Safe Bulkers Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 30, 2025

Key Takeaways

  • Positive Sentiment: We declared a $0.05 per share dividend for Q2 2025, marking our fifteenth consecutive quarterly payout and representing a 4.7% yield.
  • Negative Sentiment: Adjusted EBITDA fell to $25.5 million in Q2 2025 from $41.8 million a year ago, reflecting weaker charter rates and higher operating expenses.
  • Positive Sentiment: We maintain $315 million in liquidity with a comfortable leverage ratio of about 38%, supporting our capital allocation flexibility.
  • Positive Sentiment: Our contracted revenue backlog stands at over $135 million from seven Capesize vessels chartered at an average rate of $24,500 per day.
  • Positive Sentiment: We advanced our fleet renewal by delivering 12 Phase III eco vessels, securing six newbuild orders (including two dual-fuel), and achieved zero vessels in the bottom D and E CII ratings.
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Earnings Conference Call
Safe Bulkers Q2 2025
00:00 / 00:00

There are 3 speakers on the call.

Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Safe Walkers Conference Call on the Second Quarter twenty twenty five Financial Results. We have with us Mr. Paulis Hazliano, Chairman and Chief Executive Officer Doctor. Lucas Bomparis, President and Mr. Konstantinos Anomopoulos, Chief Financial Officer of the company.

Operator

At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. Following this conference call, if you need any further information on the conference call on the presentation, please contact Capital Link at (212) 661-7566. I must advise you that this conference call is being recorded today. The archived webcast of the conference call will soon be made available on the Safe Bulkers website, www.safebulkers.com.

Operator

Many of the remarks today contain forward looking statements based on current expectations. Actual results may differ materially from the results projected from those forward looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in forward looking statements is contained in the second quarter twenty twenty five earnings release, which is available on the Safe Bulkers website, again, ww.safebulkers.com. I would now like to turn the conference call over to one of your speakers, the Chairman and CEO of the company, Mr. Paulus Hagiano.

Operator

Please go ahead, sir.

Speaker 1

Good morning to all. I'm Lucas Pavaris, President of Sales Markets, and I will start the speech today. And I'm welcoming you at our quarterly results. During the 2025, we experienced a softer market, which impacted our revenues and profitability. We remain focused on fleet renewal, strong liquidity, comfortable leverage and long term value creation.

Speaker 1

We have declared a dividend of $05 per share of common stock, rewarding our shareholders. We took delivery of our 12 new deals and most recently shorted at the targeted price one of our oldest vessels, remain focused on capital allocation towards our newbuild program, maintain a strong capital structure, ample liquidity and the leverage of about 38%. The selling price of our Pedialas leader at $12,500,000 compared to recent market levels indicates a 10% turnaround of assets values and the sediment shift in the drybulk community. Following a comprehensive review of the forward looking statements, which are presented in Slide two, let's proceed to examine the supply side dynamics in Slide number four. The drybulk fleet is projected to grow by about 2.8% on average in 2025 and in 2026 due to stable new deliveries.

Speaker 1

Order book now stands at about 11% of the current fleet. Asset prices are projected to pick up in line with the current trade market. Recycling volumes are anticipated to rise though as market conditions prompt the retirement of older vessels, especially in relations to the recent MEPC83 and the Hong Kong Convention on Recycling. Ship recycling will double to 16,000 ships over the next ten years versus the previous decade as per Bingo projections. Only 9% of the ship capacity in the dry bulk order book will be fuel ready to use alternative fuels upon delivery and out of those ships, 37% will be burning LNG, 35% methanol and 23% ammonia.

Speaker 1

However, the dual fuel order book is minimal on drybulk segment. We do have two dual fuel vessels on order to deliveries in Q1 twenty twenty seven. Currently, about 25% of the existing global fleet is older than fifteen years. Safe baggage fleet now counts 12 Phase three vessels in the water, all delivered 2022 onwards. On top of that, 24 vessels, which have been upgraded environmentally, we have 11 ships of Echo vessels having superior design efficiencies.

Speaker 1

80% of our fleet comprises of Japanese big vessels, surpassing the global average of 40%, while our average fleet age being just ten point three years versus the global average of twelve point six years. We believe we will become even more commercially competitive as we have on our order six more Phase three vessels, two of them dual fuel methanol positioning us favorably to compete within the global standard targets recently adopted by METC eighty three and expected to be ratified this autumn. The global implementation of GFS as a global fuel standard is ratified, we penalize the excess fuel carbon intensity compared to specifically the turbine inducing units and broadened the scope of the regional fuel EU regulation, substantially affecting the ability. Moving on to Slide five, we present an overview of the demand and basic commodities trade. The combination of our trade war as expressed through tariffs and persisting geopolitical tensions, elevate policy uncertainty and pose a considerable down risk for the global growth and against the disinflation.

Speaker 1

For our segment, we anticipate an improving trade market with an increasing focus on the existing fleet decarbonization and energy efficient new bids. The global GDP growth expectations for 2025 and 2026 as reflected in the IMF's July forecast, call for a growth of about 3% in the coming years, accompanied by gradual control of inflationary pressure. According to BIMCO, the forecasted global drybulk demand will be from minus 0.5% to plus 0.5% in 2025, followed by growth of 1.5% to 2.5% in 2026 with grains and milder bags being the best performing sectors. China and India are gradually boosting domestic coal production, reducing import demand. China, in particular, has been rapidly phasing out fossil fuels from electricity generation, boosting renewables and reducing impact import dependence.

Speaker 1

The increase in import tariffs led to a 57% year on year drop in U. S. Grain volumes of China, as they are expected to continue favoring Brazilian cargoes bolstered by Brazil's growing production. India continues to perform and is projected to experience fastest growth among major economies with a forecast of 6.4% GDP increase in 2025 and 2026. It's expanding domestic market and manufacturer sector may continue to contribute positively to the drybulk demand with infrastructure investments playing a vital role.

Speaker 1

Summing up the supply demand equilibrium on Slide six, the supply growth is expected to continue to outpace demand. The freight market has rebounded recently during the start of the third quarter. Seven of our Capes are presently period chartered with an average remaining charter duration of almost two years at an average daily charter rate of $24,500 providing us visibility of cash flows topping $135,000,000 in contracted revenue backlog from Capes alone. Moving to Slide eight to present an overview of our quarterly highlights. We have declared our fifteenth consecutive quarterly dividend of $05 representing 4.7% dividend yield.

Speaker 1

At the same time, our free cash flow finance our newbuild program. We maintain ample liquidity, profitability and capital resources of $315,000,000 at a comfortable leverage of 38%. We achieved zero vessels in D and E carbon intensity, CII rating for 2024 as described in our 2024 sustainability report. Lastly, we took delivery of our 12 Phase three newbuild. And most recently, we sold one of our oldest vessels in our fleet in line with our fleet renewal strategy.

Speaker 1

In Slide nine, we present our returns to shareholders of $17,700,000 paid in common dividends and the $74,900,000 paid in common shares and purchases since 2022. We have been consistent in generating sustainable returns across market fluctuations as a result of our track record, financial management and our overall business model. Concluding the company update in Slide 10, we present our strong fundamentals. Safe Packers is a dry bulk company with $430,000,000 market cap, 47 vessels in the quarter having $312,000,000 scrap value. We maintain significant firepower with $125,000,000 cash and $188,000,000 in undrawn RCFs and 176,000,000 borrowing capacity against our significant order book of six newbuilds mainly in Japanese shipyards.

Speaker 1

We focus on our majority Japanese big fleet of partners on energy efficiency and lower CO2 taxation reflected in our CII rating of zero vessels on the bottom rating of DNB for 2024. We maintain a young technologically advanced fleet, strong balance sheet, comfortable leverage and low net debt per vessel over 9,100,000.0 for a ten year old fleet. We have built a resilient business model with cash flow visibility of 159,000,000 in revenue backlog, healthy expansion for sizable fleet that achieves scale and a meaningful 4.7% annualized dividend yield position to leverage on the environmental regulatory landscape. I now pass the floor to our CFO, Costadinos Radamopoulos, for our quarterly financial overview. Jose Dinos, the

Speaker 2

floor is yours. Thank you, Lucas, and good morning to everyone. During the 2025, we operated in a weaker charter market environment compared to the same period in 2024 with decreased revenues due to lower charter hires, decreased earnings from scrubber fitted vessels and increased operating expenses. Slide 12 will show our quarterly financial highlights for the 2025 and compare them to the same period of 2024. Our adjusted EBITDA for the 2025 stood at $25,500,000 compared to $41,800,000 for the same period in 2024.

Speaker 2

Our adjusted earnings per share for the 2025 was $01 calculated on a weighted average number of 102,500,000.0 shares compared to $0.17 during the same period of 2024, calculated on a weighted average number of 106,800,000.0 shares. On the top graph, during the 2025, we operated an average of 46.75 vessels, earning an average time charter equivalent of $14,857 compared to 45.43 vessels, ending an average of time charter equivalent of $18,650 during the same period in 2024. Our daily vessel operating expenses increased by 6% to $6,607 for the 2025 compared to $6,254 for the same period in 2024. Daily vessel operating expenses, excluding dry docking and delivery expenses increased by 10% to $5,604 for the 2025 compared to $5,089 for the same period in 2024. In conclusion of our presentation, we show on Slide two a quick overview of our quarterly operational highlights for the second quarter twenty twenty five.

Speaker 2

We would like to highlight that based on financial performance, the company's Board of Directors declared a $05 dividend per common share. Emphasis, we placed on maintaining a healthy cash position of about $104,000,000 as of 07/18/2025, another $240,000,000 in available revolving credit facilities, giving us a combined liquidity and capital resources of $343,000,000 Furthermore, we have contracted revenue from our non service spot and period time charters contracts of 171,000,000 net of commissions and before scrubber revenue. And also additional borrowing capacity in relation to six newbuilds upon the delivery as well as existing unencumbered vessel. We believe our strong liquidity and our comfortable leverage provides liquidity flexibility to our management and capital allocation and this will enable us to further expand the fleet, build a resilient company and create long term prosperity for our shareholders. This concludes our presentation.

Speaker 2

We're now ready for the Q and A session.

Operator

Thank you. We'll now be conducting the question and answer session. Session. Thank you. Thank you.

Operator

At this time, I'd like to turn the floor back to management for closing remarks.

Speaker 1

So thank you very much for attending this quarterly presentation of our financial results for the second quarter and half year twenty twenty five. And we're looking forward to discuss again with you in the next quarter. Thank you very much and have a nice day.

Operator

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

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