Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the fourth quarter and full year 2021 financial results. Today we have with us from Safe Bulkers Chairman and Chief Executive Officer, Mr. Polys Hajioannou, President, Dr. Loukas 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. At which time, if you wish to ask a question, please press star and one on your telephone keypad and wait 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 Capital Link 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 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended concerning future events, the company's growth strategy, and measures to implement such strategy, including expected vessel acquisition and entering into further charters. Words such as expect, intend, plans, believes, 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 to differ 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 Securities and Exchange Commission. The company expressly disclaims any obligations or undertakings to re-release publicly any updates or revisions to any forward-looking statements contained herein to reflect any changes in the company's expectations with respect thereto or any changes in events, conditions or circumstances on which any statement is based. Now I pass the floor to Dr. Barmparis. Please go ahead, sir.
Good morning. I'm Loukas Barmparis, President of Safe Bulkers. 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 3. We are deeply concerned about the Russian-Ukrainian conflict, which, against international laws and logic, has broken hearts, and we hope that it will end soon avoiding further bloodshed in Ukraine. We do not have any Ukrainian or Russian crew on board our vessels, 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 bulk shipping. As we can see from the slide, major commodity rates will be affected.
In slide number four, we present a synopsis of our quarter results. 2021 was a very good year for our company. We were able to renew our fleet with environmentally advanced vessels, enter into several time charters, substantially deleverage, and improve our liquidity. As a result of our strong performance, the company is declaring a $0.05 dividend per share. In terms of profitability, we reached $92.4 million in net revenues, $65.2 million of net income, $82.4 million of EBITDA, and $0.39 of adjusted earnings per share. In terms of performance, we reached a time charter equivalent rate of $26,180, aggregate daily OpEx and G&A of $6,600.
In terms of liquidity and capital resources, we have about $388 million as of March 4th, 2022, of which $194 million is in cash, and $194 million is in RCFs, revolving credit facilities and secured commitments. Furthermore, we have additional borrowing capacity in relation to four unencumbered vessels and seven newbuilds upon their delivery. Further to that, we have additional borrowing capacity in relation to four existing and unencumbered vessels and seven newbuilds upon their delivery. Most recently in February, we have successfully issued EUR 10 million five-year unsecured non-amortizing bond at a coupon of 2.95% per annum.
Our secured debt stood at $339.4 million as of March 4th, 2022, and we paid $125.3 million for the five secondhand 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 most efficient vessels. Finally, we declared a dividend $0.05 per share, noting at the same time we are renewing our fleet with secondhand and Phase 3 newbuilds ahead of the competition and that, during 2021 we have substantially deleveraged our company. Allow me now to guide you through the company's key investment highlights as presented in slide five.
Safe Bulkers is a top 10 pure dry bulk vessel owner in Panamax segment, with a heritage of 60+ years of track record experience and hands-on management led by Polys Hajioannou. With strong company balance sheet fundamentals, ample liquidity, low leverage, secured cash flows from reliable counterparties. We have secured nine Phase 3 pre-newbuilds and the replacement of five second-hand vessels for our fleet expansion and renewal ahead of peer competition and ahead of the expected impact of the environmental regulations on 2023 onwards. We have an additional revenue yearly capacity of about $20+ million from our 17 scrubber-fitted vessels due to the indicated fuel price differential. Our 40-vessel fleet is 80% comprised of Japanese vessels with superior specifications and commercial and operational upgrades, which command a substantial premium both in chartering and resale value.
Order book remains at 20-year low and market fundamentals are positive for 2022. We believe the company is well-positioned for the long run with an environmental-based advantage. Moving on to slide 7, we present the development of our 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, precious metals and industrial metals, which represent leading indicators for shipping. We have seen a strong demand for commodities across the board during 2021 and the rapid surge in price since 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 expected growth at 4.4% for 2022 and 3.8% for 2023.
The forecasted global dry bulk ton-mile demand is expected to increase by 2.2% in 2022, supported by recovery in industrial materials like iron ore, coal and agricultural while the expected dry bulk fleet growth stands at 2% for 2022, which means that the squeeze in the supply of vessels may well be a realistic scenario. Further to that, the U.S. have allocated about $1 trillion of stimulus program for infrastructure spending for bridges, roads, while China spends yearly about $120 billion on similar infrastructure projects, achieving a 8.1% GDP growth in 2021, the best growth pace in a decade. IMF forecast a 4.8% GDP growth for 2022 and 5.2% for 2023.
Lastly, the E.U. overall recovery package of EUR 2.4 billion for the period of 2021- 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 top graph, the Capesize market for the year-to-date continues to be healthy. Capesize lately have been volatile, driven by commodities, commodity dynamics which we analyzed. The forward freight agreement curve presented in red color is about $30,000-$35,000 for 2022. Similarly for Panamax, as seen on the bottom graph, the FFA curve is about $30,000-$35,000 for 2022. The prevailing commodities market, coupled with strong supply fundamentals, are likely to support the freight market throughout 2022. In slide 9, we present our scheduled order book deliveries.
In this positive expected charter market environment, we have two deliveries in 2022, five in 2023 and two in the first quarter of 2024. Our first newbuild 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 Capes and Panamax vessels. Turning to slide 10, we touch upon the current 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 9 newbuild vessels of the newest design, complying with the recent IMO regulations for NOx emissions. Further, we have acquired three Panamax and two Capes second-hand vessels of modern design built in Japanese shipyards.
The average acquisition price of our nine newbuilds was about $32.5 million as compared with their current average market value, which is about $41.6 million. For the five second-hands, the average price was $25.1 million as compared with their current average market value of $28.2 million. This timely stream of investments has created a present and embedded wealth to our shareholders of close to $100 million. Further, the company has previously invested in scrubber technology to 17 of its vessels. The surge in fuel prices over the past six months, which is more evident in today's market, has pushed the very low sulfur fuel oil versus HFO differential at high levels, which is translated to increased revenues for the scrubber-fitted vessels.
Recently, Hi-5 in Singapore stands at about $280 per ton and according to the futures market, the balance for 2022 stands at about $190 per ton. A scrubber-fitted Post-Panamax spends about 7,500 metric tons per year, pushing the implied scrubber gain net return of about $25 million per annum in aggregate for our company's 17 scrubber-fitted vessels. All in all, our fleet renewal 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, Loukas, and good morning to everyone. Let me start with our quarterly financial highlights shown in slide 12. During the fourth quarter of 2021, we operated in a significantly improved charter market compared to the same period of 2020. With lower interest expenses, reduced model expenses, and increased revenues that also include earnings from scrubber-fitted vessels. Our quarterly 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 charter equivalent rate as a result of the improved market, assisted by the additional revenues and by our scrubber-fitted vessels.
We had a TCE of $26,818 compared to a TCE of $12,319 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 rates stood at $26,818 versus $13,319 same quarter last year. Our daily OpEx stood at $5,149 versus $3,978. The daily OpEx excluding dry docking and pre-delivery expenses stood at $4,666 versus $3,955 for the last quarter of 2020.
Vessel operating expenses increased, mainly affected by increased drydocking expenses, increased spare parts, stores and provisions related to works performed during drydockings, increased provisions of technical services, and increased crew and pay expenses due to COVID-19. The aggregate figure for both OpEx and G&A for the last quarter of 2021 was $6,183, demonstrating our focus on lean operations. We believe this number for both OpEx and G&A is one of the industry's lowest as we include in our OpEx all our drydockings and pre-delivery expenses and in our G&A, our management fees, directors' and officers' compensation as well as all expenses related to the administration of our company.
Our Adjusted EBITDA for the fourth quarter of 2021 increased to $67.6 million compared to $26.3 million for the same period in 2020. Our adjusted earnings per share for the fourth quarter of 2021 was $0.39, calculated on a weighted average number of 121.6 million shares compared to $0.04 during the same period in 2020, calculated in a weighted average number of 102.2 million shares. Let's conclude our presentation in slide 13 with our quarterly operational highlights for the fourth quarter of 2021 in comparison to 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 deleverage and improve our liquidity. As a result of our performance, the company's board of directors has decided to declare a $0.05 dividend per common share. In addition, in February of last month, we have successfully issued a five-year unsecured bond in the amount of EUR 100 million, guaranteed by Safe Bulkers 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 secured commitments, resulting in a combined liquidity of about $388 million that provide us with significant firepower.
Our press release presents in more detail our financial and operational results and now we are ready to take your questions.
Thank you. We will now take your first question. This comes from the line of Chris Wetherbee from Citi. Please go ahead.
Hey, thanks, guys. This is Eli Winski on for Chris Wetherbee. Just wanted to start with rates here and the perception around the volatility. You know, last couple quarters we had a lot of excitement continuing to escalate. With what's happening 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 the spot contracts?
You mean, volatility in the charter markets?
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?
Yes. We expect that there will be a fair amount of volatility because of what is happening right now because there are big swings in the prices of commodities and the price of oil especially. A lot depends on how long the war will take and how long this conflict will keep going. Of course, we expect sanctions will be there for quite a long time, which is not necessarily bad for shipping. It could be good for volumes and ton-miles. The freight rates will fluctuate a lot because of these changes in bunker prices. I mean, we saw this week changes of $20, $30 on the price of Brent on one side to the other side.
All this is affecting the trend. Overall the trend is strong because commodities are expensive and order book is very low. We expect volatility indeed for the next few months.
Sure. 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 are trying to shift to longer term in terms of their preferences?
No, I think the trend in dry bulk is the charter rates and the offered contracts is up to one year on our size of vessels. On the bigger ones, on the Capesize, you may find a little bit longer. On the Panamax to Post-Panamax is generally, you know, 6-12 months charters.
Got it. Thanks. One more for me. You guys declared a $0.05 dividend, stronger liquidity position. What does the long-term capital allocation look like for Safe Bulkers?
Long-term capital allocation? 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. We started with a comfortable dividend in line with also the other actions the company is taking to deleverage and to take delivery of the newbuilding vessels with the least possible debt on them. 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, guys. Thanks.
All the remaining CapEx for the next couple of years is $250 million. $247 million.
Thank you. We will now take your next question. This comes from Ben Nolan of Stifel. Please go ahead. Your line is now open.
Hey, guys, this is Ben Nolan over at Stifel. I have a couple. You talked a little bit about your chartering strategy, although we've seen this week, you know, one of your competitors on a new build put a longer duration contract on a vessel. You guys obviously have some very high specification new builds. 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.
Look, it's much easier to do it on larger ships, long-term charter because there's more upside there, also on the FFA market. Charters can be guided by Capesize FFA market. In the smaller sizes like Panamax, Post-Panamax, the curve is very steep for the ton-year. It doesn't make a lot of sense when the market is so much undersupplied with new tonners. There's not a lot of new tonners to enter the market in the next 3 years. It doesn't make sense for an owner to go and lock 3- or 5-year charters on the Panamax or on the Kamsarmax.
On the Capesize, I consider this fixture, which was done, that was a pretty good fixture at the time that it was done on a newbuilding vessel with a prompt delivery. I see the point of view of the owner, and I say that I believe it was a very good fix.
Okay. Switching gears a little bit, obviously you guys have a lot of [audio distortion] on your vessels. I assume that is working very much to your benefit at the moment. Any thoughts about going out and then finishing out the fleet with scrubbers maybe as they come up for dry dock or effectively adding to your scrubber exposure?
It doesn't make a lot of sense to put the vessels off hire now to fit the scrubbers, because what we see now, the spike in the spreads can be temporary because of what is happening in Ukraine. This conflict may last for 2 or 3 months. I don't think it will last for the whole year. To put ships away in the dry docks for 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 ships in the dry dock to do this extra bit of time there to fit the scrubbers in anticipation that the spread would be a decent spread.
Right now I don't see us doing anything more. We have a Capesize vessel which we are doing right now. It was planned since 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 indices because I think when all this story of the war settles down, this will come back in focus and we have to be prepared for the next day.
Okay, that's helpful. 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 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-
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. For the time being it's at a level that we don't really need any more liquidity. That's why since September we didn't touch that scheme. On the other hand, as you have seen we have increased our liquidity. We have extra liquidity through the bank. 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. 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.
Thereafter, I mean the climate change is there. It won't go away because of the war. I mean, we are not focused on now because, you know, we have to see how especially Europe will deal with the shortage of gas and the shortage of energy. 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 that will come in the next two, three years very fast.
Understood. All right, I appreciate it. Thank you guys.
Thank you. We take our next question. This comes from the line of Randy Giveans of Jefferies. Please go ahead. Your line is open.
Good morning, gentlemen. Randy Giveans from Jefferies. How's it going?
Yes, hi. Fine, thank you.
Hey, I guess, looking at the first quarter, you know, 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?
The spot market is improving the last 2-3 weeks quite substantially as we all see. The first 2 months of the quarter have been done. The first 2 months of the year are definitely lower than the Q4. There's a catch up in the third month of the quarter. I think that is looking good. We're not guiding of what will be the average but we're expecting the 2 months are a lot lower than the one and not higher. The balance will be a little bit tipped on the lower side from the previous quarter. In the last quarter the number was 26.
Twenty-six.
26. This quarter may be a little bit less.
Yeah.
Shouldn't be huge difference.
Okay. 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?
No, it's more like let's say a 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. We have every couple of months a new building at the end of 2023, in the beginning of 2024. 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. 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.
Of course, we review our dividend policy every quarter, and there is no assurance that we will continue to pay the dividend. As Paul said, the dividend is designed so to be meaningful for, let's say, the following period.
Got it. That makes sense. All right. 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 a market that can be tapped again, right, to do another EUR 50 million or whatever it may be, kind of on the upside of that?
No, we don't plan to use this market again. We used it once. It was a good one because it was the first time our 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. It's not something you tap every half 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 spread, or if you just repay the investors.
This gives ample liquidity to the company to make investments either on new ships or modern ships or environmental investments, which will assist us to operate the fleet with the advantage to that of the competition. Because as I told you, I mean, in three or six months' time, you know, all the focus will be back on the climate. We shouldn't forget that.
Got it. Well, Dimitri, thank you again.
Thanks.
Your next question today comes from the line of Magnus Fyhr of H.C. Wainwright. Please go ahead. Your line is now open.
Good afternoon, gentlemen. This is Magnus Fyhr, H.C. 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. How much you plan to use for installment versus debt? Should we assume like 60%?
The majority is coming in 2023 because the deliveries are in 2023, and most of it is payable on at the time of delivery, 60%-70% each time at the time of delivery. You are right to say that most of this CapEx is in 2023. Look, I mean, we plan to put minimal debt on the new ships, not on all of them. Because as we say that, you know, 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 is 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 the beginning of 2024. Our last deliveries is very early 2024 in the early part of 2024, like January or February. We have a fleet that is coming in the next 20 months to the company.
On average, every two months we will be taking a newbuild vessel and this will grow our fleet by around 25% in the next 20 months. We are on a good track with the liquidity that will generate. We will reward investors and shareholders and at the same time make all the environmental investments to stay ahead of the game.
All right. Thank you for that color. Just on the pref's, do you have an amount in mind there, given that with all the cash on the balance sheet to retire some of those pref's?
The prefs you mean? Yes.
Yeah.
It's in our mind to do that as well. A certain part of it in the next few quarters to be allocated into some retirement of the prefs. Anyway, we have said that also when we issued the bond that part of it will be going there as well. The company and the board will decide what percentage goes.
In what element. Because if ship prices are gonna 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. Obviously the price of vessels, as we see now the last two, three weeks, maybe all sellers are asking $5 million more for dry bulk vessels. We're not gonna jump on those prices. We can afford to be patient, you know. People with liquidity and not 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.
Thank you.
Thank you.
Thank you. We do have one more question on the line, but in the meantime, and once again as a reminder, if you wish to ask a question, please press star one on your telephone. We will now take our next question. This comes from the line of Climent Molins of Value Investor's Edge. Please go ahead.
Good morning. Climent Molins. I'm from Value Investor's 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?
Look, the capital structure of the company, as you said, has improved substantially. We had set an approximate target for our leverage of about 30%, that region 10%-35%, which was achieved. As we go in the future ahead, the thought process is that at a certain point of time we may retire some preferred. We don't know exactly and we cannot say anything about how much. What we know is that about, I mean, a substantial amount will remain. Some of it can maybe retired. We have, let's say a strong percentage of preferred, a strong percentage of bonds, about EUR 100 million that we have already issued in euros, and some banking loans that will cover the position.
The company, as we go ahead, we'll have about 9 vessels to be delivered to us. The asset values, the net asset value of the company will increase while the debt leverage will not follow the same path. 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. 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 locate in the market.
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?
You mean hedge the bond? The bond you mean. Look, at a certain point we'll hedge some part of the exposure. You have to remember as a company, we have around EUR 30 million a year expenses in euros. We need EUR 150 million of euros in 5 years. The euros will be kept as euros because anyway we can spend them. There will be opportunities, and 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 hedge some part of the exposure.
All right. That's all for me. Thank you for taking my questions, and congratulations again for this quarter.
Thank you very much.
Thank you. It appears there are no further questions at this time.
Thank you very much to all the participants, and we're looking forward to discuss again with you in our next quarter results, which will come about in about three months from now. Thank you.
Thank you all for participating. This does conclude our conference for today.