Safe Bulkers(SB) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The net income for Q4 2023 was $27.6 million, down from $34.9 million in Q4 2022, indicating a decrease of approximately 20% year-over-year [52] - Adjusted EBITDA for Q4 2023 stood at $50.7 million, compared to $56 million for the same period in 2022 [65] - The average time charter equivalent (TCE) for Q4 2023 was $18,321, down from $21,078 in Q4 2022 [21] Business Line Data and Key Metrics Changes - The company operated an average of 45.93 vessels in Q4 2023, compared to 44 vessels in Q4 2022 [21] - The fleet renewal strategy has led to 12% of the fleet being sold in recent years, with an average age of 15 years, while 16 new vessels were acquired, nine of which are new builds [17] Market Data and Key Metrics Changes - The charter market environment improved in Q4 2023 compared to the previous quarter, with an average daily rate of $23.6 thousand for period charters, above the market currency rate of $20.5 thousand [9] - The supply side of the market is relatively weak, creating potential upside after the Chinese New Year holidays [10] Company Strategy and Development Direction - The company is focused on maintaining a green fleet advantage, with 82% of its fleet being Japanese built, which is more efficient compared to the global average of 40% [3] - The strategy includes gradual fleet renewal and investment in environmentally friendly vessels to comply with stricter regulations [15][41] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about medium-term prospects for the freight market, citing a healthy order book and the aging fleet leading to increased scrapping [11] - The company is positioned to capitalize on new environmental regulations, focusing on operational and environmental performance [44] Other Important Information - The company maintains a comfortable leverage of around 37% with a debt of $516 million, which is comparable to the fleet's scrap value of $341 million [19] - Liquidity and capital resources are strong at approximately $312 million, providing flexibility in capital allocation [20] Q&A Session Summary Question: What are the main uses of cash in the current market environment? - The company plans to split cash usage for new builds, fleet renewal, and potential share buybacks, while maintaining current leverage levels [68] Question: How does the company view the impact of China's coal tariffs on the market? - Management believes that coal will remain a significant commodity for China, despite environmental considerations, and does not expect a substantial reduction in coal imports in the near term [89] Question: Why focus on midsized vessels instead of Capesizes? - The company prefers midsized vessels for their versatility and ability to trade on more routes, reducing reliance on specific commodities like iron ore [85]