Safe Bulkers, Inc. — FY 2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide a clear set of Q4-only financial results. Figures below are U.S. dollars unless otherwise stated.
Business context
Safe Bulkers is a dry-bulk shipping company transporting commodities including iron ore, coal and grain. It reported 44 vessels and nine contracted newbuilds as of the filing’s February 2023 fleet update. The filing states the audited financial statements are prepared under U.S. GAAP; Deloitte issued an unqualified opinion.
Key financial metrics
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $364.1 million | $343.5 million |
| Net revenue, after commissions | $349.7 million | $329.0 million |
| Operating income | $184.6 million | $191.4 million |
| Net income | $172.6 million | $174.3 million |
| Basic and diluted EPS | $1.36 | $1.44 |
| Operating cash flow | $218.0 million | $217.2 million |
| Investing cash flow | $(229.4) million | $8.6 million |
| Financing cash flow | $(40.1) million | $(225.9) million |
| Total debt outstanding at year-end | $422.6 million | $360.3 million |
Operating margin was approximately 50.7% of revenue and net margin approximately 47.4%. TCE rate rose to $22,712 per available day from $21,752; available days increased to 14,959 from 14,678. Fleet utilization was 96.38% on ownership days and 98.72% on available days.
At December 31, 2022, total assets were $1.246 billion, total liabilities $474.0 million, and shareholders’ equity $771.9 million. Current assets were $157.7 million and current liabilities $91.3 million. Cash and cash equivalents were $49.2 million; time deposits were $64.2 million and restricted cash was $9.9 million. The current portion of debt was $45.7 million.
Changes versus FY 2021
- Revenue increased 6.0%, while net income declined about 1.0% and operating income declined about 3.5%.
- Vessel operating expenses rose 11.4% to $80.2 million; daily vessel operating expenses increased 8.4% to $5,235. Management cited higher crew, insurance, lubricant, repair, drydocking and environmental-upgrade costs.
- Interest expense rose 16.3% to $17.1 million. The average interest rate increased to 3.255% from 2.642%, despite lower average loan balances.
- Net derivative gains were $8.7 million versus $2.2 million in 2021, including $7.1 million of FFA gains and $4.5 million of bunker-swap losses.
- Operating cash flow was broadly stable. Investing cash outflow reflected vessel acquisitions, newbuild advances and time deposits; the prior year included substantial vessel-sale proceeds. The company issued no additional ATM shares in 2022 and repurchased and cancelled 2.8 million common shares under its buyback program.
Liquidity, debt and capital commitments
Management reported December 31 liquidity of $319.3 million: $123.3 million in cash, cash equivalents, time deposits and restricted cash, plus $145.0 million available under revolving facilities and up to $51.0 million under financing agreements. At February 24, 2023, reported liquidity was $346.1 million. Management expected available cash, operating cash flow and committed borrowing capacity to fund operations and requirements at least through the end of Q1 2024; this is management’s assessment, not a guarantee.
Year-end aggregate contractual obligations were $850.5 million, including $422.6 million of debt and $236.1 million of remaining newbuild purchase commitments. Management reported $242.6 million payable in 2023. The company had nine newbuilds on order, with deliveries scheduled through the first half of 2025. It stated that it complied with debt and bond covenants at year-end.
Outlook, risks and unusual items
- Market outlook: The filing says dry-bulk charter rates had recently weakened. The BDI fell to 530 in February 2023; as of February 24 it was 883. For the remainder of 2023, 49% of expected ownership days were contracted, at a stated contracted TCE rate of $14,149. Rates and employment for open days depend on market conditions; no formal earnings guidance is provided.
- Charter exposure: Two charterers, Viterra and Cargill, accounted for 33.52% of 2022 revenue. Twenty-four of 44 vessels were employed or scheduled on period charters with more than three months remaining as of February 24, 2023; some charter rates are index-linked.
- Fleet renewal and spending: Newbuild commitments and environmental upgrades require substantial capital. Delivery delays, financing availability and future charter rates may affect returns and liquidity. Four additional scrubbers were planned, and the company reported environmental upgrades in progress.
- Debt and market risks: Most secured borrowing is floating-rate; $228.1 million of LIBOR-based facilities had maturities beyond June 2023, with most benchmark transitions still to be negotiated. The company also faces vessel-value and covenant risks, foreign-exchange exposure, inflation, and dry-bulk market cyclicality.
- Accounting estimate: Effective January 1, 2022, the company raised its estimated vessel residual value from $182 to $375 per light-weight ton. It said 2022 net income would have been $8.6 million lower, and EPS $0.08 lower, without the change. No vessel impairment was recorded, although broker valuations were below carrying value for 10 vessels with aggregate carrying value of $320.6 million.
- Dividends: The company resumed common dividends in 2022, paying four quarterly dividends of $0.05 per share. The board retains discretion over future payments, which are subject to preferred dividends, cash needs, law and debt restrictions. In April 2022, the company redeemed 1,492,554 Series C preferred shares for $37.3 million plus accrued dividends.
- Other disclosures: The filing reports no material pending legal proceedings and no debt defaults or dividend arrearages. Management and the auditor concluded internal control over financial reporting was effective at year-end. COVID-related crew repatriation costs were about $0.5 million in Q4 2022 versus the comparable pre-COVID period.
Investor verification priorities
- Review the audited statements and notes for debt maturities, borrowing availability, covenant headroom, and how liquidity is calculated.
- Reconcile the filing’s contracted-revenue disclosures: approximately $292.0 million in the liquidity discussion versus $286.7 million in the detailed minimum time-charter schedule at December 31, 2022; confirm scope and assumptions.
- Assess the 2023 contracted TCE rate and uncontracted days against subsequent charter fixtures and current dry-bulk market conditions.
- Verify funding, delivery timing and remaining cash requirements for the nine newbuilds, and evaluate exposure to uncontracted newbuild capacity.
- Examine the residual-value estimate change, vessel broker valuations and impairment assumptions, especially future charter-rate estimates.
- Monitor floating-rate and foreign-currency exposures, including the LIBOR transition and the euro-denominated bond, as well as dividend capacity and preferred-share obligations.