Safe Bulkers, Inc. — FY 2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; the supplied filing text does not provide separate Q4 results. Financial statements are audited and prepared under U.S. GAAP.
Business context
Safe Bulkers is an international dry-bulk shipowner transporting commodities including iron ore, coal, grain, bauxite and fertilizers. At year-end 2021 it owned 39 vessels and had nine Japanese newbuilds on order. By March 18, 2022, the fleet comprised 40 vessels with capacity of about 3.93 million dwt; the nine ordered vessels were scheduled for delivery in 2022–2024.
Key financial metrics
| Metric | FY 2021 | FY 2020 | Change / context |
|---|---|---|---|
| Revenue | $343.5 million | $206.0 million | Up 66.7%, primarily from stronger dry-bulk rates |
| Net revenue after commissions | $329.0 million | $198.2 million | Commissions were $14.4 million versus $7.9 million |
| Operating income | $191.4 million | $10.5 million | Included $11.6 million gain on vessel sales and $7.5 million net early-redelivery income |
| Net income (loss) | $174.3 million | $(12.9) million | Common-shareholder earnings were $163.6 million; diluted and basic EPS were $1.44 |
| Time charter equivalent (TCE) rate | $21,752/day | $10,559/day | More than doubled; TCE is a company-reported industry measure |
| Vessel operating expenses | $72.0 million; $4,830/day | $70.1 million; $4,591/day | Total expenses rose 2.7%; daily costs rose 5.2% |
| Cash from operating activities | $217.2 million | $63.4 million | Improved with higher net revenues and lower voyage costs |
| Cash from investing activities | $8.6 million provided | $34.8 million used | Vessel-sale proceeds largely offset vessel advances and acquisitions |
| Cash from financing activities | $225.9 million used | $9.3 million used | Large debt principal repayments were a key use |
| Total assets / shareholders’ equity | $1,094.3 million / $679.2 million | $1,105.6 million / $444.7 million | Equity increased substantially, including from earnings and ATM share issuance |
The filing does not present a single headline operating-margin measure. Operating expenses included $52.4 million of depreciation and amortization and $22.5 million of general and administrative expenses.
Debt, liquidity and capital needs
- At December 31, 2021, total debt was $360.3 million, down from $616.2 million a year earlier. Of the year-end balance, $41.2 million was scheduled for repayment during 2022. The company reported compliance with its debt covenants.
- Year-end cash and cash equivalents were $101.0 million; time deposits were $1.1 million and restricted cash was $10.3 million. The company reported total liquidity of $296.2 million, including $137.7 million of revolving-credit availability and other committed financing capacity. These facilities are not equivalent to cash on hand.
- Remaining capital expenditure commitments for the nine newbuilds were about $240.0 million at year-end. Total disclosed contractual obligations were $689.2 million, including debt, newbuild commitments, management fees and estimated interest.
- After year-end, a subsidiary issued a €100 million unsecured, company-guaranteed bond in February 2022, bearing a 2.95% coupon and maturing in 2027. The filing reports aggregate debt of $427.2 million at March 18, 2022, including the bond.
- Management stated that cash, operating cash flow and committed borrowing capacity were expected to fund operations and then-current financial needs at least through the end of Q1 2023. This is a dated liquidity assessment, not a guarantee.
Material changes versus the prior year
- Market recovery drove higher revenue and TCE rates; fleet utilization on ownership days improved to 96.64% from 89.80%.
- The company sold seven vessels in 2021, recording a net gain of $11.6 million, and acquired three second-hand vessels during the year. It continued its fleet-renewal program with nine newbuilds on order.
- Debt fell by about $255.9 million during 2021, reflecting substantial principal repayments. The company also raised $71.5 million net through its ATM program, issuing 19.4 million common shares by year-end.
- Cash generation improved markedly, while vessel operating costs per ownership day increased. Crew costs and spares rose, partly reflecting COVID-related repatriation, travel and delivery expenses.
Outlook, risks and unusual items
- Market outlook: Dry-bulk freight markets are cyclical and volatile. At March 18, 2022, the company had contracted 58% of expected ownership days for the rest of 2022, at a contracted TCE rate of $22,598/day based on existing contracts and stated assumptions. A significant portion of charters was index-linked, and uncontracted days remained exposed to market rates. No formal earnings guidance is stated.
- Vessel values and leverage: Falling charter rates or vessel values could weaken cash flow, trigger impairment, or pressure collateral and financial covenants. The year-end impairment analysis found no impairment, but relied on projected charter rates and other estimates.
- Geopolitical and operating risks: COVID-related disruption and the Russia–Ukraine conflict could affect shipping routes, demand, costs, crew availability, chartering and financing. The company said it had limited Russia and Ukraine operations and no Russian or Ukrainian crew; the financial effect of the conflict could not be estimated.
- Regulation and investment: Environmental rules, including energy-efficiency and emissions requirements, may require further vessel upgrades and increase costs. At March 2022, 35 of 40 vessels had approved ballast-water treatment systems installed; 17 had scrubbers installed.
- Customer concentration: Viterra and Cargill together accounted for 30.70% of 2021 revenue. Counterparty default, renegotiation or loss of major customers could reduce revenue.
- Financing and foreign exchange: Most secured borrowings were floating-rate and LIBOR-based; transition to replacement benchmarks may change borrowing costs. The euro bond creates unhedged currency exposure, and the company reported no foreign-exchange hedges at year-end.
- Dividends and dilution: Preferred shares carry an 8% cumulative dividend. In March 2022, the company declared a $0.05-per-common-share dividend, its first common dividend since 2015. Future dividends remain discretionary and subject to liquidity, covenants and preferred-share priority. The company had not sold additional ATM shares after Q3 2021 through March 18, 2022.
- Other notable items: The company received $7.99 million in compensation for early termination of the Lake Despina charter, reflected in $7.47 million of net early-redelivery income. A $38.4 million redemption of Series C preferred shares was scheduled for April 2022. No material pending litigation was reported. Management and the auditor reported effective internal controls; the financial statement audit opinion was unqualified.
Important facts for investors to verify
- Check the audited statements and notes for debt maturities, covenant headroom, restricted cash and the terms of sale-and-leaseback financings.
- Verify the timing, funding and delivery status of the nine newbuilds, alongside the associated remaining capital commitments.
- Assess charter coverage, index-linked exposure, renewal dates and the concentration of revenue among major charterers.
- Separate recurring operating performance from vessel-sale gains, early-redelivery income and derivative valuation effects.
- Confirm post-year-end debt, bond proceeds and use of proceeds, preferred-share redemption completion, and any subsequent ATM issuance or dividend decisions.
- Review sensitivity of vessel values and impairment assumptions to freight rates, fuel spreads, regulation and operating costs.