Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call on the Second Quarter 2024 Financial Results. We have with us Mr. Polys Hajioannou, Chairman and Chief Executive Officer; Dr. Loukas Barmparis, President; and Mr. Konstantinos Adamopoulos, Chief Financial Officer of the company. [Operator Instructions]. 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. The archived webcast of this conference call will soon be made available on the Safe Bulkers website, www.safebulkers.com. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the second-quarter 2024 earnings release, which is available on the Safe Bulkers' website, again, www.safebulkers.com. I would now like to turn the conference call to one of your speakers today, the Chairman and CEO of the company, Mr. Polys Hajioannou. Please go ahead, sir.

Good morning to all. I'm Loukas Barmparis, President of Safe Bulkers. I will do the presentation. Key developments of the second quarter include the stronger market compared to the previous year, the implementation of our new integrated management system in compliance with DryBMS Standards, the order of two additional Phase 3 new bids consistent with our fleet renewal strategy, and the issuance of our 2023 sustainability report detailing our ESG practices and our vision for the future. Our strong liquidity and comfortable leverage enabled us to be flexible with our capital allocation, remain focused on long-term value creation, and at the same time, reward our shareholders with a dividend of $0.05 per share of common stock. Following a comprehensive review of the forward-looking statements language presented in slide 2, our attention transitions to the market update in slide 4. The Cape market segment has been strong throughout the quarter. All eight of our Capes are presently period chartered, boosting an average remaining chartered duration of 2.4 years with an average day rate of $24,500. This provides us with a considerable degree of cash flow visibility. On the Panamax room, the chartered market comes at about $15,000. Progressing to the slide number 5, we present here an overview of our CRB commodity index fluctuation in basic commodities prices. The geopolitical landscape retentions in regions such as the Middle East, the Red Sea, and Ukraine underscores the heightened level of global uncertainty. Persistently elevated asset around the inflation outlook has led central banks in major economies to become more cautious about the pace of policy easing, compared with the positions at the end of the first quarter. Consequently, market's expectations of the number of policy rate cuts to be delivered in 2024 have been revised downward. Upside risk inflation have increased, raising…

Ladies and gentlemen, thank you for waiting. I apologize about the technical difficulties. We will now return to our regularly scheduled conference.

Thank you. Loukas, can you hear us?

Yes. I can hear you. Did I finish? Did I said everything? [indiscernible]

Thank you, Loukas, and good morning to everyone. This is Konstantinos Adamopoulos, the CFO. I will make a presentation about our numbers, the Q2 numbers. As a general note, during the second quarter of 2024, we operated in a stronger chartered market environment compared to the same period in 2023, with increased revenues due to higher charter hires. These earnings from stupefied vessels and higher interest expenses due to increased interest rates. If we focus now on our liquidity, our cash flows and our capital structure, as presented in slide 12, we maintain a comfortable leverage of around 32%, our debt of about $500 million remains comparable to our fleet cap value of around $350 million although our fleet is only 9.9 years old. Our weighted average interest rate stood at 6.3% for a consolidated debt, of which EUR100 million is fixed at 2.95% in an unsecured year of five-year bonds. So far, we have paid $110 million or 30% for our CapEx in relation to the outstanding order book. Our liquidity and capital resources stand strong at approximately $281 million, which together with a contracted revenue of about $252 million makes a total of around more than $523 million, which is double of the outstanding CapEx of $252 million. This provides flexibility to our management in capital allocation. Additionally, we have ordering capacity in relation to four existing unencumbered vessels and nine new builds upon the delivery. We ensure that our capital expenditure is adequately covered by our future revenues, fortifying our balance sheet towards a trajectory of sustainable growth. Moving on to slide 13 with our quarterly financial highlights for the second quarter of 2022 -- of 2024 compared to the same period of 2023. Our adjusted EBITDA for the second quarter of 2024 stood at $41.8 million…

[Operator Instructions]. Our first comes from Omar Nokta from Jefferies.

Thank you, guys. Good afternoon. Thanks for the update. Just wanted to ask, obviously, on the fleet, you've been very dynamic here for the past maybe two-plus years. You've been adding these modern, perhaps super eco dual fuel Kamsarmax newbuildings. You've been selling the older ships. Yes, you have a series of these eight newbuildings delivering here over the next three years. Just wanted to ask, what are your thoughts on the Cape fleet at this point? Obviously, scrubber fitted and you have contracts in place on all the shifts. But just in general, as you think about that fleet and investing going forward and given the low order book we're seeing in the broader Cape market, is that something that maybe you're considering investing in here in terms of perhaps free cash versus continuing to look at further Kamsarmax newbuildings?

You mean investing in Capesize?

Yes.

Yes. Look, Capesize newbuildings, the prices are really out of the question at the moment. They are hovering over $75 million in Japan. And as long as interest rates remain at current levels, we cannot proceed with such investment. Maybe at the future time, maybe in a year's time, we will see some easing of interest rates. We may revisit that case but always in relation to fleet renewal. So we would have to sell and all that Capesize to buy a newer one. So we don't want to touch for the time being because of high interest rates.

I would like to point out that the last two years of fleet has been expanded substantially. So in the past, we had about three Capes, and then right now, we have eight. So this shows a proactive movement from our side to invest in the Capesize market before the prices reach this very high levels.

Yes, good point. And I guess I wanted to ask them on the Capes because that's been a -- obviously, that's a part of the market perhaps this year that's done quite well, and it has that low order book ratio. But yes, the returns aren't there as you're mentioning at least on new buildings. You were acquisitive on the secondhand as you just mentioned. Are there returns there that look interesting? Or is it kind of across-the-board Capes look too expensive relative to say the Kamsarmax or midsized segments?

Yes. I think cost of both, they are too expensive. So you need $50 million to buy an eight-year-old Capesize from a good yard. So for us, it's not a good investment at this point. [indiscernible] we are 3% and would have been a different proposal. But right now, we want to wait for that time.

Okay. Thank you for that color. Maybe just a follow-up, maybe thinking about just the market in general. Obviously, dry bulk rates across the board this year have been very healthy, much better than last year. We've seen some softer steel prices and a bit more of a tougher maybe still complex. Obviously, in China, but globally, it seems that things are under pressure. The Capes has generally held up, even though they've eased here recently, but Capes have been very good. As we think about this market dynamic, do you think, I guess, overall, for dry bulk, has it been a tight supply picture that's perhaps insulated the sector from weakness in the steel markets? Or is it perhaps just eventually weakness will make its way into the dry bulk rates, so we're not seeing it yet? Any color you're able to perhaps give on what's driving the market here recently.

Yes. Right now, the market is a little bit on the weak side and traditional is weaker in the summer months, and we expect improvement in the fourth quarter of this year. And what we have not seen in the last few months is we have not seen a real congestion in any of the major loading, all the charging areas for dry bulk tonnage. And also, we have seen very little backhaul cargoes to Europe from the Far East. And generally, a bit of a weak market in the Atlantic. And we believe that Atlantic will pick up as we enter in the autumn, in the September, October period as it always starts. And this will lift the market. We need a bit of stronger Atlantic market to lift the -- at least that comes on max market. But of course, even at $16,000 or $17,000 a day, the spot market, $15,000 to $17,000, is still a healthy market as far as we are concerned. So we don't really complain about it. Of course, a key part to it show all the closure of the Red Sea -- and not closure, but the restriction of the trading by the Red Sea and Panama Canal, which exist at the moment. Panama Canal is for a number of months, and Red Sea since January, February of this year. And this will continue to be that case. We don't see any dry bulk lessens passing to the canal, but maybe one or two every week. That's about it. And I think this will guarantee that the market will stay a bit longer at good levels. What is the most important for us in the long run as a company, well, we don't plan for -- on a quarter-by-quarter basis, we are planning…

Yes. Thank you. That makes sense. And I appreciate the insight and the deep detail. That's it for me. Thank you.

Our next question comes from Climent Molins from Value Investors.

Good afternoon. Thank you for taking my questions. I wanted to start by asking about the returns and the environmental upgrades you've pursued on your existing fleet. Could you provide some commentary on some of the initiatives you've done? And secondly, what kind of returns are this investment generating?

Yes. Look, first of all, we'll start with the scrubber investment, which we started in 2019 and we completed in 2020. This has been paid off already. And whatever income is generated by the scrubbers now is a profit on the annual result. Right now, the spread is around $80, $90. It's not at a very good level, but still on those numbers. The company is earning an extra $20 million a year. So after that, we take this money, and we draw them on environmental investment of the existing fleet by upgrading them on all of them on dry dockings even on our older ships. So we just finish now six build Kamsarmax by drydocking that we applied low friction paints and other improvements on the hull. We have reduced the consumption of those ships by 2 tonnes, from 24 tonnes down to 22 tonnes. So a 17-year-old ship is doing better -- 18-year-old ship is doing better consumption than the BKI average, which is 23 points. So with this improvement, the ships are saving around $1,000 a day more. Because of the fuel savings, we have paid $1,000 chartered rates higher. And we will carry on doing this investment on the existing year. So basically, we take the scrubber revenue, and we put it back on the remaining shoes.

Thanks for the color. Following up on Omar's question on your fleet positioning, you still have a few 2006, 2007 built Kamsarmax and Post-Panamax. Considering that asset pricing has done pretty well over the past year, should we expect the disposal of some of these going forward? Or are you comfortable holding on to them for the foreseeable future, especially after the recent upgrades?

Yes, there is an upgrade works in two-folds. First is twofold. The one is that the ships can earn extra income, whilst they remain under the company's operation. You have to remember these are ships we contracted as new buildings, 17, 18 years ago. So they are very well kept looked after. Of course, the company is not selling at any price. When we receive the right buyer at the right price, and we get a premium over the market rates because we believe the ships are worth premium, we can sell. Of course, we are not in a hurry to sell a lot of them. We are selling one ship, order of one ship every six months because we have to allow time for the newbuildings to get delivered in the fleet. So it will be a process that will be going on for the next two or three years at good periods of the market and that when we find the right buyer to pay the -- to appreciate the condition of the ships and the investments we have done in the recent drydocking. Of course, we will sell if we can achieve prices of -- like the last deals we have done. So it will be a slow process, and it will take some time, but we are not in a hurry to complete the sale of the older ships in the next six months.

That's very helpful. That's all for me. Thank you for taking my questions.

[Operator Instructions]. This concludes the question-and-answer session. I would like to turn the floor back over to Loukas Barmparis. Dr. Loukas Barmparis for closing comments.

Thank you very much for having this -- for being with us this morning and hearing our presentation. And we wish you to have a pleasant summer, and we're looking forward to discuss again with you in our next quarter call meeting. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.