Safe Bulkers Inc ((SB)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Safe Bulkers Inc. recently held its earnings call, presenting a mixed outlook for the company. While there were significant achievements in fleet renewal, dividend consistency, strong liquidity, and revenue backlog, the company faced challenges with decreased revenues and profitability, increased operating expenses, and a decline in earnings per share. The sentiment is balanced between positive long-term strategic moves and short-term financial pressures.
Fleet Renewal and Environmental Advancements
Safe Bulkers made strides in fleet renewal by taking delivery of their 12th newbuild and selling one of their oldest vessels. The company is focusing on capital allocation towards the newbuild program, boasting 12 Phase 3 vessels with an average fleet age of 10.3 years, younger than the global average of 12.6 years. Additionally, 80% of their fleet comprises Japanese-built vessels, surpassing the global average of 40%.
Dividend Declaration and Shareholder Returns
The company declared its 15th consecutive quarterly dividend of $0.05, representing a 4.7% dividend yield. Since 2022, Safe Bulkers has paid $78.7 million in common dividends and $74.9 million in share repurchases, reflecting a commitment to returning value to shareholders.
Strong Liquidity and Financial Position
Safe Bulkers maintained a strong liquidity position with $125 million in cash and $188 million in undrawn revolving credit facilities. The company reported a comfortable leverage of 38% and a low net debt per vessel of $9.1 million, ensuring financial stability.
Contracted Revenue and Cash Flow Visibility
The company has secured $135 million in contracted revenue backlog from Capes alone, with seven Capes period chartered at an average daily rate of $24,500. Safe Bulkers also reports a total contracted revenue of $171 million from non-cancelable contracts, providing cash flow visibility.
Decreased Revenues and Profitability
Operating in a weaker charter market environment compared to 2024, Safe Bulkers experienced decreased revenues due to lower charter hires and decreased earnings from scrubber-fitted vessels, impacting overall profitability.
Increased Operating Expenses
Daily vessel operating expenses rose by 6% to $6,607 for Q2 2025 compared to the same period in 2024. Excluding dry-docking and predelivery expenses, these increased by 10% to $5,604, adding to the financial pressures.
Decline in Adjusted Earnings Per Share
Adjusted earnings per share for Q2 2025 was $0.01, down from $0.17 in the same period of 2024, highlighting the challenges faced in maintaining profitability amidst a softer market.
Forward-Looking Guidance
During the second quarter of 2025, Safe Bulkers experienced a softer market, impacting revenues and profitability. Despite this, the company maintained a strong focus on fleet renewal, liquidity, and leverage management, with a declared dividend of $0.05 per share and a leverage ratio of approximately 38%. The company took delivery of its 12th newbuild and sold one of its oldest vessels at a favorable price, indicating a 10% turnaround in asset values. With a cash position of $104 million and $240 million in available revolving credit facilities, the company has a combined liquidity of $315 million, providing flexibility for future fleet expansion.
In summary, Safe Bulkers Inc.’s earnings call reflected a balanced sentiment, with positive long-term strategic moves in fleet renewal and financial stability countered by short-term financial pressures from decreased revenues and profitability. The company remains committed to shareholder returns and maintaining a strong liquidity position, providing a stable foundation for future growth.