Safe Bulkers(SB) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net revenues of $81.6 million for Q2 2021, a significant increase from $48.3 million in the same period of 2020, representing a 69% growth [10][31] - Adjusted EBITDA for Q2 2021 was $54.1 million, compared to $6.3 million in Q2 2020 [34] - Adjusted earnings per share for Q2 2021 was $0.31, a recovery from a loss per share of $0.16 in Q2 2020 [34] Business Line Data and Key Metrics Changes - The time charter equivalent rate increased to $21,098 in Q2 2021 from $8,094 in Q2 2020 [31] - Daily vessel operating expenses rose by 3% to $4,874 compared to $4,729 in the same period last year [33] Market Data and Key Metrics Changes - The capesize market is currently trading at approximately $32,000, with a year-to-date average of $24,800, significantly higher than the average of $9,600 for the same period in 2020 [13] - Kamsarmaxes are also performing well, trading at around $32,000 with a year-to-date average of $23,900 compared to $7,900 in 2020 [14] Company Strategy and Development Direction - The company plans to renew about one-fourth of its fleet with Phase 2 compliant newbuilds by 2024 while replacing older vessels with younger second-hand vessels [11] - The company is focused on maintaining a low leverage ratio of around 30% to 35% of assets and aims to create value for shareholders through strategic fleet renewal and deleveraging [48][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand for drybulk vessels due to limited supply and ongoing economic recovery post-COVID-19 [15][24] - The company anticipates that the current favorable market conditions will persist for at least one to two more years, driven by a minimal order book and increasing demand [57] Other Important Information - The company has a strong cash position of $115.6 million as of July 23, 2021, which provides flexibility for future investments and fleet renewal [35] - The company has sold six vessels and ordered eight newbuilds compliant with GHG-EEDI Phase 3 NOx-Tier III standards [10][11] Q&A Session Summary Question: Discussion on new building activity and propulsion systems - Management clarified that while alternative fuels like LNG and ammonia are being discussed, they believe the best available technology is currently conventional fuel systems, with a focus on Phase 3 vessels for future compliance [39][44] Question: Rationale behind the ATM program - The company aims to maintain a low-leverage profile while ensuring a young fleet to remain competitive, which justifies the ongoing asset management program [48][52] Question: Chartering strategy and market strength - Management indicated a preference for spot market charters over long-term agreements due to current market conditions, expecting higher rates in the near future [64][66] Question: Plans for fleet renewal and acquisitions - The company plans to focus on acquiring modern second-hand vessels to replace older ships, as newbuild prices are expected to remain high [71][73]