Loukas Barmparis
Analyst · those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in forward-looking statements is contained in the second quarter 2025 earnings release, which is available on the Safe Bulkers website, again, www.safebulkers.com. I would now like to turn the conference call over to one of your speakers, 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, and I will start the speech today and welcoming you at our quarterly results. During the second quarter of 2025, we experienced a softer market, which impacted our revenues and profitability. We remain focused on fleet renewal, strong liquidity, comfortable leverage and long-term value creation. We have declared a dividend of $0.05 per share of common stock, rewarding our shareholders. We took delivery of our 12th newbuild and, most recently sold at a targeted price, one of our oldest vessels; remained focused on capital allocation towards our newbuild program; maintained a strong capital structure, ample liquidity and the leverage of about 38%. The selling price of our Pedhoulas Leader at $12.5 million compared to recent market levels indicates a 10% turnaround of asset values and the sentiment shift in the drybulk community. Following a comprehensive review of the forward-looking statements, which are presented in Slide 2, let's proceed to examine the supply side dynamics in Slide #4. The drybulk fleet is projected to grow by about 2.8% on average in 2025 and in 2026 due to stable new deliveries. The order book now stands at about 11% of the current fleet. Asset prices are projected to pick up in line with the current freight market. Recycling volumes are anticipated to rise though as market conditions prompt the retirement of older vessels, especially in relation to the recent MEPC 83 and the Hong Kong Convention on recycling. Ship recycling could double to 16,000 ships over the next 10 years versus the previous decade as per BIMCO projections. Only 9% of the ship capacity in the drybulk order book will be fuel -- ready to use alternative fuels upon delivery. And out of those ships, 37% will be burning LNG, 35% methanol and 23% ammonia. However, the dual-fuel order book is minimal on drybulk segment. We do have 2 dual-fuel vessels on order, with deliveries in Q1 '27. Currently, about 25% of the existing global fleet is older than 15 years. Safe Bulkers' fleet now counts 12 Phase 3 vessels on the water, all delivered 2022 onwards. On top of that, 24 vessels, which have been upgraded environmentally, we have 11 -- 11 ships are eco vessels having superior design efficiencies. 80% of our fleet comprises of Japanese-built vessels, surpassing the global average of 40% while our average fleet age being just 10.3 years versus the global average of 12.6 years. We believe we will become even more commercially competitive as we have on our order 6 more Phase 3 vessels, 2 of them dual-fuel methanol, positioning us favorably to compete within the global standard targets recently adopted by MEPC 83 and expected to be ratified this autumn. The global implementation of GFS, the global fuel standard, if ratified, will penalize the excess fuel carbon intensity compared to specifically determined inducing limits and broaden the scope of the regional fuel regulation, substantially affecting tradability. Moving on to Slide 5, we present an overview of the demand and basic commodities trade. The combination of trade war as expressed through tariffs and persisting geopolitical tensions elevate policy uncertainty and pose a considerable down risk for global growth and against this inflation. For our segment, we anticipate an improving freight rate market, with an increasing focus on the existing fleet decarbonization and energy-efficient newbuilds. The global GDP growth expectations for 2025 and 2026 as reflected in the IMF's July forecast call for a growth of about 3% in the coming years, accompanied by gradual control of inflationary pressure. According to BIMCO, the forecasted global drybulk demand will be from minus 0.5% to plus 0.5% in 2025 followed by growth of 1.5% to 2.5% in 2026, with grains and minor bulks being the best-performing sectors. China and India are gradually boosting domestic coal production, reducing import demand. China, in particular, has been rapidly phasing out fossil fuels from electricity generation, boosting renewables, reducing impact -- import dependence. The increase in import tariffs led to a 57% year-on-year drop in U.S. grain volumes to China as they are expected to continue favoring Brazilian cargoes, bolstered by Brazil's growing production. India continues to perform and is projected to experience the fastest growth among major economies, with a forecast 6.4% GDP increase in 2025 and 2026. Its expanding domestic market and manufacturer sector may continue to contribute positively to the drybulk demand, with infrastructure investments playing a vital role. Summing up the supply-demand equilibrium on Slide 6, the supply growth is expected to continue to outpace demand. The freight market has rebounded recently during the start of the third quarter. Seven of our Capes are presently period chartered, with an average remaining charter duration of almost 2 years at an average daily charter rate of $24,500, providing us visibility of cash flows, topping $135 million in contracted revenue backlog from Capes alone. Moving to Slide 8, we present an overview of our quarterly highlights. We have declared our 15th consecutive quarterly dividend of $0.05, representing 4.7% dividend yield. At the same time, our free cash flow financed our newbuild program. We maintained ample liquidity, profitability and capital resources of $313 million and a comfortable leverage of 38%. We achieved 0 vessels in D and E carbon intensity CII rating for 2024 as described in our 2024 sustainability report. Lastly, we took delivery of our 12th Phase 3 newbuild. And most recently, we sold one of our oldest vessels in our fleet, in line with our fleet renewal strategy. In Slide 9, we present our returns to shareholders of $78.7 million paid in common dividends and the $74.9 million paid in common shares repurchases since 2022. We have been consistent in generating sustainable returns across market fluctuations as a result of our track record, hands-on management and our overall business model. Concluding the company update in Slide 10, we present our strong fundamentals. Safe Bulkers is a drybulk company with $430 million market cap, 47 vessels in the water, having $312 million scrap value. We maintain significant firepower with $125 million cash and $188 million in undrawn RCFs and $176 million borrowing capacity against our significant order book of 6 newbuilds mainly in Japanese shipyards. We focus on our majority Japanese-built [ panels ] for energy efficiency and lower CO2 taxation reflected in our CII rating of 0 vessels on the bottom rating of D and E for 2024. We maintain a young technologically advanced fleet, strong balance sheet, comfortable leverage and low net debt per vessel of $9.1 million for a 10-year old fleet. We have built a resilient business model with cash flow visibility of $159 million in revenue backlog, healthy expansion for sizable fleet that achieves scale and a meaningful 4.7 million -- 4.7% annualized dividend yield positioned to leverage on the environmental regulatory landscape. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly financial overview. Konstantinos, the floor is yours.
