Safe Bulkers(SB) - 2023 Q1 - Quarterly Report

Financial and Operational Highlights Q4 and Full-Year 2022 Performance Summary Safe Bulkers reported Q4 2022 net revenues of $86.7 million and full-year net income of $172.6 million, with a weaker TCE rate reflecting market conditions Key Financial Metrics (Q4 & Full Year 2022 vs 2021) | Metric | Q4 2022 (in millions of USD) | Q4 2021 (in millions of USD) | Twelve Months 2022 (in millions of USD) | Twelve Months 2021 (in millions of USD) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | 86.7 | 92.4 | 349.7 | 329.0 | | Net income | 34.9 | 65.2 | 172.6 | 174.3 | | Adjusted net income | 37.0 | 50.4 | 168.5 | 154.0 | | EBITDA | 53.8 | 82.4 | 240.4 | 244.3 | | Adjusted EBITDA | 56.0 | 67.6 | 236.4 | 223.9 | | EPS (basic and diluted) | 0.28 | 0.51 | 1.36 | 1.44 | Average Daily Results (Q4 & Full Year 2022 vs 2021) | Metric | Q4 2022 ($) | Q4 2021 ($) | Twelve Months 2022 ($) | Twelve Months 2021 ($) | | :--- | :--- | :--- | :--- | :--- | | Time charter equivalent (TCE) rate | 21,078 | 26,180 | 22,712 | 21,752 | | Daily vessel operating expenses | 5,323 | 5,149 | 5,235 | 4,830 | Selected Balance Sheet and Fleet Data (Q4 2022 vs Q4 2021) | Metric | Q4 2022 (in millions of USD) | Q4 2021 (in millions of USD) | | :--- | :--- | :--- | | Total cash | 123.3 | 112.3 | | Total debt | 414.4 | 355.7 | | Number of vessels | 44 | 39 | Management Commentary Management emphasized a strong balance sheet and conservative capital structure, prioritizing fleet renewal and environmental upgrades - Management emphasized a strong balance sheet with significant cash and revolver capacity, alongside a conservative capital structure indicated by low net debt per vessel[18] - The company's strategic focus is on renewing its fleet via its extensive orderbook and reducing the environmental footprint of existing vessels through upgrades[18] Strategic and Fleet Management Environmental, Social, and Governance (ESG) Initiatives The company completed BWTS retrofits, advanced scrubber installations, and initiated a newbuild program for energy-efficient vessels - Completed the retrofit of Ballast Water Treatment Systems (BWTS) on all existing vessels as of February 10, 2023[19] - 19 out of 44 existing vessels are fitted with Scrubbers, with four additional installations planned for Capesize vessels by 2024[20] - The newbuild program includes 11 IMO GHG Phase 3 - NOx Tier III ships, with a total capital expenditure of approximately $371.7 million. By early 2025, the fleet is expected to include 23 vessels with improved energy efficiency[21] - An environmental upgrade program for 20 existing vessels is planned for 2023, with a budget of approximately $6.9 million[23][24] Fleet and Orderbook Update As of February 10, 2023, the fleet comprised 44 vessels with 4.5 million dwt, complemented by an orderbook of eight newbuilds Fleet Composition as of Feb 10, 2023 | Vessel Type | Count | | :--- | :--- | | Panamax | 12 | | Kamsarmax | 7 | | Post-Panamax | 17 | | Capesize | 8 | | Total | 44 | - The orderbook includes eight newbuilds compliant with IMO GHG Phase 3 - NOx Tier III regulations, with four scheduled for delivery in 2023, three in 2024, and one in Q1 2025[28] - In January 2023, the company sold the MV Pedhoulas Trader, a 2006 Japanese-built Kamsarmax vessel, for $15.9 million[30] Chartering Strategy and Fleet Employment The company employs a mixed chartering strategy, balancing period and spot charters, with $229.5 million in contracted revenue - The chartering strategy combines period time charters for visible cash flow and spot market deployment for flexibility and potential upside[31] - As of February 10, 2023, the company had contracted revenue of approximately $229.5 million, with all eight Capesize vessels on period time charters contributing $161.7 million[33] Contracted Fleet Employment Profile | Year | Coverage (%) | | :--- | :--- | | 2023 (remaining) | 50% | | 2023 (full year) | 56% | | 2024 | 26% | | 2025 | 15% | Debt and Liquidity Management As of December 31, 2022, consolidated debt was $422.6 million, supported by strong liquidity and manageable capital commitments - As of Dec 31, 2022, consolidated debt was $422.6 million, consolidated leverage was 34%, and the weighted average interest rate for 2022 was 3.25%[37] Debt Repayment Schedule as of Dec 31, 2022 (in USD million) | Year | 2023 | 2024 | 2025 | 2026 | 2027 | 2028-2032 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Debt | 45.7 | 26.1 | 76.4 | 50.7 | 155.2 | 68.5 | 422.6 | Liquidity and Capital Commitments (in USD million) | Metric | As of Dec 31, 2022 | As of Feb 10, 2023 | | :--- | :--- | :--- | | Cash & Equivalents | 123.3 | 114.6 | | Undrawn Credit Facilities | 196.0 | 250.5 | | Remaining Capex | 246.2 | 224.9 | Risk Factors and Corporate Actions Geopolitical and Health Risks The company faced COVID-19 related costs and monitors the war in Ukraine, reporting limited direct operational exposure - The COVID-19 pandemic resulted in about $0.5 million in additional crew repatriation and related costs in Q4 2022 compared to the pre-COVID-19 period[49] - The company has limited exposure to the war in Ukraine, with no vessels sailing in the Black Sea and no Ukrainian or Russian crew[50] Capital Management and Shareholder Returns The company actively returned capital through share repurchases and dividends, while its ATM equity offering program remained inactive - Under its common stock repurchase program, the company has repurchased and cancelled 2,807,418 shares, or approximately 56% of the program, as of February 10, 2023[47] - The "at-the-market" (ATM) equity offering program has been inactive since September 27, 2021. Shares with aggregate sales proceeds of up to $28.5 million remain available for sale under the program[52][53] - On February 14, 2023, the Board of Directors declared a cash dividend of $0.05 per share of common stock, payable on March 17, 2023[57] Detailed Financial Analysis Management Discussion of Fourth Quarter 2022 Results Q4 2022 saw a 6% decrease in net revenues to $86.7 million due to lower charter rates, alongside increased operating and interest expenses - Net revenues decreased by 6% to $86.7 million for Q4 2022, compared to $92.4 million in Q4 2021, mainly due to lower charter hire revenues[64] - Vessel operating expenses rose 16% to $21.5 million in Q4 2022, primarily due to an increased average number of vessels, higher dry-docking expenses, and increased costs for spare parts, crew wages, and lubricants[65] - Interest expense increased significantly to $5.9 million in Q4 2022 from $2.9 million in Q4 2021, as the weighted average interest rate rose from 2.46% to 4.27%[68] - Daily general and administrative expenses decreased by 5% to $1,437 in Q4 2022, benefiting from a weaker Euro to U.S. Dollar exchange rate[71] Consolidated Financial Statements (Unaudited) This section presents unaudited consolidated financial statements for 2022, showing $172.6 million net income and $1.25 billion in total assets Condensed Consolidated Statements of Income For 2022, net revenues reached $349.7 million, with net income at $172.6 million and basic and diluted EPS of $1.36 Consolidated Income Statement Summary (Twelve Months Ended Dec 31) | (In thousands of U.S. Dollars) | 2022 (in thousands of USD) | 2021 (in thousands of USD) | | :--- | :--- | :--- | | Net revenues | 349,718 | 329,031 | | Operating income | 184,648 | 191,416 | | Net income | 172,554 | 174,348 | | Net income available to common shareholders | 163,576 | 163,555 | | Earnings per share basic and diluted | 1.36 | 1.44 | Condensed Consolidated Balance Sheets As of December 31, 2022, total assets increased to $1.25 billion, with shareholders' equity rising to $771.9 million Consolidated Balance Sheet Summary (As of Dec 31) | (In thousands of U.S. Dollars) | 2022 (in thousands of USD) | 2021 (in thousands of USD) | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents, etc. | 123,277 | 112,334 | | Vessels, net | 1,001,120 | 864,391 | | Total assets | 1,245,918 | 1,094,320 | | LIABILITIES AND EQUITY | | | | Total debt (current + long-term) | 414,362 | 355,708 | | Total liabilities | 473,996 | 415,080 | | Shareholders' equity | 771,916 | 679,240 | Condensed Consolidated Cash Flow Data In 2022, operating cash flow remained stable at $218.0 million, while investing activities used $229.4 million, primarily for vessel advances Cash Flow Summary (Twelve Months Ended Dec 31) | (In millions of U.S. Dollars) | 2022 (in millions of USD) | 2021 (in millions of USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | 218.0 | 217.2 | | Net cash used in investing activities | (229.4) | (8.6) | | Net cash used in financing activities | (40.1) | (225.9) | Supplementary Information Reconciliation of Non-GAAP Financial Measures This section reconciles non-GAAP measures, showing 2022 Adjusted Net Income of $168.5 million and Adjusted EBITDA of $236.4 million Reconciliation of Net Income to Adjusted EBITDA (Full Year) | (In thousands of U.S. Dollars) | 2022 (in thousands of USD) | 2021 (in thousands of USD) | | :--- | :--- | :--- | | Net Income | 172,554 | 174,348 | | Plus: Net Interest, Depreciation, Amortization | 67,881 | 70,002 | | EBITDA | 240,435 | 244,260 | | Adjustments (Gains on assets/derivatives, etc.) | (4,052) | (20,327) | | ADJUSTED EBITDA | 236,383 | 223,933 | Reconciliation of Net Income to Adjusted Net Income (Full Year) | (In thousands of U.S. Dollars) | 2022 (in thousands of USD) | 2021 (in thousands of USD) | | :--- | :--- | :--- | | Net Income | 172,554 | 174,348 | | Adjustments | (4,052) | (20,327) | | Adjusted net income | 168,502 | 154,021 | Fleet Data and Operational Metrics This section details fleet and operational data, including average vessels, TCE rates, daily operating expenses, and fleet employment Fleet Data and Average Daily Results (Full Year) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Average number of vessels | 41.98 | 40.87 | | Ownership days | 15,321 | 14,916 | | Time charter equivalent rate ($) | 22,712 | 21,752 | | Daily vessel operating expenses ($) | 5,235 | 4,830 | | Daily general and administrative expenses ($) | 1,423 | 1,508 | - Table 6 provides a detailed fleet and employment profile as of February 10, 2023, listing each of the 44 current vessels and 8 newbuilds on order, along with their respective charter types, rates, and periods[87][88][89]