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spk01: Saif Balkas Conference call to discuss the fourth quarter and full year 2021 financial results. Today we have with us from Saif Balkas Chairman and Chief Executive Officer Mr. Paulus Hachioano, President Dr. Lucas Barmparis, and Chief Financial Officer Mr. Konstantinos Adamopoulos. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. for the auto message advising your line is open. Following this conference call, if you need any further information on the conference call or the presentation, please contact Capitalink at 212-661-7566. I must advise you that this conference is being recorded today. Before we begin, please note that this presentation contains forward-looking statements as defined in Section of the Security Exchange Act of 1934, as amended, concerning future events the Company's growth strategy and measures to implement such strategies, including expected vessel acquisition and entering into further charters. Words such as expect, intents, plans, beliefs, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements, Although the company believes that these expectations reflect and such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. The statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results are different materially include but are not limited to changes in the demand for dry bulk vessels, competitive factors in the market in which a company operates, risks associated with operations outside the United States, and other factors listed from time to time in the company's filings with the Security and Exchange Commission. The company expressly disclaims any obligations or undertakings to release publicly any updates or revisions to any in the company's expectations with respect thereto or any changes in events, conditions, or circumstances on which any statement is based. And now I pass the floor to Dr. Barbaris. Please go ahead, sir.
spk04: Good morning. I'm Lucas Barbaris, president of SafeBikers. Welcome to our conference call and webcast to discuss the financial results for the fourth quarter and the full year of 2021. We will start our presentation in slide three. We are deeply concerned about the Russian-Ukraine conflict, which, against international laws and logic, has outbroken, and we hope that it will end soon, avoiding further bloodshed in Ukraine. and we don't have any vessels currently sailing in the Black Sea. We intend to comply with the sanctions imposed and we will continue to monitor closely the situation to assess the impact of the war on the global economy and on the dry bark city. As we can see from the slide, major commodity trades will be affected. In slide number four, we present a synopsis of our quarter results. 2021 was a very good year for our companies. We were able to renew our fleet with environmentally advanced vessels, enter into several thermal time chapters, substantially deliverance, and improve our liquidity. As a result of our strong performance, the company is declaring a 5-cent dividend per share. In terms of profitability, we reached $92.4 million. 4 million of EBITDA and 39 cents of adjusted earnings per share. In terms of performance, we reached a time cycle equivalent rate of 26,180, aggregate daily OPEX and GNA of 6.6 thousand. In terms of liquidity and capital resources, we have about 388 million as of March 4, 2022, of which 194 million is in cash. Furthermore, we have additional borrowing capacity in relation to four unencumbered vessels and seven mubilates upon their delivery. Further to that, we have additional borrowing capacity in relation to four existing unencumbered vessels and seven mubilates upon their delivery. Most recently, in February, we have successfully issued €100 million five-year unsecured non-amortizing bond at a coupon of 2.95% per annum. Our secured debt stood at $329.4 million as of March 4, 2022. And we paid $125.3 million for the five second-hand vessels with 8.8 years average age. And we collected $109.8 million for the seven vessels we sold with 14.3 years average age, effectively renewing our fleet with younger and more sufficient vessels. Finally, we declared a dividend of 5 cents per share, noting that at the same time, we are renewing our fleet with second-hand and phase 3 new builds ahead of the competition, and that during 2021, we have successfully delivered our company. Allow me now to guide you through the company's key investment highlights, as presented in slide 5. 3 buckets is top. heritage of 60-plus years of track record, experience, and hands-on management led by police IQR. With strong company-balanced fundamentals, ample liquidity, low leverage, secured cash flows from reliable counterparties, we have secured with nine pay streets here, three new builds, and the replacement of five second-hand vessels. on 2023 onwards. We have an additional revenue yearly capacity of about 20 million plus to our 17 scrubber fitted vessels due to the indicated fuel price differential. Our 40 vessels fleet is 80% comprised of Japanese vessels with superior specifications and commercial and operational upgrades, which call the substantial premium both in shattering and resale value. The order book remains at 20 years low, and market fundamentals are positive for 2022. We believe the campaign is well positioned for the long run, with an environmental-based advantage. Moving on to slide seven, we present the development of a CRB commodity index, which currently stands at a five-year high, with further upside potential. The index reflects basic commodity future prices, for example, energy, agriculture, trade, the board during 2021, and the rapid surge in prices further amplified during 2022, as a result of the ongoing Ukrainian conflict. The general forecast of IMF before the Ukrainian conflict set the global GDP is expected to increase by 2.2% in 2022, supported by recovery-related industrial materials like iron ore, coal, and agriculture, while the expected dry bark feed growth stands at 2% for 2022, which means that the squeeze in the supply of esses may well be a realistic scenario. That is to that, the USA have allocated about $1 trillion of stimulus While China spends yearly about $120 billion on similar infrastructure projects, achieving 8.1% GDP growth in 2021, the best growth pace in a decade. IMF forecasts a 4.8% GDP growth for 2022 and 5.2% for 2023. Lastly, the EU overall recovery package of $2.4 billion for the period of 2021 to 2027 is a further boost for global demand. Let's turn to slide 8 to have a quick look on present charter market conditions. As shown on the top graph, the CAPES market for the year to date continues to be healthy. CAPES lately have been volatile, driven by commodities, commodity dynamics, which we analyzed. The forward trade agreements here present in red color. is about 30,000 to 35,000 for 2022. Similarly, for Panama access, as seen on the bottom graph, the FFA care is about 30,000 to 35,000 for 2022. The prevailing commodities market coupled with strong supply fundamentals are likely to support the freight market throughout 2022. In slide nine, we present our suggested order book deliveries. In this posted expected charter market environment, we have two deliveries in 2022. hiring in 2023 and doing the first quarter of 2024. Our first new-build delivery is in May. In the same slide, in the bottom graph, we also present a record-low order book for the forward years for caves in Panama, Texas. Then, in slide 10, we touch upon the card market valuation of our second-hand acquisitions and of our order book. During the business cycle, as part of our fleet renewal strategy, we have invested in nine new build vessels of the newest design, complying with recent IMO regulations for NOx emissions. Further, we have acquired three Panamats and two Cakes, second-hand vessels, of modern design built in Japanese shipyards. The average acquisition price of our nine new builds was about $32.5 million, as compared with our current average market value, which is about $41.3 million. For the five second hands, the average price was 25.1 million as compared with the current average market value of 28.2 million. This timely stream of investments has created at present an inflated wealth to our shareholders of close to 100 million. Further, the company has previously invested in established technology to 17 of its vessels. versus HFO differential at high levels, which is translated to increase revenues for the scrubber-fitted vessels. Recently, High Five in Singapore stands at about $280 per ton, and according to the future market, the balance for 2022 stands at about $190 per ton. The scrubber-fitted Post Panamax burns about 7,500 metric tons per year, pushing the implied scrubber gain return of about $25 million per ton. All in all, our fleet renewable strategy represents a significant increase of the intrinsic value of our company of about 120 million. Now let me pass the floor to our CFO, Konstantinos Adamopoulos, for our financial overview. Thank you, Lucas, and good morning to everyone.
spk05: Let me start with our quarterly financial highlights shown in slide 12. During the first quarter, the fourth quarter of 2021, we operated in a significantly improved charter market, Lower interest expenses, reduced mortgage expenses, and increased revenues also include earnings from scrubber-fitted vessels. Accordingly, net revenues stood at $92.4 million versus $52.2 million last year. Net revenues increased by 77% compared to the same period in 2020, mainly due to the increased time chart equivalent rate as a result of the improved market, assisted by the additional revenues earned by scrubber-fitted vessels. We had a TCE of $26,180 compared to a TCE of $12,390 during the same period in 2020. The net income for the fourth quarter of 2021 reached $65.2 million compared to net income of $7.6 million during the same period in 2020. Our daily time charter. A daily OPEX stood at $5,149 versus $3,978, and a daily OPEX excluding dry docking and Invention operating expenses increased mainly affected by increased dry docking expenses, increased spare parts, stores and provisions related to works performed due to dry dockings, increased provisions of technical services and increased crew and battalion expenses due to COVID-19. The aggregate figure for both OPEX and GNA for the last quarter of 2021 was $6,183, demonstrating our focus on lean operations. We believe this number for both OPEX and GNA is one of the industry's lower as we include in OPEX all our dry dockings and pre-delivery expenses and in our GNA our management fees, directors and offices compensation as well as all expenses related to the administration of our company. Our adjusted EBITDA for the fourth quarter of 2021 Our adjusted earnings per share for the fourth quarter of 2021 was 39 cents, calculated on a weighted average number of 121.6 million shares, compared to 4 cents during the same period in 2020, calculated on a weighted average number of 102.2 million shares. Let's conclude our presentation in slide 13. the same period of 2020. As a general note, 2021 was a very good year for our company. We were able to place orders, renew our fleet with environmentally advanced vessels, enter into several favorable time charters, substantially leverage and improve our liquidity. As a result of our performance, the company's board of directors has decided to declare a five-cent dividend to the common share. In addition, in February of last month, we have successfully issued a five-year unsecured bond in the amount of 100 million euros, guaranteed by safe markets, with a coupon of 2.95% due semi-annually. We would like to emphasize that the company is maintaining a healthy liquidity position of about 194 million as of March 4, and another 194 million of RCF, and secure commitments, resulting in a combined liquidity of about $388 million that provides us with significant power. Our present list presents in more detail our financial and operational results, and now we are ready to take your questions.
spk01: Thank you. As a reminder, if you wish to ask a question, please press star 1 on your telephone keypad and wait for the automated message advising your line is opened. Please state your first and last name before you ask your question. If you wish to cancel that request, please press star two. Thank you. We will now take your first question. This comes from the line of Chris Weatherby of Citi. Please go ahead. Hey, thanks, guys. This is Eli Winske on for Chris Weatherby. Just wanted to start with rates here.
spk08: right now in the broader environment, do you guys see any more possibility for higher fluctuations, or do we think they're going to continue to remain elevated, particularly in spot contracts?
spk03: You mean volatility in the charter markets?
spk08: Yeah, yeah, exactly. Is there more now than there has been, do you think, with some of the geopolitical issues, or do we still expect demand is high in terms of the read-through to your customers?
spk03: Yes, we expect that there will be a fair amount of volatility because of what is happening right now, because there are big swings on the prices of commodities and the prices of oil, especially. And a lot depends on how long the war will take and how long this conflict will keep going. And, of course, we expect sanctions will be there for... quite a long time, which is not necessarily bad for shipping. Could be good for volumes and ton-miles. But the freight rates will fluctuate a lot because of these changes of banker prices. I mean, we saw this week one side to the other side. So all this is affecting the trend. But overall the trend is strong because commodities are expensive and order book is very low. So we expect volatility indeed for the next few months.
spk08: What are your customers saying about this in terms of the duration of contracts? I think you said that the average contract duration right now is 1.2 years. I believe that's what it said in the release. Do you see that more and more trying to shift to longer term in terms of their preferences?
spk03: I think the trend in dry bulk is the charter rates and the And the bigger ones on the Cape side, you may find a little bit longer. But on the Panamaxes to Post-Panamaxes, it's generally, you know, 6 to 12 months charters.
spk08: Got it. Thanks. And then one more for me. You guys declared a 5-cent dividend, stronger liquidity position. What does the long-term capital allocation look like for SafeBookers?
spk04: Long-term capital allocation?
spk03: Yes, look, we started the dividend this quarter in Q4 of last year, which was the first year of a good market after six or seven years of low market. And we started with a comfortable dividend in line with also the other actions the company is taking. to deliver it and to take delivery of the new building vessels with the least possible debt on them. So it all depends on the freight market. We believe we have a strong freight market for this year and possibly next year. There are good signs that next year will be good as well. Thank you, Jack.
spk04: Overall, the remaining capex for the next couple of years is 250 million, 247.
spk01: Thank you. We will now take your next question. This comes from Ben Nolan of Stifel. Please go ahead. Your line is now open.
spk06: guys. This is Ben. We're at Stiefel. I have a couple. You talked a little bit about your chartering strategy, although we've seen this week one of your competitors on a new bill put a longer-duration contract very high-specification new builds, and it sort of is something that you guys have done often in the past. I'm curious if there's much depth to that market and if it's something that you guys would consider doing on a few of those new vessels.
spk03: Look, it's much easier to do it online. because there's more horizon there, also on the FFA market. So charters can be guided by cave-sized FFA market. In the smaller sizes, like Panamax and Post-Panamax, the curve is very steep for the top. So it doesn't make a lot of sense when the market is so much under-supplied with new tonnage. There's not a lot of new tonnage to enter the market in the next three years. It doesn't make sense for an owner to go and lock three or five years' charters on the Panamaxes or on the Kamsa Marxes. And on the cave size, I consider this fixture which is done. That was a pretty good fixture at the time it was done on a new business vessel with a prompt delivery. So I see that point of view of the owner that I believe it was a very good fix.
spk06: Okay. And then switching gears a little bit, obviously you guys have a lot of scrubbers on your vessel. that is working very much to your benefit at the moment. Any thoughts about going out and finishing out the fleet with scrubbers maybe as they come up for dry dock or effectively adding to your scrubber exposure?
spk03: Yeah, it doesn't make a lot of sense to put the vessels of higher now to fit in scrubbers because what we see now, the spike in the spreads can be temporarily because of what is happening in Ukraine. This may last for two or three months. I don't think it will last for the whole year. So to put ships away in the dry docks for an extra period of 15-20 days when the market is $35,000 a day doesn't make sense. We did it in 2019 when the market was 5,000 or 6,000 or 7,000. We put the sheets in the dry dock to do this extra bit of time there to fit the scrambles in anticipation that the spread would be a decent spread. So right now, I don't see us doing anything more. We have a cape-sized vessel, which we are doing right now. It was planned already. a year ago to do it, but we don't have plans. We are more focused on environmental improvements that we can do on our fleets, of how we can upgrade our ships and reduce their CII and their energy efficiency indexes. Because I think this, when all this story of the war settles down, this will come back and we have to be prepared for the next day.
spk06: Okay, that's helpful. And the last, for me, I believe I saw in the release that you guys had not been active under the ATM program, which is the first time in a while. Is that an indication that, you know, you sort of, you are where you are and you like where you are and you don't need more capital to do anything else or just trying to, you know.
spk03: It's clear that we consider the stock price still not at the level that is worth considering and we don't plan to use it. So, for the time being, it's at the level that we don't really need any more liquidity. So, that's why since September we didn't touch that scheme. On the other hand, as we have seen, we have increased our liquidity. We have extra liquidity through the bond. We are waiting for the right opportunity to invest. in new technologies and in fleet renewal, replacing the older ships with a bit younger one, apart from the new buildings we have. And for us, the most important is to prepare for the next day on the new environmental changes that, as I tell you now, we will forget about them for three months, but thereafter, I mean, the climate change is there. It won't go away because of the war. I mean, We are not focused on it now because, you know, we have to see how, especially Europe, will deal with the shortage of gas and the shortage of energy. But in three months' time, I believe that the focus will be back on the climate. And we don't want to derail from our initial planning of making environmental investments will come in the next two, three years very fast. Understood.
spk01: All right, I appreciate it. Thank you, guys. Thank you. And we take our next question. This comes from the line of Randy Givens of Jefferies. Please go ahead. Your line is open.
spk07: Howdy, gentlemen. Randy Givens from Jefferies. How's it going? Yeah, hi. Fine, thank you. Hey, I guess looking at the first quarter, a lot of your peers kind of giving some quarter-to-date rate guidance. Can you provide us with the same on the spot side of the market?
spk03: The spot market is improving the last two, three weeks quite substantially, as we all see. And the first two months of the quarter have been dull. So the first two months of the year are definitely lower than... but there's a catch-up in the third month of the quarter. So I think that is looking good. So we are not guiding what will be the average, but you expect if the two months are a lot lower and the one a lot higher, the balance will be a little bit tipped on the lower side from the previous quarter. And then this quarter maybe a little bit less. But that's huge.
spk07: So that'd be huge. And then on the dividend, you know, great to see a dividend announcement from you guys. How did you decide on this amount? How should we think about it going forward? You know, is there a policy in place, or is this a flexible dividend based on kind of market conditions?
spk03: No, it's more like a, let's say, sustainable dividend, because for us, as I tell you, we were one of the few companies that we have made timely renewal of the fleet, which we have to take now delivery of all the ships, starting with the first one in two months' time. And then we have every couple of months a new building at the end of 2023, the beginning of 2024. So all these ships, we expect to hit the market in a good freight rate environment. As we have seen, the new ships, certainly they will be very attractive to charters and would be able to secure longer than one-year charters, maybe two or three-year charters at the right time of the market. So we thought to start with this dividend right now. We are very confident for the next two years and we thought that we should start it now and at the same time keep enough liquidity for the new builds and for the environmental investments.
spk04: Of course, we review our dividend policy every quarter and always there is no reassurance that we will continue to pay the dividend. But as Paul said, the dividend is... the following period. Got it. That makes sense. All right.
spk07: And in terms of the unsecured, you know, the very impressive in terms of the rates there, use of proceeds, I know you had a few options, kind of are you leaning towards one or the other? Is that market going to be tapped again, right, to do another 50 million euro or whatever may be kind of on the upside of that?
spk03: No, we don't plan to use this market again. We used it once. It was a good one because it was the first rival company to do the bond in the Athens stock exchange. We consider the price favorable. Of course, conditions have changed the last month with interest rates. And it's not something you tap every other quarter and you go in. You do it... Once you go for five years and then you see what happens after five years, if there is appetite for refinancing it and at what money, at what spend, or if you just repay the investors. So this gives absolute liquidity to the company to make investments, either on new ships or modern ships, or environmental investments, which... with advantage to that of the competition. Because, as I told you, I mean, in six months' time, you know, all three or six months' time, all their focus will be back on the climate. We shouldn't forget that. Got it. Well, that's it for me. Thank you again.
spk01: Thank you. Please go ahead. Your line is now open.
spk09: Good afternoon, gentlemen. This is Magnus for your HG Wainwright. Just a follow-up question on the current cash position. You mentioned you have $250 million of capex going forward. Can you break that out between the three years? I guess most of it is in 2023. And how much do you plan to use for installment versus debt? Should we assume like 60%?
spk03: The majority is coming in 2023 because the deliveries are in 2023, and most of it is payable at the time of delivery, 60% or 70%. It's time at the time of delivery. So you are right to say that most of this capex is in 2023. Look, I mean, we plan to put a minimal debt on the new ships, not on all of them. Because as we say that we want to keep the debt near the scrap value of the fleet and so we could produce more profits for our shareholders. Also, I believe that it's very important in shipping to remember that it's a significant business. There will be definitely opportunities in the next two or three years to invest money. in shipping. We cannot take everything for granted that this market will last 10 years. We have to have the funds and be able to invest in the low part of the cycle if anything happens during the next two or three years. The capex of the company is 55 million in 2022, 143 million in 2023, and 47 million in the beginning of 2024. Our last delivery is very early 2024, in the early part of 2024, like January, February. So we have a fleet that is coming in the next 20 months to the company. Every two months we take, on average, every two months we will be taking a new-built vessel, and this will grow our fleet by around 25 percent in the next 20 months. So we are on a good track with the liquidity that will generate, will reward investors and shareholders, and at the same time make all the environmental investments to stay ahead of the game. All right.
spk09: Thank you for that, Carlo. On the press, do you have an amount in mind there, given that with all the cash on the balance sheet, to retire some of those press?
spk03: The press, you mean? Yes, it's in our mind to do that as well. A certain part of it in the next few quarters will be allocated into some retirement of the press. And anyway, we have said that also when we should... the bonded part of it will be going there as well. But the company and the boat will decide what percentage goes in what element. Because if ship prices are going to be elevated, you know, you understand we are not planning to invest in expensive vessels. We'll wait our opportunity. We have fleet expansion anyway and obviously the price of the last two or three weeks, maybe all sellers are asking $5 million more for dry bulk vessels. We're not going to jump on those prices. We can afford to be patient. People with liquidity and who have not invested on ships may jump on expensive acquisitions, whilst in our case we can afford to wait. Very good. That's it for me. Thank you.
spk01: Thank you. Thank you. Thank you. We do have one more question on the line, but in the meantime, once again, as a reminder, if you wish to ask a question, please press star 1 on your telephone. We will now take our next question. This comes from the line of Clement Moulin of Value Investors Edge. Please go ahead.
spk02: Good morning. Clement Moulin. I'm from Value Investors Edge. Congratulations for this quarter. Your balance sheet has improved significantly over the past year, and I was wondering if you could provide some commentary on how you think about the preferred. Is redeeming part of the preferred outstanding something you would consider to further reduce your cost of capital?
spk04: Look, the capital structure of the company, as we said, has improved substantially, and we had As we go ahead, the thought process is that at a certain point of time we may retire some preferred. We don't know exactly. We cannot say anything about how much. What we know is that about a substantial amount will remain. Some of it may be retired. So we have, let's say, a strong percentage of preferreds, a strong percentage of bonds, about some million that we have already, in euros, have already issued, and some are banking loans that will cover the position. The company, as we go ahead, will have about nine doses to be delivered to us. So the asset values, the net asset value of the company will increase, while the debt path. So we intend to maintain somehow this capital structure the following years, which gives us benefit in good markets, because we have the liquidity, we have the right capital structure, we have low expenses, and also in good and bad markets it will work for us and may create for us opportunities. This liquidity to move if there are certain opportunities that we may located in the market.
spk02: All right. That's helpful. Regarding the bond you issued in the Greek market at what we believe to be a very attractive rate, will you look to hedge the FX risk, or are you comfortable with this euro exposure?
spk03: You mean hedge the bond? At a certain point, we'll have some part of the exposure. But you have to remember, as a company, we have around 30 million a year expenses in euros. So we need 150 million euros in five years. So the euros we have kept as euros, because anyway we can spend them. There will be opportunities, as we see one right now, That is happening because of this unfortunate story with the Ukrainian war that the euro has depreciated to levels that the company is considering to have some part of the exposure.
spk02: All right, that's all from me. Thank you for taking my questions and congratulations again for this quarter.
spk01: Thank you very much. Thank you. It appears there are no further questions at this time.
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