because we have to allow time for the new buildings to get delivered in the fleet. So it will be a process that will be going on for the next two or three years, at good periods of the market, and when we find the right buyer to appreciate the condition of the ships and the investments we have made in the recent dry dockings, of course, we will sell if we can achieve prices like So it will be a slow process, and it will take some time, but you know, we are not that hard to complete the sale of the older ships in the next six months.
Luke: Luke's Hospital.
Luke: Of course, the company is not settling up enterprise, one would assume that buyer at.
Luke: The right price and.
Luke: We get a premium over the <unk>.
Luke: The market rates, because we believe that ships on whats the premium.
Speaker Change #149: We can sell of course, we're not in a hurry.
Speaker Change #149: To sell all of them, we are selling one ship, though orbital.
Speaker Change #149: Our total one ship every six months because we have to allow time for the new buildings to get delivered in the fleet. So it wouldn't be a process that will be calling on for the next two or three years.
Speaker Change #150: Both periods of the market.
Speaker Change #150: When we find the right buyer to pay that.
Speaker Change #150: But let me say the compensate the conditional on the ships.
Speaker Change #150: The.
Speaker Change #150: The.
Speaker Change #150: Investments, we have done and that is in dry dockings. So of course, we won't sell.
If we cannot achieve the bicycle.
Speaker Change #150: Or like the last deals we have Bob so it will be a slow process sensitive will take some time, but you know.
Speaker Change #150: We are not in a hurry to complete the sale of the older ships in the next six months.
Climent Molins: That's very helpful. That's all for me. Thank you for taking my questions. Once again,
Speaker Change #151: That's very helpful. That's all for me. Thank you for taking my questions.
Speaker Change #151: Thank you.
Operator: Once again, I would like to remind participants that if they would like to ask a question, they may press star one on their telephone keypad. This concludes our question and answer session. I would like to turn the floor back over to Loukas Barmparis, Dr. Loukas Barmparis, for closing comments. Thank you very much for coming.
Once again I would like to remind participants that a state we would like to ask a question press star one on their telephone keypad.
Speaker Change #153: This concludes our question and answer session I would like to turn the floor back over to Lukas bump Paris.
Loukas Barmparis: Paris for closing comments.
Loukas Barmparis: Thank you very much for coming, for being with us this morning and hearing our presentations. We wish you a pleasant summer and we're looking forward to discussing it again with you in our next quarterly call meeting. Thank you very much. Thank you. This concludes today's teleconference. You may disconnect your lines at this time.
Speaker Change #154: Thank you very much for having the visa for being with US This morning.
Speaker Change #155: I didn't know if they can get.
Speaker Change #154: Yeah.
Speaker Change #156: We wish you to have a pleasant summer and bear with me.
Speaker Change #157: Look forward to discuss again with you.
In our next quarter call. The meeting thank you very much.
Speaker Change #158: Thank you.
Operator: This concludes today's telecast.
Speaker Change #159: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change #159: Okay.
Speaker Change #159: Yeah.
Speaker Change #159: Yeah.
Speaker Change #159: [music].
Speaker Change #159: Uh-huh.
Speaker Change #159: [music].
Speaker Change #159: Uh-huh.
Speaker Change #159: Hum.
Speaker Change #159: Uh huh.
Speaker Change #159: [music].
Speaker Change #159: Hum.
unknown: Loukas Barmparis, Climent Molins, Konstantinos Adamopoulos, Loukas Barmparis, Polys Hajioannou, Safe Bulkers Inc
Speaker Change #159: [music].
Speaker Change #159: Hum.
Speaker Change #159: [music].
Speaker Change #159: Hum.
Speaker Change #159: Hmm.
Speaker Change #159: Uh-huh.
Speaker Change #159: Uh huh.
Speaker Change #159: Yeah.
Speaker Change #159:
Speaker Change #159: Uh huh.
Speaker Change #159: [music].
Speaker Change #159: Scott.
Speaker Change #159: [music].
Speaker Change #159: Hum.