Safer Bulkers' first quarter 2024 results improve due to a more robust market.

 Safe Bulkers, Inc., an international provider of marine drybulk transportation services, announced its unaudited financial results for the three month periods ended March 31, 2024. The Board of Directors of the Company also declared a cash dividend of $0.05 per share of outstanding common stock.

Dr. Loukas Barmparis, President of the Company, said: “During the first quarter of 2024, we operated in a relatively stronger market compared to the previous year. Having comfortable liquidity and leverage, and consistent with our ESG strategy, we placed an additional order for a Phase 3 newbuild, continued the renewal of our fleet by selling three of our older vessels, repurchased 4.9 million shares of our common stock and at the same time declared a dividend of five cents per share of common stock. We are focused to create long-term value for our shareholders by maintaining a strong capital structure together with the development of a young, modern and energy efficient fleet, with operational competitive advantage ahead of forthcoming stringent environmental regulations.”

Environmental investments – Dry-dockings

The Company is gradually renewing its fleet with newbuilds designed to meet the most recent International Maritime Organization (the “IMO”) regulations related to the reduction of greenhouse gas emissions (the “IMO GHG Phase 3”) and of nitrogen oxides emissions (the “IMO NOx Tier III”), and selectively selling older vessels. As of April 19, 2024, the newbuild program consists of 16 vessels in the aggregate, including contracts for two methanol dual-fueled Kamsarmax newbuilds. Nine of such newbuild vessels have already been delivered to us. The aggregate capital expenditure of the newbuild program is approximately $579.5 million, of which $200.6 million is remaining to be paid.

Furthermore, the Company is continuing the environmental upgrade program of its existing fleet, targeting increased energy efficiency and lower fuel consumption, which is expected to reduce GHG emissions. As of April 19, 2024, 20 existing vessels in total have been upgraded. The cost of low friction paint applications that are part of the environmental upgrades is recorded as operating expenses, while the cost of energy saving devices is capitalized and recorded as capital expenditures.

During the first quarter of 2024, the Company has completed environmental upgrades on two vessels, namely the Agios Spyridonas and the Venus Harmony. During the second quarter of 2024, the Company has scheduled six dry-dockings, which include environmental upgrades and the installation of one exhaust gas cleaning device, (“Scrubber”), with 160 estimated aggregate down time days.

Fleet Update

As of April 19, 2024, we had a fleet of 46 vessels, two of which were held for sale, consisting of 10 Panamax, 11 Kamsarmax, 17 Post-Panamax and 8 Capesize class vessels, with an aggregate carrying capacity of 4.6 million dwt and an average age of 10.0 years. Eleven vessels in our fleet are eco-ships built 2014 onwards, and nine are IMO GHG Phase 3 – NOx Tier III ships built 2022 onwards.

Orderbook

In January 2024, the Company entered a contract for the acquisition of one Japanese, 81,800 dwt, Kamsarmax class IMO GHG Phase 3 – NOx Tier III dry-bulk newbuild vessel with scheduled delivery within the third quarter of 2026, sister to newbuilds recently delivered to us.

As of April 19, 2024, we had an orderbook of seven IMO GHG Phase 3 – NOx Tier III Kamsarmax class newbuilds, two of which are methanol dual-fueled, with scheduled deliveries, one in 2024, two in 2025, three in 2026 and one in the first quarter of 2027.

Subsequent newbuild order

On April 25, 2024, the Company entered a contract for the acquisition of one Japanese, 82,000 dwt, Kamsarmax class IMO GHG Phase 3 – NOx Tier III dry-bulk newbuild vessel with scheduled delivery within the fourth quarter of 2026, sister vessel to a number of newbuilds in our orderbook with advanced energy efficiency characteristics resulting to lower fuel consumption.

Newbuild deliveries

The Company, during the first quarter of 2024 and as of April 19, 2024, took delivery of two Japanese Kamsarmax class IMO GHG Phase 3 – NOx Tier III sister newbuilds, namely the Ammoxostos and the Kerynia.

Vessel Sales

In November 2023, the Company entered into an agreement for the sale of the Pedhoulas Cherry, a 2015 Chinese-built, Kamsarmax class, dry-bulk vessel at a gross sale price of $26.6 million. The vessel was delivered to her new owners in February 2024.

In February 2024, the Company entered into an agreement for the sale of the Maritsa, a 2005 Japanese-built, Panamax class dry-bulk vessel, the oldest vessel in its fleet, at a gross sale price of $12.2 million. The vessel is scheduled to be delivered to her new owners in May 2024.

In March 2024, the Company has entered into two separate agreements, for the sale of the Panayiota K, a 2010-built Post-Panamax class dry-bulk vessel, at a gross sale price of $20.5 million, which was delivered to her owners in April 2024, and of the Paraskevi 2, a 2011-built, Panamax class, dry-bulk vessel, at a gross sale price of $20.3 million, which is scheduled to be delivered to her new owners in July 2024.

Chartering our Fleet

Our vessels are used to transport bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes. We intend to employ our vessels on both period time charters and spot time charters, according to our assessment of market conditions. Our customers represent some of the world’s largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with visible and relatively stable cash flows, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions as well as provide an opportunity for a potential upside in our revenue when charter market conditions improve. The chartering of our vessels is arranged by our Managers15 without any management commission.

During the first quarter of 2024, we operated 47.08 vessels, on average earning a TCE of $18,158, compared to 43.83 vessels earning a TCE of $15,760 during the same period in 2023. As of April 19, 2024, we employed, or had contracted to employ, (i) 9 vessels in the spot time charter market (with up to three months` original duration) and (ii) 38 vessels in the period time charter market (with original duration in excess of three months). Of the vessels chartered in the period time charter market, 12 have an original duration of more than two years. As of April 19, 2024, the average remaining charter duration across our fleet was 0.8 years.

As of April 19, 2024, we had contracted revenue of approximately $274.2 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit.

During the first quarter of 2024, we took advantage of the strong Capesize charter market to fix forward the Aghia Sofia, upon completion of her current index-linked period time charter expected for September 2024, under a new period time charter with an expected duration of 18 to 20 months at a gross daily charter hire rate of $26,000, whilst we extended the index-linked period time charter of the Maria, which had an initial duration expiring in September 2024, with a period time charter of an expected duration of 48 to 60 months at a gross daily charter hire rate of $25,950, from April 1, 2024. These period time charters are accretive to our revenue generation and add significant cash flow visibility.

As of April 19, 2024, all eight of our Capesize class vessels have been chartered in period time charters, seven of which have remaining charter durations exceeding one year. As of April 19, 2024, the average remaining charter duration of our Capesize class vessels was 2.7 years and the average daily charter hire was $24,413, resulting in a contracted revenue of approximately $189.0 million net of commissions, excluding the additional compensation related to the use of Scrubbers.

Debt

As of March 31, 2024, our consolidated debt before deferred financing costs was $534.3 million, including the €100 million – 2.95% p.a. fixed coupon, non-amortizing, unsecured bond issued in February 2022, maturing in February 2027. As of March 31, 2024, our consolidated leverage16 was approximately 34% and our weighted average interest rate during the three-month period ended March 31, 2024 was 6.51% inclusive of the applicable loan margin. During the three-month period ended March 31, 2024, we made scheduled principal payments of $7.0 million, voluntary debt prepayments of $70.7 million and drawings of $25.5 million under a new loan facility, $30.0 million under a new sale and leaseback facility and $43.0 million under our existing revolving facilities.

Liquidity, capital resources, capital expenditure requirements and debt as of March 31, 2024

As of March 31, 2024, we had a fleet of 47 vessels, three of which were held for sale, and an orderbook of seven newbuilds. In relation to our orderbook, we had paid $78.8 million and had $200.6 million of remaining capital expenditure requirements.

We had $87.1 million in cash, cash equivalents, bank time deposits and restricted cash and $129.2 million in undrawn borrowing capacity available under existing revolving reducing credit facilities. The aggregate gross sale proceeds of our three held for sale vessels amounted to $53.0 million, with no requirement for any associated debt prepayment. Furthermore, we had contracted revenue of approximately $276.2 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit, and additional borrowing capacity in connection with the financing of seven unencumbered vessels and seven newbuilds upon their delivery.

In relation to capital expenditure requirements of the seven newbuilds, the schedule of payments was $36.1 million in 2024, $52.5 million in 2025, $84.2 million in 2026 and $27.8 million in 2027.

The scrap value17 of our fleet, excluding our three held for sale vessels, was $337.9 million and the outstanding consolidated debt before deferred financing costs was $534.3 million, including the unsecured bond.

War in Ukraine

As a result of the war between Russia and Ukraine that commenced in February 2022, the US, the EU, the UK, Switzerland and other countries and territories have announced unprecedented levels of sanctions and other measures against Russia and certain Russian entities and nationals. We intend on complying with these requirements and addressing their potential consequences. While we do not have any Ukrainian or Russian crews, our vessels currently do not sail in the Black Sea and we conduct limited operations in Russia, we will continue to monitor the situation to assess whether the conflict could have any impact on our operations or financial performance.

Trade disruption in the Red Sea and conflicts in Middle East

Following attacks on merchant vessels in the region of the southern end of the Red Sea, there is disruption in the maritime trade and supply chains towards the Mediterranean Sea through the Suez Canal. Since the beginning of this disruption, we have diverted our fleet from sailing in the Red Sea region. The expanded conflicts in the Middle East represent additional geopolitical and economic risks that could increase the volatility of the global economy. While our vessels currently do not sail in the Red Sea, we will continue to monitor the situation to assess whether there will be any impact on our operations which could negatively affect our results of operations and financial condition.

Source: Safe Bulkers Inc.