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Edited Transcript of SB.N earnings conference call or presentation 9-Jun-20 12:30pm GMT

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Q1 2020 Safe Bulkers Inc Earnings Call Jul 21, 2020 (Thomson StreetEvents) -- Edited Transcript of Safe Bulkers Inc earnings conference call or presentation Tuesday, June 9, 2020 at 12:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Konstantinos Adamopoulos Safe Bulkers, Inc. - CFO & Director * Loukas Barmparis Safe Bulkers, Inc. - President, Secretary & Director * Polys Hajioannou Safe Bulkers, Inc. - Chairman & CEO ================================================================================ Conference Call Participants ================================================================================ * James Monigan Citigroup Inc., Research Division - Senior Associate * Randall Giveans Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Safe Bulkers conference call to discuss the first quarter 2020 financial results. Today, we have with us from Safe Bulkers, Chairman and Chief Executive Officer, Mr. Polys Hajioannou; President, Dr. Loukas Barmparis; Chief Financial Officer, Mr. Konstantinos Adamopoulos; and Chief Operating Officer, Mr. Ioannis Foteinos. (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 is being recorded today. Before we begin, please note that this presentation contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, concerning future events, the company's growth strategy and measures to implement such strategy, including expected vessel acquisitions and entering into further time charters. Words such as expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are identified -- are intended to identify forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for drybulk vessels, competitive factors in the market in which the company operates, risks associated with operations outside the United States and other factors listed from time to time in the company's filings with the Securities and Exchange Commission. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement in based. And now I pass the floor to Konstantinos Adamopoulos. Please go ahead, sir. -------------------------------------------------------------------------------- Konstantinos Adamopoulos, Safe Bulkers, Inc. - CFO & Director [2] -------------------------------------------------------------------------------- Good morning to all. I am Konstantinos Adamopoulos, CFO of Safe Bulkers. Welcome to our conference call and webcast to discuss the financial results for the first quarter of 2020. I would like to start by thanking our seafarers for their commitment and dedication throughout this harsh period as collectively, we will continue to serve our charterers. Moving to Slide 4. We have been active in all fronts, operational, financial and commercial, taking measures to ease the impact of COVID-19. In the operational forefront and in relation to our seafarers onboard, the company's COVID-19 Management Plan has been disseminated to the vessels, incorporating measures to protect seafarers, ensure employees' health and the well-being, and to keep all our vessels sailing continuously servicing our charterers. In our shore operations, we have conducted remotely our business efficiently through -- since March 20, 2020, and reopened our offices on May 4, 2020. So far, we have zero COVID-19 incidents, both onboard and ashore. We've secured the normal supply of bunkers, provisions and potable water at main ports under specific procedures to avoid contact with port personnel. All critical technical services are maintained and as all crew changes have been suspended, we have developed a detailed plan of such changes in order to increase crew availability and meet replacement demand once the changes resume. We have been also active in our environmental investments as seen in Slide 5. From the beginning of the year and until May 29, 2020, even during the peak of the COVID-19 pandemic, our program of dry dockings, ballast water systems and scrubber installations has continued. We have concluded 6 dry dockings, 5 ballast water installations, 4 scrubber installations and had 1 recent newbuild vessel delivered. In the financial forefront in Slide 6, following the refinancing concluded in early 2020, which provided us with $53.1 million of additional liquidity and the drawdown of $10 million from our unsecured RCF, we took a further step in close cooperations with our lenders to preserve our strong financial position by pushing back to 2022 and 2023, a total of $39.1 million of loan repayments scheduled for 2020 and 2021, and also by drawing down $36.4 million from our existing available facilities. Moving to Slide 7. In the commercial forefront, we have reached an agreement with a prominent charter for 4 period time charters of non-scrubber fitted Panamax class vessels: Three 5-year charters at a daily gross charter hire of $11,750 for the first 2 years, and for the next 3 years at Baltic Exchange Kamsarmax Index-82 5TC times 97% less $2,150, starting in the third quarter of 2020; and 1 year charter at a daily gross charter rate linked to the Baltic Exchange-82 5TC Index times 109%, starting in the first half of 2020, thus front loading our future cash flows. The anticipated aggregate gross revenue of these 4 charters is $54.7 million until 2025, basis calculations of the current FFA curve. Let's move now into analyzing the market conditions. In Slide 9, we present the outlook of the market as of the beginning of June in terms of charter rates for Capes and Kamsarmaxes (technical difficulty) So far the market is mainly driven by COVID-19 and its effect in global economies. Most advanced economies have already announced stimulus packages to address the adverse effect of the pandemic. Another important driver so far is the U.S.-China trade war and the long anticipated implementation of Phase 1 deal, which was struck back in January. Seasonality is a constant driver in the shipping market, setting the first quarter of every year as the weakest in terms of charter rates. Turning to Slide 10. We present our data on China, which seems to be the first country to recover from the pandemic. Chinese economy contracted by almost 7% in Q1. In response, China has announced the fiscal measures it intends to take to stimulate the economy back to growth territory. And this includes a fiscal stimulus package of almost CNY 3.6 trillion, that's equivalent about $0.5 trillion; a raise in the financial government's bond -- special bond quota of CNY 3.75 trillion; an issuance of CNY 1 trillion of central government special bonds targeted at COVID-19 relief; and finally, business tax cuts and fee reductions worth CNY 500 trillion (sic) [CNY 500 billion] in total. As evidenced in the bottom graph, Chinese industrial production indicates are -- indicators are evolving, signaling what seems to be hopefully a V-shaped market recovery. The special purpose bonds should be the catalyst for a boost in industrial production and consequently, for the uplift in demand in marine transportation commodities with the conditions in China normalized. Slide 11, we analyze the developments on imports of the major drybulk commodities. As shown on the top graph, total iron ore imports to China in the January to April period were up 5% versus the same period of 2019. Rapid spread of COVID-19 in Brazil has halted exports of iron ore, which are down 17% year-on-year. This explains partially the depressed charter rates on Capes. In the graph in the middle of the page, we presented thermal coal and lignite imports to China for the January through April period, which were increased by 46.6% versus the same period in 2019. And from the bottom graph, we see that soybean imports to China in the same 4 months with a marginal increase versus the same period of 2019. We believe that the positive news coming from China and the gradual recovery of other importing countries worldwide will eventually increase demand for bulk. In Slide 12, we present the status of the order book on Capes and Panamaxes to post-Panamaxes. Order book is declining after 2020 with slippage and cancellations due to COVID-19 creating extensive delays. The combination of aging of fleet, low charter rates and increased CapEx for complying with environmental regulations may intensify scrapping activity, which has diminished due to lockdowns of demolition countries like India and Bangladesh. Lastly, the ongoing environmental discussions for emissions and decarbonization do not favor new orders. On Slide 13, we present the effect of the global lockdowns and mobility restrictions on demand for oil and fuel. As presented on the top graph, according to DNB, the global oil demand is also expected to evolve on a V-shape. In the middle and bottom graphs we present the U.S. implied oil demand and the gasoline demand. We believe that as global lockdowns ease, oil demand will continue to improve in the second half of 2020. In Slide 14, we present the price of the spread differential, also known as Hi5 between the IMO2020 compliant fuel versus the heavy fuel oil, which is used now only on the scrubber-fitted vessels, in correlation with Brent prices. Compliant fuel and distillate products are closely related to the open up and recovery of global economies. The compliant fuel prices versus the HFO prices has shrunk. As evidenced on the graph, Hi5 spread is correlated with Brent prices. We expect that the end of the global lockdown will lift mobility restrictions and hence the demand for oil and fuel. This probably lead to recovery of Brent prices and to wider Hi5 spread differential. Turning in Slide 15 in the context of our environmental and social responsibility. Despite the tough environment, we have retrofitted 18 scrubbers and 25 ballast water treatment systems at an aggregate cost of $55.8 million. By the end of the third quarter of 2020, we will have completed our scrubber installation program. On the bottom table, we estimate the expected downtime days for Q2 and Q3 in 2020 so as to assist our analysts with their projections. Now let's summarize the key market takeaways in Slide 16. Seasonality patterns are repetitive and intensified after Chinese New Year by the COVID-19 pandemic. We believe the delays in Chinese shipyard, delays in ports due to quarantine, the diminished scrapping and excessive environmental investments will control the supply side. As China has introduced the fiscal stimulus package of about $0.5 trillion, its industrial indicators are rebounding, signaling what might possibly be a V-shape of the market recovery. There is a declining order book from 2020 onwards. At the same time, discussions on emissions and decarbonization will not favor new orders. The combination of slippage and cancelations due to the COVID-19 pandemic may create extensive delays. Furthermore, the aging fleet, low freight rates and increased environmental CapEx may enhance the scrapping activity. The global lockdown has adversely affected the demand for oil and distillate fuels. We expect a slow rebound of global oil demand in the second half of this year as global lockdowns ease oil demand. Fuel price spread differential has shrunk for this reason during the first quarter of 2020, but if Brent recovers, then this spread might recover as well. Slide 17, the keynotes points are the liquidity which is in excess of $127 million, in the remark that we've done numerous drydockings, already [paid 90%] of our environmental investments, as liquidity in this unstable environment provides us with flexibility. Our ability to produce long-term period charters despite market conditions, adding front-loaded cash flow visibility, is the hard evidence of excellent relations with our charterers. Our ability to complete our environmental investments in the peak of the pandemic is evidence of our technical expertise. And lastly, our smoothened debt profile for the next years while our leverage ratio comfortably stands at 63% is an evidencing of the trust and support from our lenders. Let me continue with our liquidity in Slide 19, which as of May 29 this year is $127.2 million consisting of $108 million (technical difficulty) represent or the blue columns are repayment schedule on a pro forma basis, taking into account the financing activities. The new loan facility from our -- for our last newbuild was delivered and we have secured revolving credit facility versus the repayment schedule as of March 31, 2020. (technical difficulty) which was completed in (technical difficulty) providing us with an additional liquidity of $53.1 million. During the first quarter, we drew down $10 million by our -- through our secured RCF. In April 2020, we drew down an additional $10 million available under this RCF (technical difficulty) MV Troodos Oak. In addition, in close cooperation with our lenders, we pushed back $39.1 million on the payments to 2022 and 2023, which were originally scheduled for 2020 and 2021, thus expanding the average tenor, creating a smooth repayment profile, maintaining the same cap -- while maintaining the same covenants of debt. This resulted in increasing our flexibility during this period. Overall, following the quarter end, the company drew down $36.4 million and pushed back $39.1 million in payments till 2020 and 2021. Moving to Slide 21, we present our quarterly daily OpEx, which stood at $4,771 versus our quarterly daily G&A, which stood at $1,371. The aggregate figure for both these numbers for Q4 2020 -- 2019 (sic) [Q1 2020] was $6,142, demonstrating our focus on lean operations. We believe that this $6,100 for both OpEx and G&A when comparing OpEx to OpEx is one of the industry's lower -- of the lowest, given the fact that we include in our OpEx all our drydocking expenses and in our G&A, our director compensation and all expenses related to the administration, while other companies may not include these numbers. Moving on to Slide 22. We present our quarterly TCE which stood at $9,089 affected by COVID-19, versus our quarterly OpEx which stood at $4,771. Let's move to Slide 23 with our quarterly financial highlights for the first quarter of 2020 compared to the same period of 2019. Net revenues decreased by 5% to $45.7 million from $48.3 million. Our time charter equivalent rate per vessel decreased to $9,089 per day from $12,280 during the same period in 2019. Daily vessel OpEx increased by 15% to $4,771 compared to $4,153 for the same period in 2019, whereas daily OpEx, excluding drydocking and predelivery expenses increased by 3% to $4,285 for the first quarter of 2020 compared to $4,150 for the same period last year. Our adjusted EBITDA for the first quarter of 2020 decreased to $9.4 million compared to $24.9 million for the same period in 2019. Our adjusted loss per share for the first quarter of 2020 was $0.13, calculated on the weighted average number of 103.4 million shares compared to adjusted earnings per share of $0.03 during the same period in 2019, calculated on the weighted average number of 101.6 million shares. Closing my presentation in Slide 24, we present our quarterly fleet data and average daily indicators compared to the same period last year. I'd like to emphasize that in this period, we have worked extensively despite the tough market conditions and we have contracted three 5-year period time charters and 1 year period time charter, adding front-loaded cash flows. We have refinanced a large part of our debt early in 2020 which allowed us (technical difficulty) We took -- steps further to push back to 2022 and 2023, $39.1 million of loan repayments. We also drew down $36.4 million. And we installed 18 scrubbers with only 2 remaining. We have a strong balance sheet and comfortable leverage and smooth debt profile for 2022 and -- 2020 and 2021, and liquidity of $127.2 million. And finally, we took measures to protect our seafarers and shore employees' health and well-being and kept all of our vessel sailing, continuously servicing our charterers. Once again, we would like to thank all our seafarers for their commitment and dedication and efforts throughout this tough period. Going forward, we'll maintain our determination to preserve our strong financial position in which we currently are, as we believe that the market signs are there for a market rebound once the COVID-19 impact is fully -- underway. Our press release presents in more detail our financial and operational results. We're now open to take questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And your first question comes from Chris Wetherbee. -------------------------------------------------------------------------------- James Monigan, Citigroup Inc., Research Division - Senior Associate [2] -------------------------------------------------------------------------------- This is James on for Chris. I just wanted to start with the balance sheet and touch on some of the refinancing. I just wanted to get a sense of where you were. Are there additional refinancings that you'd like to pursue? Are you comfortable with what you've done so far? Just kind of wanted to get a sense of what sort of the target capital structure is right now or what goals you're sort of working towards and sort of see where you are in that process? -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [3] -------------------------------------------------------------------------------- Yes. This is Loukas. Look, we are quite happy. We have concluded very quickly this refinancing of certain facilities. Of course, the major job of it was done late last year. And right now, you can see the principal payment schedule for the following years. And we feel quite comfortable because we sit on a substantial liquidity, which can cover the 2020 and 2021 principal payments. Having said that, of course, we shouldn't forget that the debt to asset ratio is 63%, which is still quite comfortable. And so the company, we feel that -- the management feels that we are very fine at this position at this point in the pandemic. -------------------------------------------------------------------------------- James Monigan, Citigroup Inc., Research Division - Senior Associate [4] -------------------------------------------------------------------------------- Got it. And I kind of wanted to get a sense of the preferreds within that context. Is there anything that you think that you could opportunistically do there? Or is that actually something that you're also comfortable with? -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [5] -------------------------------------------------------------------------------- Could you repeat the question? -------------------------------------------------------------------------------- James Monigan, Citigroup Inc., Research Division - Senior Associate [6] -------------------------------------------------------------------------------- Yes. I just also wanted to touch on the preferreds. Are you comfortable with them where you are? Or given the current environment, is there something that you could do opportunistically there, possibly repurchase at a discount? Or -- they are fairly high cost of capital, so just wanted to get a sense of if there's anything you could do on that side of the capital structure as well. -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [7] -------------------------------------------------------------------------------- Yes, we are quite comfortable with preferreds. And I think the preferreds have played a very good, let's say, substantial part of the equity of the company. And I think we should continue to maintain them in our balance sheet for, let's say, next periods. -------------------------------------------------------------------------------- James Monigan, Citigroup Inc., Research Division - Senior Associate [8] -------------------------------------------------------------------------------- Got it. And then looking at OpEx. I know it's up about 3% year-over-year, as you said. Just wanted to get a sense of if that is the right run rate to think of moving forward. Or if there -- you have any opportunities to move it down or if there's anything sort of onetime-ish in there, essentially trying to get an outlook for OpEx per day. -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [9] -------------------------------------------------------------------------------- Look, the OpEx -- I mean the OpEx that we always present is not comparable with several other companies that report different OpEx and drydocking expenses. We report everything together. And if you see that, we should see that we did a large number of drydockings and installations during the first quarter despite the fact that we had this COVID-19 outbreak. We did it without our people in China. And we are quite comfortable. In the next quarters, I mean, we expect that this figure probably will go down because we have less drydockings. And the other thing is that also we have a program of reducing OpEx during this period. So I think that we are quite happy and -- even in comparison with all our peers. -------------------------------------------------------------------------------- James Monigan, Citigroup Inc., Research Division - Senior Associate [10] -------------------------------------------------------------------------------- Yes. Got it. But on -- I think you'd called out that OpEx per day, excluding drydocking expenses, was roughly 4,000 -- or 4,300 -- or $4,285. So if we look at that moving forward, how -- what should we be thinking of that particular number being and then also your ability to reduce that through some of your initiatives? Just trying to get an ex drydocking and ex delivery expenses. Trying to get a sense of what that might do across the next couple of quarters. -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [11] -------------------------------------------------------------------------------- Yes. I think that we should look for a figure between $4,000 and $4,200. This is a reasonable assumption on our efforts. And on that, then you need to top up with the drydocking expenses, as we said. -------------------------------------------------------------------------------- James Monigan, Citigroup Inc., Research Division - Senior Associate [12] -------------------------------------------------------------------------------- Got it. And then if you're thinking about sort of the outlook at the moment, like what is your expectation for rates? Is it -- do you think it will be slow and gradual and occur maybe mid next year? Or do you think it will be sort of sharp and pointed and you could actually see some level of recovery in this year? Just trying to understand sort of the outlook for the sort of shape of recovery, if you will. -------------------------------------------------------------------------------- Polys Hajioannou, Safe Bulkers, Inc. - Chairman & CEO [13] -------------------------------------------------------------------------------- Yes. This is Polys. So what we expect is the second half of this year to move towards breakeven level, so slightly above breakeven levels. But as this uncertainty is still there with the pandemic and nobody knows how it will develop, if there is a second round coming or if there's a vaccine that may be produced, a lot will depend on that. If things go normal -- get normalized, we expect that we will have a very strong 2021 because the supply of newbuildings will be much less than what is this year and demand will be back on track. So we believe that we should have a good next 18 months if we don't have a new surprise from the pandemic. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Your next question comes from Randy Giveans. -------------------------------------------------------------------------------- Randall Giveans, Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping [15] -------------------------------------------------------------------------------- A few questions for me. So looking at the kind of share issuances, you repurchased, I think, it was like 3.3 million shares. What is the average price of that? And then are you looking to be more conservative now? Or still looking at share repurchases at these levels? -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [16] -------------------------------------------------------------------------------- Look, the management is very comfortable with the company. And that's why the -- from time to time, we have repurchase programs. And I think that in the future, according to our assessment, we may continue to do such repurchase programs, either opportunistically or to support the stock price. -------------------------------------------------------------------------------- Randall Giveans, Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping [17] -------------------------------------------------------------------------------- Sure. And the average price for the shares that were repurchased? -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [18] -------------------------------------------------------------------------------- Could you please repeat? -------------------------------------------------------------------------------- Randall Giveans, Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping [19] -------------------------------------------------------------------------------- The average price for the shares that have been repurchased? -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [20] -------------------------------------------------------------------------------- We have not reported that, but it's quite close to what the levels -- I mean it's below the levels of the stock today. -------------------------------------------------------------------------------- Konstantinos Adamopoulos, Safe Bulkers, Inc. - CFO & Director [21] -------------------------------------------------------------------------------- I think it's around... -------------------------------------------------------------------------------- Randall Giveans, Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping [22] -------------------------------------------------------------------------------- Around what? Sorry, I could not hear it there. -------------------------------------------------------------------------------- Konstantinos Adamopoulos, Safe Bulkers, Inc. - CFO & Director [23] -------------------------------------------------------------------------------- It's around the price of $0.81, $1.10, I think. -------------------------------------------------------------------------------- Randall Giveans, Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping [24] -------------------------------------------------------------------------------- Okay. So similar to the price you've offered for the vessel. But okay, can you provide some color on the recent jump in the rates for Capesizes and kind of your expectations of this kind of going forward? -------------------------------------------------------------------------------- Polys Hajioannou, Safe Bulkers, Inc. - Chairman & CEO [25] -------------------------------------------------------------------------------- Capesizes rates are improving the last 2 or 3 weeks. We expect very soon the market to get over $15,000 a day, the spot market. Thereafter, a lot depends on how also the trend in -- of the pandemic is developing in Brazil. If there is no big surprises there, and we can maintain the safety of the workers in the mines, we don't get any big surprises from that place, we think that there will be an increased volume of Brazilian iron ore moving to China. We see that the demand is there. You see that the price is going up of iron ore. It's more than $100 a tonne. So we expect the volume of Brazilian iron ore to help the market substantially. I think the market is already improving. So basically, the usual pickup in demand, we -- that was in the past starting after the Chinese New Year usually in April. This year because of the pandemic in the Western Hemisphere, it's delayed and we see it now in June. So it's a 2-months delay from other years. So I expect to see a very strong July to December period for the iron ore grade. -------------------------------------------------------------------------------- Randall Giveans, Jefferies LLC, Research Division - VP,Senior Analyst & Group Head of Energy Maritime Shipping [26] -------------------------------------------------------------------------------- Sure. Okay. And then I guess last question with all that in consideration now that we're in almost mid-June, can you give some guidance on the second quarter compared to the first quarter in terms of that daily TCE? I know for the first quarter, you're at $9,100. Where do you kind of view the second quarter to be? -------------------------------------------------------------------------------- Polys Hajioannou, Safe Bulkers, Inc. - Chairman & CEO [27] -------------------------------------------------------------------------------- Yes. We don't give guides as such, but we expect that definitely second quarter will be better than first quarter. -------------------------------------------------------------------------------- Operator [28] -------------------------------------------------------------------------------- Your next question comes from [Richard Diamond]. -------------------------------------------------------------------------------- Unidentified Analyst, [29] -------------------------------------------------------------------------------- First, great job in a difficult environment. And when the market is hot, it's easy to look good, but this is a true demonstration of character. My question is that -- my impression is that mining involves, by its very nature, social distancing. And the people are wearing masks and they're far apart. So it looks like the mines should be able to reopen in Brazil. But I wondered if you could just give us some commentary, what you see happening on the ground in Brazil? -------------------------------------------------------------------------------- Polys Hajioannou, Safe Bulkers, Inc. - Chairman & CEO [30] -------------------------------------------------------------------------------- When you mean on the ground, you mean in the various spots around the world? -------------------------------------------------------------------------------- Unidentified Analyst, [31] -------------------------------------------------------------------------------- No, on the ground in Brazil, what's happening today? What is your observation of conditions today? -------------------------------------------------------------------------------- Polys Hajioannou, Safe Bulkers, Inc. - Chairman & CEO [32] -------------------------------------------------------------------------------- I mean we saw the reports over the weekend that there was some closure of mines in Brazil because of some increased COVID-19 hits by some workers there. But I don't think this will last very long. Already they gave reassurances that their production will not be affected, maybe there will be a little bit of shortage of pellets for the local market. So as far as exports are concerned, I don't think we will see any great deal of change of what was planned for export. So we are reasonably optimistic, and with also the improvement of the far eastern market, Capes will not balance in volume towards Brazil, some of them they are staying busy in the Pacific. And this will give a chance in the long-haul trade to help boost the market. So last year, the second half of last year, we enjoyed rates of $35,000 per day on the Capesizes. This year, we'll be happy if this is -- even if we average around $20,000 at the peak of Q3, we will be very happy with these numbers. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- Gentlemen, there are no further questions. I will turn the call back over to you. -------------------------------------------------------------------------------- Konstantinos Adamopoulos, Safe Bulkers, Inc. - CFO & Director [34] -------------------------------------------------------------------------------- So -- and this concludes our conference call for the Q1 earnings. Thank you very much for your participation, and we look forward to seeing you. -------------------------------------------------------------------------------- Polys Hajioannou, Safe Bulkers, Inc. - Chairman & CEO [35] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Loukas Barmparis, Safe Bulkers, Inc. - President, Secretary & Director [36] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Konstantinos Adamopoulos, Safe Bulkers, Inc. - CFO & Director [37] -------------------------------------------------------------------------------- Goodbye. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.