Safe Bulkers(SB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved adjusted earnings per share of $0.14, with a declared dividend of $0.05 per share [5] - Adjusted EBITDA for Q4 2025 was $37.4 million, compared to $40.7 million in Q4 2024 [28] - Daily vessel operating expenses increased by 13% to $5,683 in Q4 2025, compared to $5,047 in Q4 2024 [30] - The company maintains a liquidity position of $382 million and a leverage ratio of 34% [23] Business Line Data and Key Metrics Changes - The average time charter equivalent (TCE) for Q4 2025 was $17,050, compared to $16,521 in Q4 2024 [29] - The company operated an average of 45 vessels in Q4 2025, down from 45.9 vessels in the same period of 2024 [29] Market Data and Key Metrics Changes - The dry bulk fleet is projected to grow by about 3% in 2026, with the highest growth in the Panamax and Supramax segments [7] - Global dry bulk demand is forecasted to grow by 2% to 3% in 2026, with cargo volumes expected to expand by 1% to 2% [14] - Iron ore shipments are expected to grow by up to 1% in 2026, while coal shipments are projected to decline by 1% to 2% [15][16] Company Strategy and Development Direction - The company maintains a prudent balance between spot and time charter exposure to capture market opportunities while preserving cash flow visibility [6] - The fleet is focused on quality, with approximately 80% being Japanese-built, and an average fleet age of 10.5 years, which is younger than the global average [11][12] - The company is expanding its fleet with a focus on energy efficiency and lower CO2 taxation, with plans to take delivery of eight newbuilds by Q1 2029 [12][26] Management Comments on Operating Environment and Future Outlook - The management noted increased market volatility in the dry bulk market due to geopolitical reasons, but expressed optimism about the strong Q4 and early Q1 [5][22] - The company anticipates that supply growth will marginally match demand in 2026, with a healthy freight market continuing into early 2026 [22] - Management highlighted the importance of maintaining a young, technologically advanced fleet to enhance operational performance and regulatory compliance [12][27] Other Important Information - The company has a contracted revenue backlog of $178 million, supporting debt service and reinvestment [33] - The company has paid $89 million in common dividends and $35 million in common shares since 2022, reflecting a consistent return to shareholders [25] Q&A Session Summary Question: Fleet renewal and Capesize age - Management noted that second-hand prices are rising, but quality tonnages are scarce, leading to a focus on newbuilds [36][37] Question: Time charter market appetite - Management indicated that there is currently no interest in two to three-year contracts, with a preference for six to twelve-month charters as the market improves [38][39] Question: Index-linked vs fixed coverage - Management traditionally prefers fixed rates but is open to index-linked exposure, noting current one-year deals are approaching $18,000 to $19,000 per day for Eco Kamsarmaxes [41][42]