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• Net income for the second quarter of 2010 was $24.4 million, a decrease of 58% from net income of $58.1 million in the second quarter of 2009. The decrease of $33.7 million in net income is mainly attributed to: (i) early redelivery income of $1.8 million, compared to $42.4 million, (ii) zero loss on asset cancellations, compared to $20.7 million loss related to our cancellation of certain newbuilds, (iii) loss on derivatives of $4.9 million, compared to gain of $5.1 million and (iv) net revenue of $40.6 million compared to $44.3 million. Earnings per share were $0.37 in the second quarter of 2010 compared to $1.07 in the second quarter 2009, calculated on 65,870,573 and 54,510,002 weighted average number of shares respectively. • EBITDA2 of $29.8 million for the second quarter of 2010, a decrease of 54% from $64.3 million in the second quarter of 2009, mainly due to lower net income as described above. • Declaration of a dividend of $0.15 per share for the second quarter of 2010. Summary of First Half 2010 Results • Net revenue for the first half of 2010 decreased by 18% to $74.9 million from $91.1 million during the same period in 2009. The Company operated 14.02 vessels on average during the first half of 2010, earning a TCE rate of $29,572, compared to 12.77 vessels and a TCE rate of $39,479 during the first half of 2009. • Net income for the first half of 2010 was $56.5 million, a decrease of 53% from net income of $120.1 million in the first half of 2009. The decrease of $63.6 million in net income is mainly attributed to: (i) early redelivery income of $0.3 million, compared to $72.1 million, (ii) zero loss on asset cancellations compared to $20.7 million, (iii) gain on sale of assets of $15.2 million, compared to none, (iv) net revenue of $74.9 million compared to $91.1 million, and (v) loss on derivatives of $9.1 million, compared to gain of $2.8 million. Earnings per share for the first half of 2010 was $0.93 compared to $2.20 in the first half of 2009, calculated on 60,681,831 and 54,508,235 weighted average number of shares respectively. • EBITDA of $66.9 million for the first half of 2010, a decrease of 50% from $132.7 million in the first half of 2009, mainly due to lower net income as described above. Fleet and Employment Profile The Company’s operational fleet as of June 30, 2010 was comprised of 15 drybulk vessels with an average age of 3.55 years. The Company has contracted for seven additional drybulk newbuild vessels with deliveries scheduled at various times through 2013. The newbuilds consist of three Post-Panamax, two Kamsarmax, one Panamax and one Capesize vessels. In July 2010, we entered into a shipbuilding contract for the construction of a 76,000 dwt, Panamax-class, Chinese-built vessel, with expected delivery date in 2013. As of July 26, 2010, the contracted employment of the Company’s fleet is 88% of fleet ownership days for the remaining days of 2010, 61% for 2011 and 53% for 2012, including vessels which will be delivered to us in the future. Dividend Declaration The Company declared a cash dividend on its common stock of $0.15 per share payable on or about August 27, 2010 to shareholders of record at the close of trading of the Company’s common stock on the New York Stock Exchange (“NYSE”) on August 20, 2010. The Company has 65,872,695 shares of common stock outstanding as of today. The Board of Directors of the Company is continuing a policy of paying out a portion of the Company’s free cash flow at a level it considers prudent in light of the current economic and financial environment. The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. The timing and amount of any dividends declared will depend on, among other things: (i) our earnings, financial condition and cash requirements and availability, (ii) decisions in relation to our growth strategies, (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends, (iv) restrictive covenants in our existing and future debt instruments and (v) global financial conditions. We can give no assurance that dividends will be paid in the future. Management Commentary Dr Loukas Barmparis, President of the Company, said: “During this quarter, we have maintained our basic policies, while continuing our monitoring of market conditions, which resulted to the acquisition of a new Panamax vessel and consequent expansion of our fleet to 22 vessels by 2013. We have maintained a high charter coverage which we believe will provide stability to our future cash flows and we have declared a dividend for the 9th consecutive quarter in line with our policy to pay out a portion of our free cash flows.” Conference Call On Wednesday, July 28, 2010 at 9:00 A.M. EDT, the Company’s management team will host a conference call to discuss the financial results. Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (US Toll Free Dial In), 0(800) 953-0329 (UK Toll Free Dial In) or +44 (0)1452-542-301 (Standard International Dial In). Please quote “Safe Bulkers” to the operator. A telephonic replay of the conference call will be available until August 4, 2010 by dialing 1 (866) 247-4222 (US Toll Free Dial In), 0(800) 953-1533 (UK Toll Free Dial In) or +44 (0)1452 550-000 (Standard International Dial In). Access Code: 1859591#. Slides and Audio Webcast There will also be a live, and then archived, webcast of the conference call, available through the Company’s website (www.safebulkers.com). Participants in the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. Management Discussion of Second Quarter 2010 Results Net income decreased by 58% to $24.4 million for the second quarter of 2010 from $58.1 million for the second quarter of 2009. This decrease is attributable to the following factors: Net revenues: Net revenues were $40.6 million for the second quarter of 2010, a 8% decrease compared to $44.3 million for the second quarter in 2009. Net revenues decreased due to lower time charter rates. Vessel operating expenses: Vessel operating expenses increased to $5.9 million for the second quarter of 2010, a 28% increase compared to $4.6 million for the same period in 2009. This increase was primarily due to increased crew costs, crew expenses, lubricants, general stores and provisions, which in turn are mainly attributed to increased ownership days from 1,183 in the second quarter of 2009 to 1,359 in the second quarter of 2010, and to the initial costs related to delivery of newbuild Panayiota K during the second quarter of 2010. Consequently, daily vessel operating expenses increased by 11% to $4,362 for the second quarter 2010, compared to $3,914 for the second quarter of 2009. Early redelivery income (net): During the second quarter of 2010, we recorded $1.8 million of early redelivery income, versus $42.4 million, for the same period in 2009. Early redelivery income recorded in the second quarter of 2010 was related to the early termination agreements for the period time charters of our vessels Pedhoulas Merchant and Pedhoulas Leader. Pedhoulas Merchant was redelivered on April 13, 2010, instead of the contracted earliest redelivery date of November 5, 2010. In connection with this early redelivery, we recognized early redelivery income of $3.6 million, comprising cash compensation paid by the relevant charterer of $4.8 million less accrued revenue of $1.2 million. Pedhoulas Leader is expected to be redelivered on about November 15, 2010 instead of the contracted earliest redelivery date of September 30, 2011. In connection with this early redelivery, we paid to the relevant charterer cash compensation of $1.8 million, calculated based on the expected redelivery date. Interest expense: Interest expense decreased to $1.6 million in the second quarter of 2010 from $3.1 million for the same period in 2009, attributable to the declining USD LIBOR levels as reflected in the decrease of weighted average interest rate from 2.541% in the second quarter of 2009, to 1.333% in the second quarter of 2010, and to the lower average loans outstanding. The weighted average of loans outstanding during the second quarter of 2009 was $490.1 million, compared to $465.1 million during the second quarter of 2010. Loss on asset cancellations: During the second quarter of 2010, the Company did not enter into asset cancellations, whereas a loss totaling $20.7 million on cancellation of newbuilds was incurred during the same period in 2009. Gain/(Loss) on derivatives: Loss on derivatives amounted to $4.9 million in the second quarter of 2010, compared to $5.1 million gain on derivatives, for the same period in 2009, as a result of the mark-to-market valuation of certain interest rate swap transactions that we employ to manage the risk and interest rate exposure of our loan and credit facilities. These swaps economically hedged the interest rate exposure of 97.4% of the Company’s aggregate loans outstanding as of June 30, 2010. The valuation of these interest rate swap transactions at the end of each quarter is affected by the prevailing interest rates at that time. Cash, time deposits & restricted cash: As of June 30, 2010, we had $92.9 million in cash, short-term time deposits and short-term restricted cash, $4.9 million in long-term restricted cash and $50.0 million in a long-term floating rate note. Additionally, we have $64.0 million in undrawn loan commitments, comprising a $40.0 million loan commitment to be secured by our vessel Kanaris and a $24.0 million loan commitment to be secured by our vessel Panayiota K. About Safe Bulkers, Inc. The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world’s largest users of marine drybulk transportation services. The Company's common stock is listed on the NYSE, where it trades under the symbol “SB”. The Company’s current fleet consists of 15 drybulk vessels, all built post-2003, and the Company has contracted to acquire seven additional drybulk newbuild vessels to be delivered at various times through 2013. _________ 1. Refer to definition of “TCE” in Note 6 of Fleet Data Table. 2. EBITDA represents net income plus interest expense, tax, depreciation and amortization. See "EBITDA Reconciliation". Safe Bulkers, Inc. |
Safe Bulkers, Inc. Reports Second Quarter and First Half 2010 Results and Declares Quarterly Dividend