SB - Safe Bulkers Inc. Reports Fourth Quarter and Twelve Months 2023 Results and Declares Dividend on Common Stock | Benzinga

MONACO, Feb. 12, 2024 (GLOBE NEWSWIRE) -- Safe Bulkers, Inc. (the "Company") (NYSE:SB), an international provider of marine drybulk transportation services, announced today its unaudited financial results for the three and twelve month periods ended December 31, 2023. The Board of Directors of the Company also declared a cash dividend of $0.05 per share of outstanding common stock.

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¹ Adjusted Net income is a non-GAAP measure. Adjusted Net income represents Net income before impairment and loss on vessels held for sale, gain/(loss) on sale of assets, gain/(loss) on derivatives, early redelivery income/(cost), other operating expense and gain/(loss) on foreign currency. See Table 4.
² EBITDA is a non-GAAP measure and represents Net income plus net interest expense, tax, depreciation and amortization. See Table 4. Adjusted EBITDA is a non-GAAP measure and represents EBITDA before gain/(loss) on derivatives, early redelivery income/(cost), other operating expenses and gain/(loss) on foreign currency. See Table 4.
³ Earnings per share ("EPS") and Adjusted EPS represent Net Income and Adjusted Net income less preferred dividend divided by the weighted average number of shares respectively. See Table 4.
⁴ Time charter equivalent ("TCE") rate represents charter revenues less commissions and voyage expenses divided by the number of available days. See Table 5.
⁵ Daily vessel operating expenses are calculated by dividing vessel operating expenses for the relevant period by the number of ownership days for such period. See Table 5.
⁶ Daily vessel operating expenses excluding dry-docking and pre-delivery expenses are calculated by dividing vessel operating expenses excluding dry-docking and pre-delivery expenses for the relevant period by the number of ownership days for such period. See Table 5.
⁷ Daily general and administrative expenses are calculated by dividing general and administrative expenses for the relevant period by the number of ownership days for such period. See Table 5.

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⁸ Total Cash represents Cash and cash equivalents plus Time deposits and Restricted cash.
⁹ Undrawn borrowing capacity under revolving reducing credit facilities.
¹⁰ Secured financing commitments for loan and sale and lease back financings.
¹¹ Unsecured debt represents the five-year tenor unsecured non-amortizing bond, net of deferred financing costs, maturing in February 2027.
¹² Secured debt represents Long-term debt plus current portion of long-term debt, net of deferred financing costs.
¹³ Total Debt represents Unsecured debt plus Secured debt.
¹⁴ Net debt per vessel represents Total Debt less Total Cash divided by the number of vessels at period's end.

Management Commentary

Dr. Loukas Barmparis, President of the Company, said: "The last quarter of the year we operated in an improved charter market environment compared to the previous quarter. The Company continues to maintain a strong capital structure while implementing its strategy of gradual fleet renewal that leads to decreasing fleet average age. Our ongoing efforts to upgrade our existing vessels coupled with our fleet renewal, will enable us to remain competitive while reducing our carbon footprint."

Formation of Environmental, Social and Governance Committee

In November 2023, the Company announced the formation of a Board of Directors' committee to focus on Environmental, Social and Governance (the "ESG Committee"). The ESG Committee shall support the Company's overall ESG strategic direction, providing executive management and the Board of Directors with ESG insights on significant ESG trends. The ESG Committee consists of six members of the Board of Directors, four of whom are independent directors. The President of the Company has been assigned to lead the management team on ESG matters and report to the ESG Committee. The ESG Committee shall review the Company's ESG performance and ensure governance oversight by the Board of Directors of the Company's ESG strategy and implementation, consistent with the priorities outlined in the Company's sustainability report. The formation of this new ESG Committee comes as a result of the additional specific focus required by the Board of Directors on the overall ESG strategy of the Company. The Company implements its ESG strategy as articulated in the latest sustainability report, taking steps towards decarbonization.

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 the reduction of nitrogen oxides emissions (the "IMO NOx Tier III"), and selectively selling older vessels. The newbuild program consists of 16 vessels in the aggregate, of which 12 are Japanese-built and four are Chinese-built, 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 $206.1 million is remaining to be paid as of February 9, 2024.

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 February 9, 2024, 21 vessels in total have been upgraded. The low friction paint applications that are part of the environmental upgrades are recorded as operating expenses, while energy saving devices are capitalized and recorded as capital expenditures.

During the fourth quarter of 2023, the Company completed environmental upgrades on two vessels, namely the Zoe and Xenia. During the first quarter of 2024 and as of February 9, 2024, the Company completed environmental upgrades on two vessels, namely the Agios Spyridonas and the Venus Harmony, with 50 down-time days and has further scheduled environmental upgrades on three other vessels, including an exhaust gas cleaning device ("Scrubber") installation on the Capesize class vessel Stelios Y, with an estimated 90 down-time days. The Company continues to use biofuels in certain voyages, targeting a lower CO2 emission factor and lower environmental impact.

Recent Newbuild Contracts

The Company, during the fourth quarter of 2023 and as of February 9, 2024, has entered into the following newbuild contracts for the acquisition of four IMO GHG Phase 3 - NOx Tier III vessels:

• In October 2023, for the acquisition of two methanol dual-fueled, 81,200 dwt, Kamsarmax class dry-bulk vessels, with scheduled deliveries in the fourth quarter of 2026 for the first vessel, and the first quarter of 2027 for the second vessel. When powered by green methanol they can produce close to zero GHG emissions based on well-to-propeller life cycle assessment methodology.
  
  
• In December 2023, for the acquisition of one Japanese, 81,800 dwt, Kamsarmax class dry-bulk vessel with scheduled delivery within the first half of 2026; sister to newbuilds recently delivered to us.
  
  
• In January 2024, for the acquisition of one Japanese, 81,800 dwt, Kamsarmax class dry-bulk vessel with scheduled delivery within the third quarter of 2026; sister to newbuilds recently delivered to us.
  

Fleet Update

As of February 9, 2024, we had a fleet of 48 vessels, one of which was held for sale, consisting of 10 Panamax, 12 Kamsarmax, 18 Post-Panamax and 8 Capesize class vessels, with an aggregate carrying capacity of 4.8 million dwt and an average age of 9.9 years. Twelve vessels in our fleet are eco-ships built after 2014, and nine are IMO GHG Phase 3 - NOx Tier III ships built 2022 onwards.

Orderbook
As of February 9, 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.

Newbuild deliveries
The Company, during the fourth quarter of 2023 and as of February 9, 2024, took delivery of four Japanese Kamsarmax class IMO GHG Phase 3 - NOx Tier III sister newbuilds: the Morphou, Rizokarpaso, Ammoxostos and Kerynia.

Vessel Sales
In November 2023, the Company entered into an agreement for the sale of the Katerina, a 2004 Japanese-built, Panamax class, dry-bulk vessel, being the oldest vessel in its fleet at that time, at a gross sale price of $10.2 million. The vessel was delivered to her new owners in December 2023.

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 is scheduled to be delivered to her new owners in February 2024.

On February 12, 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 April-May 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.

As of February 9, 2024, we employed, or had contracted to employ, (i) 12 vessels in the spot time charter market (with up to three months original duration) and (ii) 37 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, 11 have an original duration of more than two years. As of February 9, 2024, the average remaining charter duration across our fleet was 0.8 years.

As of February 9, 2024, we had contracted revenue of approximately $246.4 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit. Given the volatility associated with the Capesize charter market, as of February 9, 2024, all eight of our Capesize class vessels have been chartered in period time charters, six of which have remaining charter durations exceeding one year. As of February 9, 2024, the average remaining charter duration of our Capesize class vessels was 2.2 years and the average daily charter hire was $23,633, resulting in a contracted revenue of approximately $148.4 million net of commissions, excluding the additional compensation related to the use of Scrubbers. During the fourth quarter of 2023, we operated 45.93 vessels, on average earning a TCE of $18,321, compared to 44.00 vessels earning a TCE of $21,078 during the same period in 2022. Our contracted fleet employment profile as of February 9, 2024, is presented in Table 1.

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¹⁵ Safety Management Overseas S.A., Safe Bulkers Management Monaco Inc., and Safe Bulkers Management Limited, each of which is referred to herein as "our Manager" and collectively "our Managers".

Table 1: Contracted employment profile of fleet ownership days as of February 9, 2024

Debt

As of December 31, 2023, our consolidated debt before deferred financing costs was $515.9 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 December 31, 2023, our consolidated leverage¹⁶ was approximately 37% and our weighted average interest rate during the three-month period ended December 31, 2023 was 6.31% inclusive of the applicable loan margin. During the three-month period ended December 31, 2023, we made scheduled principal payments of $6.1 million, voluntary debt prepayments of $45.0 million and drawings of $25.5 million under a new loan facility, $28.0 million under a new sale and leaseback facility and $60.0 million under our existing revolving facilities. The repayment schedule of our debt as of December 31, 2023, is presented in Table 2 below:

Table 2: Loan repayment Schedule as of December 31, 2023
(in USD million)

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¹⁶ Consolidated leverage is a non-GAAP measure and represents total consolidated liabilities divided by total consolidated assets. Total consolidated assets are based on the market value of all vessels, as provided by independent broker valuers on quarter-end, owned or leased on a finance lease taking into account their employment, and the book value of all other assets. This measure assists our management and investors by increasing the comparability of our leverage from period to period.
¹⁷ The fleet scrap value is calculated on the basis of fleet aggregate light weight tons ("lwt"), excluding held for sale vessel, and market scrap rate of $492.5/lwt ton (Clarksons data) on December 31, 2023 and $495.0/lwt ton on February 9, 2024.

Liquidity, capital resources, capital expenditure requirements and debt as of December 31, 2023

As of December 31, 2023, we had a fleet of 46 vessels, one of which was held for sale, and an orderbook of eight newbuilds. In relation to our orderbook, we paid $85.6 million and had $222.6 million of remaining capital expenditure requirements.

We had $98.8 million in cash, cash equivalents, bank time deposits and restricted cash, $131.5 million in undrawn borrowing capacity available under existing revolving reducing credit facilities, $55.5 million in undrawn borrowing capacity available under a loan facility and a sale and leaseback financing relating to two newbuild vessels. Our held for sale vessel has a gross sale price of $26.6 million and is expected to be delivered to her new owners in February 2024. Furthermore, we had contracted revenue of approximately $271.1 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 eight unencumbered vessels and six newbuilds upon their delivery.

In relation to capital expenditure requirements of the eight newbuilds the schedule of payments was $81.8 million in 2024, $52.2 million in 2025, $60.8 million in 2026 and $27.8 million in 2027.

The scrap value¹⁷ of our fleet, excluding our held for sale vessel, was $341.3 million and the outstanding consolidated debt before deferred financing costs was $515.9 million, including the unsecured bond.

Liquidity, capital resources, capital expenditure requirements and debt as of February 9, 2024

As of February 9, 2024, we had a fleet of 48 vessels, one of which was held for sale, and an orderbook of seven newbuilds. In relation to our orderbook, we paid $73.3 million and had $206.1 million of remaining capital expenditure requirements.

We had $90.6 million in cash, cash equivalents, bank time deposits, restricted cash and $158.5 million in undrawn borrowing capacity available under existing revolving reducing credit facilities. Our held for sale vessel has a gross sale price of $26.6 million and is expected to be delivered to her new owners in February 2024. Furthermore, we had contracted revenue of approximately $246.4 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 eight unencumbered vessels and seven newbuilds upon their delivery.

In relation to capital expenditure requirements of the seven newbuilds, the schedule of payments was $41.6 million in 2024, $52.5 million in 2025, $84.2 million in 2026 and $27.8 million in 2027.

The scrap value¹⁷ of the fleet, excluding our held for sale vessel, was $355.3 million and the outstanding consolidated debt before deferred financing costs was $535.3 million, including the unsecured bond.

Five Million Shares of Common Stock Repurchase Program

In November 2023, the Company authorized a program under which it may from time to time in the future purchase up to 5,000,000 shares of the Company's common stock. Should the maximum number of shares of the Company's common stock be purchased pursuant to the aforementioned program, it would represent approximately 4.5% of the shares of the Company's common stock outstanding and 8.1% of its public float. The program does not obligate the Company to purchase shares of the Company's common stock and the program may be modified or terminated at any time without prior notice. Any such purchases will be made in the open market in compliance with applicable laws and regulations, and purchases on the open market will be conducted within the safe harbor provisions of Regulation 10b-18 under the Securities Exchange Act of 1934, as amended. As of February 9, 2024, the Company had not purchased any shares of common stock under the aforementioned program.

Dividend Policy

On February 12, 2024, the Board of Directors of the Company declared a cash dividend on the Company's common stock of $0.05 per share which is payable on March 19, 2024 to the shareholders of record of the Company's common stock at the closing of trading on March 1, 2024. As of February 9, 2024, the Company had 111,617,369 shares of common stock issued and outstanding.

In January 2024, the Board of Directors of the Company declared a cash dividend of $0.50 per share on each of its Series C preferred shares (NYSE:SB) and Series D preferred shares (NYSE:SB) for the period from October 30, 2023 to January 29, 2024. The dividend was paid on January 30, 2024, to all shareholders of record as of January 19, 2024 of the Series C Preferred Shares and of the Series D Preferred Shares, respectively.

In November 2023, the Board of Directors of the Company declared a cash dividend on the Company's common stock of $0.05 per share which was paid on December 14, 2023 to the shareholders of record of the Company's common stock at the closing of trading on November 27, 2023.

In October 2023, the Board of Directors of the Company declared a cash dividend of $0.50 per share on each of its Series C preferred shares (NYSE:SB) and Series D preferred shares (NYSE:SB) for the period from July 30, 2023 to October 29, 2023. The dividend was paid on October 30, 2023, to all shareholders of record as of October 18, 2023 of the Series C Preferred Shares and of the Series D Preferred Shares, respectively.

The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. There is no guarantee that the Company's Board of Directors will determine to issue cash dividends in the future. The timing and amount of any dividends declared will depend on, among other things: (i) the Company's earnings, fleet employment profile, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to the Company's growth, fleet renewal and leverage strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in the Company's existing and future debt instruments; and (v) global economic and financial conditions.

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

Following attacks on merchant vessels in the region of the Bab al-Mandab Strait and the Gulf of Aden at the southern end of the Red Sea, there is disruption in the maritime trade towards the Mediterranean Sea through the Suez-Canal. As a result we have diverted our fleet from sailing in the specific region. While our vessels currently do not sail in the Red Sea, we will continue to monitor the situation to assess whether the trade disruption could have any impact on our operations or financial performance.

Conference Call

On Tuesday, February 13, 2024, at 10:00 A.M. Eastern Time, the Company's management team will host a conference call to discuss the Company's financial results.

Conference Call Details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1 877 405 1226 (US Toll-Free Dial In) or +1 201 689 7823 (US and Standard International Dial In), or +0 800 756 3429 (UK Toll-Free Dial In). Please quote "Safe Bulkers" to the operator and/or conference ID 13744452. Click here for additional participant International Toll-Free access numbers.

Alternatively, participants can register for the call using the "call me" option for a faster connection to join the conference call. You can enter your phone number and let the system call you right away. Click here for the call me option.

Slides and Audio Webcast:

There will also be a live, and then archived, webcast of the conference call and accompanying slides, available through the Company's website. To listen to the archived audio file, visit our website www.safebulkers.com and click on Events & Presentations. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Management Discussion of Fourth Quarter 2023 Results

During the fourth quarter of 2023, we operated in a weaker charter market environment compared to the same period in 2022, with decreased revenues due to lower charter hires, decreased earnings from Scrubber fitted vessels, decreased operating expenses and higher interest expenses due to increased interest rates. During the fourth quarter of 2023, we operated 45.93 vessels on average, earning an average TCE of $18,321 compared to 44.00 vessels earning an average TCE of $21,078 during the same period in 2022. The Company's net income for the fourth quarter of 2023 was $27.6 million compared to net income of $34.9 million during the same period in 2022. The main factors driving the change in net income are as follows:

Net revenues: Net revenues decreased by 5% to $82.3 million for the fourth quarter of 2023, compared to $86.7 million for the same period in 2022. This is primarily due to lower revenues from charter hires and decreased revenues earned by our Scrubber fitted vessels.

Vessel operating expenses: Vessel operating expenses decreased by 9% to $19.6 million for the fourth quarter of 2023 compared to $21.5 million for the same period in 2022 mainly due to the following factors: (i) dry-docking expenses decreased to $1.2 million, related to one fully completed and two partially completed dry-dockings during the fourth quarter of 2023, compared to $2.0 million related to one fully completed and one partially completed dry-docking for the same period of 2022, (ii) spare parts decreased to $1.4 million for the fourth quarter of 2023, compared to $2.8 million for the same period in 2022 and (iii) crew wages and crew expenses increased to $10.0 million for the fourth quarter of 2023, compared to $9.7 million for the same period in 2022, mainly due to the increased average number of vessels during the fourth quarter of 2023. The Company expenses dry-docking and pre-delivery costs as incurred, which costs may vary from period to period. Excluding dry-docking costs and pre-delivery expenses of $1.7 million and $2.0 million for the fourth quarter of 2023 and 2022, respectively, vessel operating expenses decreased by 8% to $17.9 million during the fourth quarter of 2023 in comparison to $19.5 million during the same quarter of 2022. Dry-docking expense is related to the number of dry-dockings in each period and pre-delivery expenses are related to the number of vessel deliveries and second-hand acquisitions in each period. Other shipping companies may defer and amortize dry-docking expense, while many do not include dry-docking expenses within vessel operating expenses costs but present these separately.

Depreciation: Depreciation expense increased by $1.2 million, or 9% to $14.2 million for the fourth quarter of 2023, compared to $13.0 million for the same period in 2022, mainly due to the increased number of vessels during the fourth quarter of 2023.

Voyage expenses: Voyage expenses increased to $5.6 million for the fourth quarter of 2023, compared to $2.9 million for the same period in 2022, mainly due to increased bunker consumption costs for scrubber fitted vessels under charter agreements, which provide for variable consideration based on the bunker consumption and the hire expense relating to the chartered-in vessel MV Arethousa.

Gain on assets sale: Gain on sale of assets was $2.4 million in the fourth quarter of 2023, as a result of a gain from the sale of MV Katerina, compared to zero for the same period in 2022.

Other operating expenses: Other operating expenses of $1.9 million in the fourth quarter of 2023, compared to $3.6 million for the same period in 2022, represent loss from the valuation of the bunkers remaining on board our vessels, which were affected by the decline of bunker market prices during the relevant period.

Interest expense: Interest expense increased to $7.2 million in the fourth quarter of 2023 compared to $5.9 million for the same period in 2022. This change is mainly due to the increased weighted average interest rate of 6.31% during the fourth quarter of 2023, compared to 4.27% for the same period in 2022, as a result of the higher USD rates environment.

Gain/(loss) on derivatives: Loss on derivatives amounted to $0.1 million in the fourth quarter of 2023 compared to a gain of $3.3 million for the same period in 2022, mainly due to losses realized from Forward Freight agreements.

Daily vessel operating expenses: Daily vessel operating expenses, calculated by dividing vessel operating expenses by the ownership days of the relevant period, decreased by 13% to $4,642 for the fourth quarter of 2023 compared to $5,323 for the same period in 2022 mainly due to the decreased number of dry-dockings and environmental upgrades. Daily vessel operating expenses excluding dry-docking and predelivery expenses decreased by 12% to $4,232 for the fourth quarter of 2023 compared to $4,822 for the same period in 2022.

Daily general and administrative expenses:¹⁸ Daily general and administrative expenses, which include management fees payable to our Managers and daily company administration expenses, increased by 3% to $1,473 for the fourth quarter of 2023, compared to $1,437 for the same period in 2022, as a result of increased public company expenses during the fourth quarter of 2023.

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¹⁸   See table 5

Balance sheet

Other financing liability: In March 2023, the Company entered into an agreement to sell the Efrossini, a 2012 Japanese-built, Panamax class vessel to an unaffiliated third party at a gross sale price of $22.5 million and charter her back for a period of ten to fourteen months at a gross daily charter rate of $16,050 . The sale was consummated in July 2023, when the vessel was delivered to her new owners, renamed Arethousa, and immediately taken back on charter by the Company. We assessed the transaction according to ASC 842-40 and ASC 606 and concluded that the transfer of the asset is a sale, and that the sale was not at fair value since the net sale price was greater than the fair value of the asset at the time the sale was consummated. The difference between the net sale price and the fair value of the Efrossini at the time the sale was consummated was recognized as other financing liability. Other financing liability represents the outstanding balance of the reduction of the sale price plus interest accrued, net of the portion of the hire payments allocated to the other financing liability.

Assets held for sale: As of December 31, 2023, we had classified the assets directly associated with the vessel Pedhoulas Cherry as assets held for sale and presented them on the balance sheet separately under current assets in the amount of $24.2 million, which represented the net book value of the vessel and her inventories. As of December 31, 2022, we had classified the assets and liabilities directly associated with the vessel Pedhoulas Trader, (the vessel built 2006), as assets held for sale and presented them on the balance sheet separately under (a) current assets in the amount of $12.0 million, which represented the net book value of the vessel and her inventories, and (b) liabilities directly associated with assets held for sale of $16.9 million, representing the sale proceeds and the value of estimated bunkers and lubricants on board that had been received prior to the delivery of the vessel in January 2023.

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