Release Date: February 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Safe Bulkers Inc (SB, Financial) operated in an improved charter market environment in Q4 2023 compared to the previous quarter.
- The company maintains a strong capital structure and is actively renewing its fleet, reducing the average age of its vessels.
- Safe Bulkers Inc (SB) has been proactive in adhering to environmental regulations, including placing orders for dual-fuel vessels and Phase 3 energy efficiency vessels.
- The company has a competitive fleet with 82% of its vessels being Japanese-built, which are more efficient and better suited for upcoming environmental regulations.
- Safe Bulkers Inc (SB) declared a $0.05 dividend per common share, reflecting its commitment to rewarding shareholders while maintaining a healthy cash position and liquidity.
Negative Points
- Safe Bulkers Inc (SB) experienced decreased revenues in Q4 2023 compared to the same period in 2022 due to lower charter hires and decreased earnings from scrubber-fitted vessels.
- The company faced higher interest expenses due to increased interest rates.
- The average time charter equivalent (TCE) for Q4 2023 was lower at $18,321 compared to $21,078 in Q4 2022.
- Net income for Q4 2023 was $27.6 million, down from $34.9 million in the same period of 2022.
- The company is cautious about the high capital cost of ordering new Capesize vessels, which could pose a risk given the current interest rate environment.
Q & A Highlights
Highlights of Safe Bulkers Inc (SB) Q4 2023 Earnings Call
Q: How are you thinking about the uses of cash in the current market environment? Is it to lower debt or expand further?
A: (Polys Hajioannou, CEO) The use of cash will be split between new buildings for fleet renewal, share buybacks, and reducing leverage. The market outlook is positive, and we aim to maintain leverage around 37-38%.
Q: Are there any operational changes due to geopolitical tensions, specifically regarding the Red Sea?
A: (Polys Hajioannou, CEO) Safe Bulkers has decided to avoid the Red Sea due to safety concerns for our seamen. This decision has been well-received by our crew and charterers, and we hope the situation will be resolved in the next few months.
Q: Given the current market conditions, do you plan to initiate share buybacks?
A: (Polys Hajioannou, CEO) Yes, we believe it is the right time to buy back shares as we have clear signs that the market is improving.
Q: Why is Safe Bulkers focusing on ordering midsized vessels instead of Capesizes?
A: (Polys Hajioannou, CEO) We prefer midsized vessels for their versatility and lower reliance on single commodities like iron ore. The high capital cost and interest rates for Capesizes also make them a riskier investment for us.
Q: What is your outlook on China's coal tariffs and their impact on the market?
A: (Polys Hajioannou, CEO) China's coal imports are vital, and while they may consider environmental consequences in the future, we don't expect a significant reduction in coal imports in the next five to ten years. Other regions like India and Southeast Asia will continue to demand coal.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
