Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers Conference Call on the Second Quarter 2025 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 call is being recorded today. The archived webcast of the 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 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 welcome you to 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 a 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 a 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 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 in the drybulk segment. We do have two dual-fuel vessels on order, with deliveries in Q1 2027. 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 have been upgraded environmentally; we have 11 eco vessels having superior design efficiencies. Eighty percent of our fleet comprises Japanese-built vessels, surpassing the global average of 40%, while our average fleet age is 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 six more Phase 3 vessels, two 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 the global fuel standard, if ratified, will penalize the excess fuel carbon intensity compared to specifically determined limits and broaden the scope of regional fuel regulation, substantially affecting tradability.
Moving on to Slide 5, we present an overview of demand and basic commodities trade. The combination of trade wars, as expressed through tariffs, and persisting geopolitical tensions elevate policy uncertainty and pose a considerable downside risk for global growth and against disinflation. For our segment, we anticipate an improving freight rate market, with an increasing focus on 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 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 and reducing 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 manufacturing sector may continue to contribute positively to drybulk demand, with infrastructure investments playing a vital role. Summing up the supply-demand equilibrium on Slide 6, 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 two 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 a 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 had zero vessels in D and E carbon intensity (CII) ratings 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 $74.9 million paid in common share 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 a $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 six newbuilds mainly in Japanese shipyards. We focus on our majority Japanese-built vessels for energy efficiency and lower CO2 taxation, reflected in our CII rating of zero vessels on the bottom ratings 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 a sizable fleet that achieves scale and a meaningful 4.7% annualized dividend yield positioned to leverage the environmental regulatory landscape. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly financial overview. Konstantinos, the floor is yours.
Thank you, Loukas, and good morning to everyone. During the second quarter of 2025, we operated in a weaker charter market environment compared to the same period in 2024, with decreased revenues due to lower charter hires, decreased earnings from scrubber-fitted vessels and increased operating expenses. In Slide 12, we show our quarterly financial highlights for the second quarter of 2025 and compare them to the same period of 2024. Our adjusted EBITDA for the second quarter of 2025 stood at $25.5 million compared to $41.8 million for the same period in 2024. Our adjusted earnings per share for the second quarter of 2025 was $0.01, calculated on a weighted average number of 102.5 million shares compared to $0.17 during the same period of 2024, calculated on a weighted average number of 106.8 million shares. On the top graph, during the second quarter of 2025, we operated an average of 46.75 vessels, earning an average time charter equivalent (TCE) of $14,857, compared to 45.43 vessels, earning an average TCE of $18,650 during the same period in 2024.
Our daily vessel operating expenses increased by 6% to $6,607 for the second quarter of 2025 compared to $6,254 for the same period in 2024. Daily vessel operating expenses, excluding dry-docking and predelivery expenses, increased by 10% to $5,604 for the second quarter of 2025 compared to $5,089 for the same period in 2024. In conclusion of our presentation, we show on Slide 2 a quick overview of our quarterly operational highlights for the second quarter of 2025. We would like to highlight that based on financial performance, the company's Board of Directors declared a $0.05 dividend per common share. Emphasis we place on maintaining a healthy cash position of about $104 million as of July 18, 2025, and another $240 million in available revolving credit facilities, giving us combined liquidity and capital resources of $315 million. Furthermore, we have contracted revenue from our non-cancelable spot and period time charter contracts of $171 million, net of commissions and before scrubber revenue, and also additional borrowing capacity in relation to six newbuilds upon their delivery as well as one existing unencumbered vessel.
We believe our strong liquidity and our comfortable leverage provides flexibility to our management and capital allocation, and this will enable us to further expand the fleet, build a resilient company and create long-term prosperity for our shareholders. This concludes our presentation. We are now ready for the Q&A session.
Operator Instructions: At this time, I'd like to turn the floor back to management for closing remarks.
So thank you very much for attending this quarterly presentation of our financial results for the second quarter and half year 2025, and we're looking forward to discuss again with you in the next quarter. Thank you very much. Have a nice day.
This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.