Thank you for standing by, ladies and gentlemen. Welcome to the Safe Bulkers conference call to discuss the first quarter 2021 financial results. Today we have with us from Safe Bulkers, Chairman and Chief Executive Officer, Mr. Polys Hajioannou, President, Dr. Loukas Barmparis, Chief Financial Officer, Mr. Konstantinos Adamopoulos. At this time all participants are in an only listen mode, there will be a presentation followed by a question-and-answer session. Each time you wish to ask a question you may need to press star one on your telephone keypad, and wait 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 this conference is being recorded today, the 6th of May 2021.
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 closed 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 the 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, changes in the demand for dry bulk vessels, competitive factors in the market in which the 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 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 first quarter of 2021. Let me start our presentation by expressing our gratitude to all our seafarers. We are committed to their safety and well-being. Moving on to slide three, we present some key points about Safe Bulkers. We are a pure drybulk player. With our predecessors, we have a history of 60+ years of uninterrupted presence in the drybulk market. Our management team has more than 30 years of experience in the drybulk industry. We are here for the long run. We preserve our liquidity, which provides financial flexibility, security in turbulence, and opportunistic asset acquisitions. Our spot market exposure allows expansion of profits in favorable charter market conditions.
We have 1/2 of our fleet in the spot market and about 1/3 of period charters index-linked, enjoying the present market conditions. About 75% of our fleet is Japanese-built, providing us with a lower environmental footprint, lean operations, and cost-saving advantages from scrubber-fitted vessels based on increased fuel spread differential. We have actively centered the environmental preservation in the heart of our competitive strategy by investing more than $67 million in 2019 and 2020, retrofitting 50% of our fleet with exhaust gas cleaning devices, also known as scrubbers, which provide us with extra income capability in rising oil price environment. Management team has skin in the game that offers full alignment with shareholders. We have demonstrated our two-fold fleet renewal strategy. On the one hand, looking towards 2030 with phase iii and NOx Tier 3 Japanese newbuilds.
On the other hand, capturing the present market by opportunistic second-hand acquisition, replacing older vessels at a modest price differential. At the same time, we continue the gradual deleveraging of the company. I will continue in slide four. We focus on our spot market exposure. I would like to point out that 75% of our fleet is Japanese versus 46% of the world fleet, providing us with a lower environmental footprint, lean operations, and cost-saving advantage. We present on the left side the Cape and Kamsar spot market, where during the first quarter of 2021 has significantly improved.
As a result of our exposure in the spot market, with 1/2 of our fleet and the fact that about 1/3 of our period charters are index-linked, we can observe on the right-hand side figures the impact on our TCE and net revenues of this quarter versus the same period of 2020. We continue the presentation of certain key points in slide five. We demonstrate our lean operations and low break-even point with stable operating expenses yet again during this quarter. As a result, in slide six, we have increased our profitability to earnings per share of $0.18 and $0.14 on an adjusted basis, as compared to an adjusted loss of $0.13 for the same quarter last year. Our liquidity has also increased.
In slide seven, to over $190 million as of quarter end, and to over $209 million as of April 23rd, which increases our flexibility to execute on our fleet renewal strategy and deleveraging. At the same time, we have a strong balance sheet, as analyzed in slide eight, with a healthy total liabilities to total assets ratio of about 57%. Let's see an overview of the first quarter as presented in slide number nine. We have increased our profitability in tandem with our exposure. We talk about fleet in the stock market and about 1/3 of our period charters enjoying indexing rates. As an example, our recently early delivered Capesize has been subsequently fixed for one year at a gross daily charter rate linked to the 5 TC Baltic Exchange Capesize index multiplied by 119%. The current BCI rate stands at $44,000.
At the same time, we have increased our liquidity and strengthened our balance sheet. We will continue our efforts to gradually renew our fleet through selective sales of older vessels and new acquisitions with modern design vessels that adhere to new environmental regulations. We remain focused on our environmental performance and continue to invest to improve our operations in this area as we believe that our environmental investments will contribute to sustained operational and financial advantages. Let's move now to slide 11 and the industry update. Most of the countries have accelerated COVID-19 vaccinations and have resumed their economic activity, and in most cases, at a faster pace than pre-COVID period. This year started with very strong charter markets. The average charter hire for Capes is about $20,500 year-to-date, as compared to $5,400 for the same period in 2020. Presently, Capes are trading at about $45,000 per day.
Similarly, for Kamsarmaxes, the average charter hire is $19,300 year-to-date, as compared to $7,100 for the same period in 2020. Presently, Kamsarmaxes are trading at above $35,000 per day. This represents a substantial increase in the vessels revenue, which has been sustained through the first five months of 2021. Leading on year-to-date Capes, which have been extremely good and relevant to the market trend, the forecast is for the market to remain strong. According to the present trading rates for Capesizes, June is expected to trade at $47,000, Q3 and Q4 at $36,000 and $29,000 respectively. Similarly, for Kamsarmaxes, June is expected to trade at $38,000 per day, while Q3 and Q4 is at $25,500 and $22,000 per day respectively.
The expected sustainability of the market comes as a result of the increase in the underlying demand, which is also reflected in the commodity prices, which we will review in a moment, and the lack of oversupply. In slide 12, we present the current status of the major relevant commodity prices. As seen, there has been a huge price surge on all commodities relevant to shipping. Main reason for this was the strong demand from China and from other countries and the government spending on post-pandemic recovery programs, as well as the greening projects of the global economy. Indicatively, iron ore, which is the main cargo for Capes, is trading at about $190 per ton, comparable to 2009 levels. Similarly, for steel rebar, which is a direct product of iron ore and reflects the status of industrial production, is currently trading at the highest levels in five years.
Soybeans, which are among the major cargos for Kamsarmaxes, have hit an eight-year high, and similar patterns apply on all grain products such as wheat, corn, et cetera. In addition, we also present the price development of copper, which has stayed above $10,000 for the first time since 2011. The rising demand for commodities has been further enhanced by government stimulus plans. President Biden has proposed two additional stimulus plans on top of the one he has already passed. Furthermore, it is important to note that the demand is not only driven by China, which was the case through the past decade. The rest of the world is picking up and many countries are real contributors to the demand side. Turning to slide 13, we present the status of the fleet for Capes and Panamax.
On the top left graph, we present the price of a five-year-old Capes and Panamax since 2010, as assessed by the Baltic E xchange. The five-year-old Capes have surged by about 30% since the last six months and about 90% since 2016 lows, and presently are valued at about $12 million. Similarly, Panamaxes have surged up by about 35% during the last six months and about 135% since the 2016 lows. It is important to note that above figures reflect the average vessel in terms of country and shipyard built, specifications, and maintenance conditions. Safe Bulkers has a fleet mostly built by top-class shipyards in Japan and advanced specifications. Moreover, 75% of the fleet is fitted with Ballast Water Treatment System and some of the fleet equipped with scrubbers. All these features are providing significant additional market values to each of our vessels.
On the second and third graph, we present the status of the order. Until the end of the year, the newbuild orders accounted for about 3.5% for Capes and about 3.7% for Panamax. From 2032 onwards, the new orders are less than 2%. It is important to note that there are several limitations for anticipating a surge in newbuild orders. There is a scarce building capacity as most shipyards have tied up their slots by building other sectors vessels, such as containers and tankers. In addition, only few shipyards have developed new environmentally efficient designs. These reasons take into account the aging of the fleet and the eventual scrapping will diminish the growth of the dry bulk fleet.
On the next slide, number 14, we will present the status of the bunker prices and more specifically, the difference between the price of Very Low Sulfur Fuel Oil and the High Sulfur Fuel Oil, the so-called Hi5, which is of interest for our scrubber operations. As shown on the top graph, the Brent prices collapsed during the pandemic period, especially in the beginning of 2020. As it was expected, this affected also the bunker prices and especially the different products, and hence, the Very Low Sulfur Fuel Oil. Presently, Brent trades close to the pre-pandemic levels in a healthy level of about $70 per barrel.
Hi5 is presently in the region of $110 per metric ton, and according to the future market in Singapore, is expected to trade in the region of $120 for the remainder of 2021 and in the region of $130 for 2022 and 2023. Safe Bulkers has installed scrubbers on half of its fleet. For reference, a scrubber-fitted Post-Panamax with consumption of about 7,500 metric tons per year may enjoy the benefit of about $120, which is the difference between the Very Low Sulfur Fuel Oil and the High Sulfur Fuel Oil, making about $900,000 per year or about $2,500 per day. The recovery of global economies, restoration of mobility, and recovery of crude oil prices may push the Hi5 differential even higher to pre-COVID-19 levels. Let me summarize the key market takeaways in slide 15.
The order book is minimal, at its lowest level since 2002, as the decarbonization discussions do not favor new orders. Most shipyards are pre-occupied with containers and tankers orders until 2024, 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 in trade. Demand for commodity has been exceptionally strong during the first quarter. We have seen increased government spending on post-pandemic stimulus programs and continuing greening of global economy. We have experienced Brent prices recovery, which may lead even to wider Hi5 spread differential than that of today of about 120 tons. Lastly, the aging of the fleet and the increased environmental restrictions for emissions may enhance the scrapping activity. 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 in slide 17 with our chartering performance, where we present our quarterly time charter equivalent rate for the first quarter, which stood at $16,567 versus our quarterly running expenses, which stood at $4,702. Moving on to slide 18, we present our quarterly daily OpEx and our quarterly daily G&A, which stood at $1,440. The aggregate figures for both OpEx and G&A for Q1 2021 was $6,142, demonstrating our focus on lean operations. We believe that this number, when comparing apples to apples, is one of the industry's lower, if not the lowest, given the fact that we include in our OpEx all our dry dockings and pre-delivery expenses, and in our G&A, our management fees, our director and officer compensation, as well as all expenses related to the administration of our company.
Moving on to fleet debt profile, as seen in slide 19, we present our repayment schedule as of March 31st, 2021. As of that time, our liquidity stood at $191.4 million, consisting of cash and bank term deposits, restricted cash, contracted and drawn borrowing capacity under revolving credit facilities and secured commitments, including sale and leaseback financing. In slide 20, we focus on our liquidity versus our CapEx. As of April 23rd, 2021, we have liquidity of $209.6 million, which included cash and cash equivalents and deposits, restricted cash, and funds available under the sale and leaseback agreements, new term loan agreement, as well as the revolving credit facility. Our aggregate remaining CapEx for the acquisition of our two new builds and the on order were $62 million, of which $600,000 is payable this year and $51.4 million payable in 2022.
In addition, the committed CapEx for the scrubber, for the installation of one scrubber and several Ballast Water Treatment Systems, were $3.2 million, of which $2.3 million is due this year and $900,000 next year. In slide 21, we present our debt amortization schedule versus the scrap value of our fleet. We have a smooth debt repayment profile for the next few years, so helping us gradually de-leverage our company. Next slide, number 22, we present our quarterly financial highlights for the first quarter of 2021 compared to the same period of 2020. As a general note, during the first quarter of 2021, we operated in an improved charter market environment, higher hire rates compared to the fourth quarter of 2020, with lower interest expenses while our revenues were supported by the earnings from scrubber-fitted vessels, and the reduced bunker expenses.
During the first quarter of 2021, we had a time charter equivalent of $16,567 compared to a TCE of $9,089 during the same period in 2020. The net income for the first quarter of 2021 reached $21.3 million compared to a net loss of $9.9 million during the same period in 2020. Net revenues increased by 37% to $62.5 million for the first quarter in 2021 compared to $45.7 million for the same period in 2020, mainly due to increased TCE as a result of the improved market, assisted also by the additional revenues earned by our scrubber-fitted vessels. Daily vessel OpEx decreased by 1% to $4,702 compared to $4,771 for the same period in 2019. This decrease is associated with reduced dry docking and provision of technical services, which was impacted with increased crew repatriation expenses due to COVID-related issues.
Daily vessel OpEx, excluding dry docking and pre-delivery expenses, increased by 2% to $4,358 for the first quarter of 2021 compared to $4,258 for the same period in 2020. Our adjusted EBITDA for the first quarter of 2021 increased to $34.6 million compared to $9.4 million for the same period in 2020. Our adjusted EPS for the first quarter in 2021 was $0.14, calculated in a weighted average number of 103.3 million shares compared to a loss per share of $0.13 during the same period in 2020, calculated in a weighted average number of 103.4 million shares. In slide 23, we provide an estimation of the expected downtime in days for this year in order to assist our analysts with their projections. Closing our presentation in slide 24, 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 liquidity position with $209.6 million as of April 23rd, 2021. This decreased liquidity provides us with flexibility to follow our plan, aiming to gradually renew our fleet with a view of forthcoming environmental changes and progressively de-leverage our balance sheet, targeting to create value for our shareholders. Once again, we would like to thank our seafarers for their commitment and dedication throughout this past period. Our press release presents in more detail our results. We are now open to take questions.
Thank you. We'll now begin the question- and- answer session. If you would like to ask a question, please press star one on your telephone keypad and wait for the automated message advising your line is open. Please state your first and last name before you ask your question. If you wish to cancel your request, you can press star two. Once again, it's star one to ask a question and star two to cancel. Thank you. We'll now take the first question. Please go ahead. Your line is open.
Hi, this is Liam on for Christian Wetherbee. Thank you for taking my question. I just wanted to first ask about your fleet and your chartering strategy. I know that half of your fleet is on the spot market currently.
Could you please speak closer to the microphone because we don't have good reception.
Yes, sorry about that.
Thank you.
I know that half of your fleet is on the spot market currently. I just wanted to ask about your chartering strategy. What are your thoughts about the portion of your vessels that will continue to trade in the spot market, and what would it take for you to look to lock in some of your vessels on the longer-term charters?
Yes. Right now, 1/2 of the vessels are in the spot market and the other 1/2 on short-term period market up to one year. Out of this period of ships, 1/3 of them, as you saw, is index-linked because we were feeling that the market will improve in 2021. We decided those fixtures on top of the period fixtures will be done on an index-linked basis. We will continue for the rest of the quarter and up to the third quarter, this policy to keep our ships in the spot market. Possibly in the third quarter or the fourth quarter, we will try to lock in longer periods as the charterers will be more keen to secure longer period charters.
Got it. That's very helpful. Thank you. There’s a little bit of a follow-up to that and some of the things you discussed earlier. I know that more recently, given the fact that spot rates have surged, that's really benefiting your liquidity. I'm also just wondering, how you are planning to leverage that increased liquidity. Are you going to look to be more aggressive in pursuing your fleet renewal program and maybe acquire more vessels in the secondhand market?
Yes. I think that now our aim is during the exercise of deleverage and fleet renewal. We are interested into newer technology vessels, which means we have to concentrate on acquisitions on ships younger than five years old. At the same time, we have some ships approaching 18 years old that we need to sell. There will be some sales and some acquisitions and some selective ordering at a very limited pace. Right now we see that the shipyards are not ready to propose new designs with the new technology. There are not so many options there. This, of course, is giving us more optimism for the trade market in that we don't expect to see many dry bulk new building orders for 2023. We believe that the yards are getting filled up with big container ships and tanker orders.
While dry bulk orders, the owners will be waiting the new designs to appear, but we don't see many shipyards keen at the moment to develop these new designs.
All right. Thank you very much for taking my questions.
Thank you. We'll now take our next question. Please go ahead. Your line is open.
Great. Thanks. Hey, this is Ben Nolan from Stifel. I actually just wanted to follow up on that last response you were talking about. Well, obviously you guys ordered some ships late last year. Now are sort of looking for things with new designs. I'm curious if you could maybe flesh that out a little bit. Are you most interested, I don't know, in things that maybe would use ammonia? Is there something specific that you have in mind that isn't being developed that would be of interest?
Yeah, look, when we speak about new buildings for the future, we said that we have ordered two ships, EEDI phase III, i wanted to clarify that IMO phase III comes in the regulations after 2025. Basically, what the company has done is that we ordered not the present generation that we can do easily, which is phase II until 2025. We phase III vessels, which are much closer to 2030, they are more advanced. Now, the company has chosen this route because we believe it's a pragmatic route of existing technologies. We know that despite the fact that there are several discussions and researches about new fuels, we're quite sure we know that new fuels like hydrogen or ammonia will not come to play a role in, let's say, in the next decade.
By having the most advanced ships of 2025 onwards earlier, that would be a competitive advantage. A second point that we want to stress out is that our company has, and we said that many times that we want to clarify that our company has the vast majority in Japanese fleet, which generally are lighter and more energy efficient. As a result, we have better footprint. We expect that when the new regulations for greenhouse gas is coming to 1st of January 2023, as it's expected to play a role in the performance in the classification of the vessels and categories A to E, and the A category vessels will receive a notice that within a year they need to fix certain things or the B category within three years. Our vessels will be well-placed in this list.
We will maintain the operational advantages that we always had in the past. I don't know if you want to ask me another question on that?
Really the question is, and I appreciate that you're in a good position and that your new builds that you have ordered are also in a good position. When looking at what would be next if you were to order a ship, but yeah, isn't available at the shipyard, what do you have in mind there? What is that next-generation ship that would, if a yard were to come out with a design, what would check the boxes for you? Is there a particular type of fuel or something?
This is a problem right now. There is no next-generation ship available. A lot of stories appearing in the press about what will be the fuel for the next 10 years or 20 years. No one knows. Definitely on tankers, on containers, there are a few options being proposed by the shipyards, which really we don't know which is the medium-term or the long-term or the short-term. For ourselves, we cannot do anything more at this stage phase III new building whenever it's available. Otherwise, we will concentrate on very modern secondhand ships that are under five years old, that will be very close on the upper part phase II designs. There's nothing we can do at the moment because really no one knows if this ship will be LNG powered, if it will be hydrogen, it will be ammonia. No one has an idea.
The yards, and this is maybe a good point for freight markets, the yards, they are not really interested to develop such designs for bulkers. At the moment they concentrate on big container ships that they have big consumption, VLCCs or bigger ships, and they don't bother yet to develop designs for bulkers for the next phase of decarbonization. Basically, you have to remember that the yards, like ship owners, they've been losing money for a number of years. First of all, they have to do the change on the bigger ships. They earn better levels and new contract levels, and thereafter they will bother. I think it will be very difficult to have new buildings with new designs for bulkers proposed by the yards this year. If at all we get it will be next year at the earliest.
The delivery of bulkers with different fuels and all these things should not be available before 2025 delivery. We have to be patient. If we can find a reasonably priced with good delivery date phase III, we may consider. If we don't find, we would go for very young ships in replacement of our older ships. If we consider that the only alternative of fuel to the existing fuel, which is the natural gas, for example, the LNG, and we don't have such solutions in the bulker industry, such solutions may come, let's say, towards the end of this decade. Maybe new fuels like hydrogen or like ammonia could come at the early or mid of the next decade. Basically, the next-generation ships that are not generally available now phase III vessels.
This is the only thing that we have and which is pragmatic.
Yeah, I appreciate that. I can switch gears for a second on my next question. Obviously, we've seen the spot rates go up, and you talked about that, and there's strong underlying demand. You guys did do some time charters, but still most things, both for you and elsewhere in the market, tend to be pretty short duration, six to maybe 18 months on the long end. As the market tightens, are you guys beginning to see any lengthening duration in terms of what customers are looking for to perhaps hedge out the risk of a spike or something like that? Really I ask because I know in the past you guys have done some longer duration deals. Is that something that's materializing at all, and is it something that you would be interested in doing?
You are talking about the longer period charter deals?
Yeah. Three years or four.
Yeah.
Things longer than a year. Yeah.
Yeah. For this to happen, we have to be a little bit patient because we had a decent two months, February and April. In between, we had a correction of the market in March. All we have seen until now was just two good months of freight markets, February and April, and we continue now in May, the third month of a good freight market. The charterers, before they start fixing long-term deals, they have to see the spillover of enthusiasm going on in the forward years. And many of them usually monitor this FFA market, which is not necessarily every ship owner’s piece of cake or guidance for long-term business.
The charterers mainly they monitor these things, and as we know, the forward part of those curves is very depressed from the point of view that there is not enough volume to push it up to the proper levels. Similar levels like 2022, when 2021, when we know 2022 is supply restricted, and the same for 2023. As we enter into Q3 and Q4, I believe charterers will get this feeling that the commodity prices of today and the value of the dollar and what is happening worldwide with the stimulus package, both East and West, will keep the market this time higher for a longer period of time. We will see the FFA forward years start moving to higher levels, and then charterers will start asking ships for three or four or five years.
We have to be patient and have the ships in the spot market to be able to reach that point when charterers will decide that, yes, they believe in this market, and they start investing into the forward part of the FFA curve. I think this will happen sometime in the third quarter, personally. Maybe you will call me optimistic. Maybe it happens in Q4, I don't know. A lot depends on those two quarters, if we will see the long-period charters. I believe that because ship owners do not participate in the FFA market, especially for the forward years, I believe that the FFA market is rather constrained, and the freight is being exchanged for the forward years between charterers and operators, which mostly sit on the same side of the fence usually.
If that does materialize, that is an area that you guys would seek to be active in?
If it doesn’t materialize, we have to enjoy the $20,000 a day.
Right. No, if it does. If it happens.
If it does, a certain part of the fleet has to go there. Yes, definitely.
Yeah. Okay, perfect. I appreciate it. Thank you.
Thank you. We'll now take the next question.
How are you, gentlemen. It's Randy Giveans to Jefferies. How's it going?
Yes, Randy. Good morning.
Good morning. Two questions for me. First, clearly your TCE rates increased pretty meaningfully from $12,000 a day in the fourth quarter of 2020 to about $16,000 in 1Q 2021. How big of an increase are you expecting in 2Q 2021?
Look, the spot market has moved to the levels, $22,000, $23,000 a day. On the Capes, it has moved to $40,000 a level. You should expect that the second quarter TCE rate should be a similar increase. We already ran 50% of the second quarter, and the fixtures you are doing now will cover the rest of the second quarter. The assumptions are easily to be made. I do not want to predict the numbers now, but you are 50% in the spot market and one third of the period ships on index link, you can run the calculations very easily.
Okay. Looks like you used 1/2 of your $23.5 million ATM program, raising, I think it was $12.7 million in recent months. Average price was under $2.80. With the ongoing rally now pushing your shares around $4, will you use the remainder of that ATM here in the near term, and what will the primary use of the proceeds be?
Look, a small part of ATM has remained, but we don't know exactly when we will activate this last part. We always activate it, as we have already indicated, when the company thinks that it's the right pricing. We cannot comment on that anymore.
All right. Well, thanks so much. That's it for me.
Thank you. As a reminder, if there are any further questions, it's star and one on your keypad. There were no further questions coming through, I'll now hand back to the speakers.
Thank you for attending this Q1 conference call and webcast as we discuss our financial results, and we're looking forward to have the same discussion in about three months from now. Thank you to all, and have a nice day.
Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.