Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the second quarter 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'll be a presentation followed by question and answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone keypad and wait for your name to be announced. Following this conference call, if you need any further information on the conference call or on the presentation, please contact Capital Link at 212-661-7566. I must advise you that this conference is being recorded today. Forward-looking statement.
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 acquisitions and entering into further time charters. Words such as expects, intends, 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 their expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These 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, change in the demand for dry bulk vessels, competitive factors in the market in which the company operates, risks associated with operations outside the U.S., 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 undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto, or any change 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 second quarter of 2021. We are happy to present the financial results for the second quarter of 2021. A synopsis is profitability, fleet renewal at the edge of the technology, and de-leveraging, targeting to create shortly a company where its net debt is comparable to steel value of the vessels, creating value for our shareholders. The above are presented in slide 4. We reached $81.6 million in net revenues, $50.2 million of EBITDA, and $0.31 of adjusted earnings per share. We ordered eight vessels, GHGEEDI EEDI phase III NOx Tier III compliant, Japanese newbuilds with early deliveries, two in 2022, four in 2023, and two in Q1 2024, at very competitive prices ahead of our competition.
At the same time, we have sold six vessels, three of which are yet to be delivered with $47.6 million outstanding sale proceeds, and acquired two secondhand Panamax. We believe that by 2024, we will be able to renew about one-fourth of the fleet with phase III compliant newbuilds while substituting at the same time some older vessels with younger secondhand vessels. In terms of deleveraging, we have a $125.5 million decrease in debt from $607.7 million as of our 2020 year-end to $482.2 million as of July 23rd, 2021. At the same time, we maintain our financial flexibility by preserving a strong cash position of $105.6 million and our undrawn borrowing capacity available under revolving and reducing credit facilities to $67 million. All these actions, we believe, will position the company to a whole new level of competitiveness well ahead of the competition.
We are here for the long run. In slide 5, we show balance sheet analysis. The assets are presented, of course, in their book value, noting that presently we believe that asset values substantially exceed the book values. Let's turn to slide 7 to have a quick look on present charter market conditions. As shown on the top graph, the Capes market for the year to date is outperforming 2020. Presently, Capes are trading at about $32,000. The year to date average at about $24.8 thousand as compared to 2020 average for the same period, which was $9,600. Similarly, for Capesize and Maxes, the market remains strong throughout this year. Presently, trades at the region of $32,000 with a year-to-date average of $23.9 thousand, as compared to $7.9 thousand for the same period in 2020.
Current market prospects with strong demand and balanced order book are reflected in the FFA here, which is marked in healthy and sustainable levels. Turning to the next slide, number eight, we present the development on pricing of certain commodities, which are leading indicators for the shipping. The continuous increase on prices during the last period is signifying their underlying demand. The strong demand from China continues, and the control of COVID-19 will lead to the opening and normalization of other important countries, as for example, India. Furthermore, leading countries such as United States and China have been preparing for post-pandemic plans to boost their economies. These facts are expecting to enhance in global growth and altogether to boost the demand for dry bulk cargos further. On the slide 9, we present the status of the fleet in terms of values and expected supply.
On the top graph, we present the values of five year-old Capes and the Panamax as assessed by Baltic Exchange. During the last month, it is evident a sharp increase of the vessels value. For Capes, in particular, the values have surged more than 40% in the same period in 2020 and have gained about $21 million per vessel since the lows in 2016. Similarly, for five-year old Panamax, the values have gained about 45% since same period in 2020 and have gained about $18 million per vessel since 2016 lows. The above assessment is indicative for the average Baltic type vessel. Japanese-built vessels built at high specifications have increased demand and can achieve even higher values. Our fleet consists of mostly Japanese-built vessels with high specifications and many commercial and operational upgrades.
Looking on the order book on the bottom graph, we note that the growth of the fleet for both Capes and Panamax is minimal and does not exceed the 3% on each year. Taking into account the expected scrapping, we may conclude that the expected demand for dry bulk vessels for the next years to come will be significantly higher than the actual supply of vessels. Under current market conditions at shipyards, both in Japan and China, we do not expect that the order book may increase significantly for the next couple of years. The shipyards are occupied with orders from other sectors, such as containers and tankers, and there is no space for additional dry bulk orders. Furthermore, only few shipyards have developed new environmental efficient designs, which together with the ongoing environmental discussions for emission, is expected to discourage new orders.
Turning to the next slide 10, we touch upon the current status of fuels and their pricing. Our company has invested in the exhaust gas cleaning technology, which allows our ships fitted with scrubbers to comply with IMO 2020 regulations for sulfur emissions by burning High Sulfur Fuel Oil instead of IMO compliant fuel, which is a Very Low Sulfur Fuel Oil. The differential in the price between Very Low Sulfur Fuel Oil and the High Sulfur Fuel Oil, the so-called Hi-5, is translated to revenues for scrubber-fitted vessels. Presently, the Hi-5 differential in Singapore, for example, stands at about $125 per metric ton. According to future markets, as shown in the graph on the bottom, these prices are sustainable through 2023. A scrubber-fitted Post-Panamax burns about $7,500 per year. This brings the scrubber gain to about $900,000 per year or about $2,500 per day.
The recovery of global economies, the restoration of mobility, and the recovery of crude oil prices may lead to even higher, wider Hi-5 spread. As shown in the top graph, presently, the Brent prices are trading to pre-pandemic levels and at the highs of the last five years. Let's summarize all the key takeaways in slide number 11. The order book is minimal and at its lowest level since 2002, as decarbonization discussions not favor new orders. Most shipyards are preoccupied with containers and tanker orders until 2024, and only few shipyards have developed new environmental efficient designs. We have experienced an exceptionally strong start of 2021 with robust volumes of iron ore, coal, and grain. Demand for commodities has been exceptionally strong during the first quarter. We have seen increased government spending on post-pandemic stimulus programs and continuing greening of the global economy.
We have experienced Brent prices recovery, which may lead to even wider Hi-5 spread differential than that of today of about $120 per ton. Lastly, the aging of the fleet and the increased environmental restrictions for emissions may enhance the scrapping activity. This gives us a support for our thought process in relation to the market conditions that will prevail in the following quarters. 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 chartering performance in slide 13, where we present our quarterly TCE, which stood at $21,098 versus our quarterly OpEx, which stood at $4,874. Moving on to slide 14, we present our quarterly daily OpEx, which stood at $4,874, and our quarterly G&A, daily G&A, which stood at $1,448. The aggregate figure of those two numbers is $6,322, which demonstrates our focus on lean operations. We believe that this number is one of the industry's lowest, if not the lowest, given the fact that we include in our OpEx all our dry docking and free delivery expenses and in our G&A, our management fees, directors and officers' compensation, and all expenses related to our administration.
Moving on to our debt profile, as seen in slide 15, we present our repayment schedule as of the end of June of this year. Turning now to liquidity, as of June 30, we had $127.4 million in cash equivalents, bank term deposits and restricted cash. We had another $67 million in undrawn borrowing capacity available under revolving reduced security facilities and $54.7 million available in secured commitments for loan and sale and leaseback agreements in relation to two newbuild vessels and the refinancing of an existing vessel. Excluding the vessels permitted for sale, which had not been delivered yet, we had additional borrowing capacity in relation to one unencumbered existing vessel and to three newbuilds upon their delivery. Slide 16, we present our debt amortization schedule versus the scrap value of our fleet.
We have a smooth debt repayment profile for the next two years, gradually de-leveraging our company following considerable debt repayments we have made this quarter. If you now move to slide 17 with our quarterly financial highlights for the second quarter of 2021 compared to the same period of last year. As a general note, during the second quarter of 2021, we operated in an improved charter market environment compared to the second quarter of 2020. With lower interest expenses, while our net revenues of $81.6 million compared to $48.3 million for the same period in 2020 were further increased by the earnings from scrubber-fitted vessels and our reduced voyage expenses. During the second quarter of 2021, we had a time charter equivalent rate of $21,098 compared to $8,094 for the same period in 2020.
The net income from the second quarter of this year reached $32.4 million compared to a net loss of $13.9 million during the second quarter of 2020. Net revenues increased by 59% to $81.6 million for the second quarter of 2021 compared to $48.3 million for the same period in 2020, mainly due to the increased TCE of our fleet as a result of the improved market, assisted by the additional revenues earned by our scrubber-fitted vessels. Daily vessel OpEx increased by 3% to $4,874 compared to $4,799. This increase was a result of the combined effect of reduced dry dockings and provisions of technical services, but increased crew repatriation expenses due to the COVID-19 pandemic. Daily vessel OpEx, excluding dry docking and free delivery expenses, increased by 9% to $4,568 for the second quarter of 2021 compared to $4,207 for the same period in 2020.
Our adjusted EBITDA for the second quarter of 2021 increased to $54.1 million compared to $6.3 million for the same period last year. Our adjusted earnings per share for the second quarter of 2021 was $0.31, calculated in a weighted average number of 109 million shares compared to a loss per share of $0.16 during the same period in 2020, calculated in a weighted average number of 102.7 million shares. Closing our presentation in slide 18, we present our quarterly fleet data and average daily indicators compared to the same period last year.
We would like to emphasize that the company is maintaining strong cash position of $115.6 million as of July 23 that provide us with flexibility to follow our plan, aiming to gradually renew our fleet with a view of forthcoming environmental changes in regulations and further de-leverage our balance sheet targeting to create value for our shareholders. Once again, we would like to thank our seafarers for the commitment and dedication throughout this tough period. Our press release represents in more detail our financial and operational results. We are now ready to take your questions.
Thank you. As a reminder to ask a question, you need to press start one on your telephone. To withdraw your question, please press star and two. Your first question comes from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.
Thank you. I have a couple. Well, good morning or afternoon, I guess, first. My first question relates to the new building activity. Obviously, you guys have been sort of at the forefront of the innovations of design and have always had high-quality equipment from primarily Japan. They're still conventionally fueled or use oil relative to some of the other designs that we see a lot now, be that maybe LNG or ammonia. Can you maybe talk through the idea of how you decided on your propulsion systems versus some of the other, what seem to be increasingly popular alternatives?
Yes. If you assess the actual situation, there are not presently other alternatives. Ammonia or hydrogen or alternative fuels will be under assessment and we strongly believe that this will be the case, and we facilitate this shift towards the new fuels after about at least 10- years from now or even 15. We have followed a pragmatic approach. To tell you the truth, the LNG, as you mentioned, is not actually a real solution. It could be an intermediate solution, but LNG has the steep factor of methane, which is, I think, about 100 times more greenhouse gas effective compared to CO2. It's not clear that if you order an LNG, this LNG will be compatible with the new regulations after five or six or seven years. The second point is that the other fuels basically do not exist.
They're under discussions, and we know that because we are in the shipyards and we participate in such designs also ourselves, and we have the first information. On the other hand, we have followed a pragmatic approach, and when we say phase III, I want to make clear that phase III is applicable after 2025. It's not the vessels that are produced today, because today we have phase II vessels, not phase III vessels, which represent 20% reduction of emissions compared to 2008 and not 30%, which is the phase III. A phase III vessel that we order is a vessel that will start its production between 2025 and 2030, before the shift of two new technologies like, I don't know, maybe ammonia or hydrogen, whatever it prevails, which will come towards the middle of 2030.
I don't believe that there is a question whether you want to invest or not. This is an investment which is clear advantage to us. We will have the best vessels compared to the market. We can compete easily all of the existing fleet with extremely low emissions compared to everybody else. While the others will wait to see what technology will come after 10- years from 2025.
Yeah. I appreciate that. What we do sometimes see is people that order ships that maybe aren't fueled by whatever is the alternative, but have the ability to be converted relatively easily. Is there any ability of the new builds that you have to convert to alternative fuels relatively easily?
If you can give me one name and one shipyard that has that design, then we can discuss. Let's not say about work, let's say about reality. I don't believe presently. In principle, everything can be converted. An LNG, for example, can be converted, but it has huge conversion costs. You need to have different systems for storage, et cetera. We don't want to play this game of advertisement. We just follow what is the best available technology after 2025 - 2030. Between 2025 and 2030, we may order the technology that will be available for the next decade. If you have a vessel or if you give me a design, I can tell you whether what you say is correct, because we don't believe that such designs are tradable right now or even exist.
Got you. Okay, that's helpful. Lastly for me, you guys have been pretty active, very active under that ATM program that you have. Can you maybe talk through the thinking behind that? Obviously, you are ordering new ships, but you're also selling older ships and making a lot of money on the existing fleet. It doesn't look like you really need the money at the moment. What's the thinking behind the activity on the ATM program?
The idea is very simple. We have designed a company that wants to create value for its shareholders, and I tell you that the majority shareholder is the family that owns our management, the Hajioannou family. The design, we have clearly described how we look a company that will be able to be very profitable in the future, and also at the same time, be able to pay dividends to the shareholders. We don't want a company which is over-levered, so this is the one point. We want a company which has low leverage, about, say, 30%, 35% of the assets.
Second, we don't want a company which has an old fleet that after 2023 and following, I mean 2025, et cetera, the vessels will not be able to compete, especially when you have Chinese vessels, will not be able to compete in the market and have to pay environmental taxes either in Europe or U.S., or have to withdraw your fleet if it's in a category E, or you have to do additional investments within three years if it's in category D. All such vessels will have substantial programs. We want a company that has basically its backbone has solid phase III vessels. We have also about 10, 11 eco ships which were bought after 2013. This is the second point.
If you have a company with low interest, low leverage, low interest expense, young fleet, Japanese fleet, durable company, solid company, low emissions, this company will be able to generate the best profits after one year from now, and will be able to pay also dividend at certain point of time. We don't want to create a company over-levered and pay a dividend now, or do that. On this respect, we have done two things. The one is selling older vessels, which you see this is a replacement, a renewal strategy. We have sold a few vessels, and the prices in which we sell are very good.
The second point that we are doing is that we have also the ATM, which at the back of our mind, at a certain point of time, all companies from time to time access the public markets one way or the other. It's not a big deal for us to have some equity injected in our balance sheet, which basically is not dilutive because as you can see the profits, we always pick the profits because the market is very good and with the new technology ships, we will continue to do that. Basically, this is an investment for the future of the company. Of course, when we do all this job in the right way as we have designed, we will be able to do also to reward our shareholders in the future.
Okay. That's helpful. Since you brought it up, you talk about wanting to pay dividend. How close are you to that at this point? You're making money and again, the balance sheet is stronger. Is that something that you think is a 12-month or less kind of an event?
I cannot say how close or how far we are because half a year before, we were very far, now we could be closer. The issue is that as you can see, we had the leverage. Yes, Polys?
If I may add here. If I may add, the good market has started only six months ago, around February. We are still six months into a good market. It's most important for the company to deleverage and renew its fleet first, and then to consider the dividends because now we have work to do, and this is what we are doing, and we are not staying still. We prove it quarter after quarter, both the deleveraging policy and the fleet renewal policy. There will come a time that the dividend will come for the benefit of all shareholders.
Hello.
Yes. Did you hear that?
Yes. Thank you.
What I wanted to say is that the good market is only six months old. We expect this market should last a year or two more. The order book is so small in dry bulk. All the yards are fully booked until first quarter of 2024 with major activity in containers. Before that, we had major activity in tankers, but we have no activity in bulkers. We expect a strong market with all the regulations that are coming in front of us to prevail for more years, one or two years more from now. A company to reinstate the dividend has to do it after you finish off with your deleveraging priority and your fleet renewal priority.
Right. Thank you for that.
Yes. Thank you.
Thank you. Your next question comes from the line of Randy Giveans from Jefferies. Please go ahead. Your line is open.
Hi, gentlemen. How is it going?
Thank you. Fine.
Fine. Thank you.
Good. I guess two questions from me here. Looking at your chartering strategy, you clearly have a lot of your days already booked for the back half of the year. Has your chartering strategy changed at all given the kind of current market strength? What are your quarter-to-date spot rates achieved thus far? It seems like the vast majority of your third quarter is already booked. Just trying to compare 3Q 2021 versus the $21,000 a day you earned in 2Q 2021.
Yes. Look, first of all, regarding the period charters, as I said in previous calls, the period charter is, for the time, still controlled by the major charterers through the so-called FFA curve and the FFA, the forward freight agreements. Which for the forward years are not at satisfactory levels for 2023 or 2024, so you cannot really utilize three or four or five year charters like we see now on container business. The company prefers to work in the spot market or short period or up to one year because you can get the maximum benefit during those periods. I expect as the spot market improves in the following quarters, that charters will come out and meet higher freight rates for two or three-year periods. At the moment, we only see sensible numbers for the up to 12- months period.
Beyond that, if you start talking for two year period, the charterers ask heavy discounts. I don't see what is the point for a company to invest in two years when you are doing the year one, let's say, at the high 20s and the year two at the low teens. There is no point to fix the year two at low teens and make average of $21,000-$22,000 a day because you can get it done the year one and then keep the ship in the spot market. We don't believe there will be order book in 2022 or 2023 to spoil the party from that point of view. We still believe the supply will be strong because we see Handysize rates are $30,000 a day. We see Supramax rates of $30,000 a day.
We see Kamsarmax at the same and Capesize at the same. We never before remember Handysize earning $30,000 a day, even in the good times of 2010, 2011, that we have strong market. The Handysize were earning $16,000 a day or $17. It means now the mine of bulk is moving and is moving with the bulk carriers and not on containers. This is boosting a lot the base of the market and the strength of the market. I believe that the two or three year charters will have to wait a little bit longer before those come. As far as the other question you said about the third quarter, the numbers are increasing. Yes, this is true, that the levels have increased from Q1. It's reasonable to expect that the numbers will be higher in the third quarter as it looks now.
We are only through the first month of the third quarter. It's higher than what it was in the second quarter until now.
Got it. Yep. I was just saying, I know with your recent chartering activity, almost 100% of the third quarter is already booked. All right. Looking at your balance sheet, you have obviously a very robust cash balance, $150 million plus all the cash available from the asset sales. How are you looking at kind of current in terms of renewal, looking at further acquisitions, maybe more divestitures of the older vessels? What are your plans on that in the coming months?
Yes, we have eight new buildings. We have sold six older vessels. These are coming in as replacement for the older vessels. I do not expect we can find reasonably priced new buildings from now on. It will be very difficult, the type of ships we want from Japan. We will mostly concentrate on more than secondhand acquisition. If we are to sell a vessel built in 2004 or 2005, we will try to replace it with a 10-year younger vessel built in 2012, 2013, 2014, that sort of period. From now on, we tend to concentrate on secondhand acquisitions. We have a couple of deals under negotiation. We are going to conclude in the next few weeks. I think it is a prudent strategy to continue that way because also on the shipyards, we see that their cost has gone up.
The steel price is going up, or they are increasing their prices. For us, also deliveries that is two and a half years away now is looking a bit far away for us. We have to wait for new ships and also to allow some time for new technologies to evolve, if this may be in hydrogen vessels or ammonia vessels or other things, or LNG, I don't know. No one knows what fuel will prevail and what technology will prevail. We are happy we've got these eight vessels to replace ships we have already sold. The priority for us is to keep renewing the fleet and to deleverage the company. We are doing that very fast as we have demonstrated in our last two quarter earnings. We have solid profits.
It's looking good. Let's make the company as attractive as possible for investors to join in and enjoy the good returns in the next quarters that are coming.
Yep. All right. Well, hey, that's it for me. Thanks again.
Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star and one on your telephone keypad. There are no further questions at this time. I will hand the call back to you.
Thank you very much for attending this conference call where we presented our quarter results, and we are looking forward to discuss again with you in the next quarter. Thank you very much again, and have a nice day.
Thank you.
Thanks. Thank you. That does conclude today's conference. Thank you for participating. You may now disconnect.