Press release

Safe Bulkers, Inc. Reports Third Quarter and Nine Months 2023 Results and Declares Dividend on Common Stock

MONACO, Nov. 07, 2023 (GLOBE NEWSWIRE) -- Safe Bulkers, Inc. (the "Company") (NYSE:SB), an international provider of marine drybulk transportation services, announced today its unaudited financial results for the three and nine-month periods ended September 30, 2023. The Board of Directors of the Company also declared a cash dividend of $0.05 per share of outstanding common stock.


Financial highlights
           
In million U.S. Dollars except per share data Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Nine Months 2023 Nine Months 2022
Net revenues 64.7 70.6 66.8 86.7       93.7 202.1 263.1
Net income       15.0 15.4 19.3 34.9       51.0 49.7 137.7
Adjusted Net income1       11.1 15.3 14.2 37.0       48.8 40.7 131.5
EBITDA2       34.8 34.4 38.2 53.8       69.1 107.4 186.6
Adjusted EBITDA 2       30.9 34.3 33.1 56.0       66.9 98.3 180.4
Earnings per share basic and diluted3       0.12 0.12 0.15 0.28       0.41 0.38 1.08
Adjusted earnings per share basic and diluted 3       0.08 0.12 0.10 0.29       0.39 0.30 1.03
               
               
Average daily results in U.S. Dollars            
Time charter equivalent rate4   14,861 17,271 15,760 21,078   23,403 15,954 23,303
Daily vessel operating expenses5     5,357 6,477 5,550 5,323     4,949 5,794 5,204
Daily vessel operating expenses excluding dry-docking and pre-delivery expenses6     4,720 5,224 5,132 4,822     4,571 5,024 4,708
Daily general and administrative expenses7     1,453 1,435 1,493 1,437     1,360 1,460 1,418

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1 Adjusted Net income is a non-GAAP measure. Adjusted Net income represents Net income before impairment and loss on vessels held for sale, gain/(loss) on sale of assets, gain/(loss) on derivatives, early redelivery income/(cost), other operating expense and gain/(loss) on foreign currency. See Table 4.
2 EBITDA is a non-GAAP measure and represents Net income plus net interest expense, tax, depreciation and amortization. See Table 4. Adjusted EBITDA is a non-GAAP measure and represents EBITDA before gain/(loss) on derivatives, early redelivery income/(cost), other operating expenses and gain/(loss) on foreign currency. See Table 4.
3 Earnings per share ("EPS") and Adjusted EPS represent Net Income and Adjusted Net income less preferred dividend divided by the weighted average number of shares respectively. See Table 4.
4 Time charter equivalent ("TCE") rate represents charter revenues less commissions and voyage expenses divided by the number of available days. See Table 5.
5 Daily vessel operating expenses are calculated by dividing vessel operating expenses for the relevant period by the number of ownership days for such period. See Table 5.
6 Daily vessel operating expenses excluding dry-docking and pre-delivery expenses are calculated by dividing vessel operating expenses excluding dry-docking and pre-delivery expenses for the relevant period by the number of ownership days for such period. See Table 5.
7 Daily general and administrative expenses are calculated by dividing general and administrative expenses for the relevant period by the number of ownership days for such period. See Table 5.


Selected financial highlights              
In million U.S. Dollars Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022    
Total cash8       83.3 88.5 98.7 123.3     121.7    
Undrawn revolving credit facilities9     148.0 128.5 109.0 145.0     144.3    
Financing commitments10       51.0 80.7 148.2 51.0          —    
Unsecured debt11     103.8 106.7 106.5 104.6       95.4    
Secured debt12     336.9 339.0 316.0 309.8     344.2    
Total debt13     440.7 445.7 422.5 414.4     439.6    
Number of vessels at period end          45 45 44 44          44    
Average age of fleet     10.59 10.60 10.59 10.72     10.47    
Net debt per vessel14         7.9 7.9 7.4 6.6         7.2    

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8 Total Cash represents Cash and cash equivalents plus Time deposits and Restricted cash.
9 Undrawn borrowing capacity under revolving reducing credit facilities.
10 Secured financing commitments for loan and sale and lease back financings.
11 Unsecured debt represents the five-year tenor unsecured non-amortizing bond, net of deferred financing costs, maturing in February 2027.
12 Secured debt represents Long-term debt plus current portion of long-term debt, net of deferred financing costs.
13 Total Debt represents Unsecured debt plus Secured debt.
14 Net debt per vessel represents Total Debt less Total Cash divided by the number of vessels at period's end.


Management Commentary

Dr. Loukas Barmparis, President of the Company, said: "Our third quarter 2023 performance was adversely impacted by global economic uncertainties and a weaker charter market. Our newbuilds orderbook with more efficient vessels and our environmental upgrades program on our existing fleet was complemented with orders for two methanol dual-fueled newbuilds for the fourth quarter of 2026 and for the first quarter of 2027, marking a significant step towards decarbonization."

Environmental Social Governance and Responsibility - Environmental investments - Dry-dockings

The Company is continuing the environmental upgrade program of its existing fleet in relation to International Maritime Organization ("IMO") greenhouse gas ("GHG") emission regulations. As of November 3, 2023, 19 vessels in total have been upgraded, with one more vessel targeted for upgrade by the end of 2023. The low friction paint applications that are part of the environmental upgrades are recorded as operating expenses, while energy saving devices are capitalized and recorded as capital expenditures.

During the third quarter of 2023, the Company completed environmental upgrades on four vessels, namely the MVs Pedhoulas Cedrus, Pedhoulas Commander, Eleni and Lake Despina, including exhaust gas cleaning device ("Scrubber") installation on the Capesize class vessel Lake Despina. During the third quarter of 2023, the Company commenced environmental upgrades, which were completed as of November 3, 2023, on the MV Zoe. During the fourth quarter of 2023, the Company has scheduled environmental upgrades during dry-dockings on one vessel, with an estimated aggregate number of 22 down-time days. The Company continues to use biofuels in certain voyages, targeting a lower carbon factor and lower environmental impact.

Furthermore, the Company has a newbuild program of 14 vessels in aggregate, of which 10 are Japanese-built and four Chinese-built, including recent contracts for two methanol dual-fueled Kamsarmax newbuilds, designed to meet the IMO regulations related to the reduction of GHG and NOx emissions (the ''IMO GHG Phase 3 - NOx Tier III''). Six of such newbuild vessels have already been delivered to us. The aggregate capital expenditure of the newbuild program is approximately $501.6 million, of which $232.7 million are remaining as of November 3, 2023.

Contracts for the Acquisition of Two Dual-Fueled Kamsarmax Class Newbuild Vessels

In October 2023, the Company entered into contracts at attractive prices for the acquisition of two dual-fueled, IMO GHG Phase 3 - NOx Tier III compliant, 81,200 dwt, Kamsarmax class dry-bulk vessels,  with scheduled delivery dates in the fourth quarter of 2026 for the first vessel, and the first quarter of 2027 for the second vessel. These  vessels are capable of operating with methanol and fuel. When powered by green methanol they can produce close to zero GHG emissions based on the life cycle assessment (LCA) methodology well-to-propeller (WTP). 

Fleet update

As of November 3, 2023, we had a fleet of 46 vessels, consisting of 11 Panamax, 9 Kamsarmax, 18 Post-Panamax and 8 Capesize vessels, with an aggregate carrying capacity of 4.6 million dwt and an average age of 10.5 years. Twelve vessels in our fleet are eco-ships built after 2014, and six vessels are IMO GHG Phase 3 - NOx Tier III ships built 2022 onwards.

Orderbook
As of November 3, 2023, we had an orderbook of eight IMO GHG Phase 3 - NOx Tier III Kamsarmax class newbuilds, two of which are dual-fueled, with one scheduled delivery in the remainder of 2023, three in 2024, two in the first half of 2025, one in the fourth quarter of 2026 and one in the first quarter of 2027.

Newbuild deliveries
In September 2023, the Company took delivery of the Kamsarmax class vessel MV Pedhoulas Trader, its fifth IMO GHG Phase 3 - NOx Tier III, Japanese newbuild.
In October 2023, the Company took delivery of the Kamsarmax class vessel MV Morphou, its sixth IMO GHG Phase 3 - NOx Tier III, Japanese newbuild.

Chartering our fleet

Our vessels are used to transport bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes. We intend to employ our vessels on both period time charters and spot time charters, according to our assessment of market conditions. Our customers represent some of the world's largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with visible and relatively stable cash flows, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions as well as provide an opportunity for a potential upside in our revenue when charter market conditions improve. The chartering of our vessels is arranged by our Managers15 without any management commission.

As of November 3, 2023, we employed, or had contracted to employ, (i) 15 vessels in the spot time charter market (with up to three months original duration) and (ii) 32 vessels in the period time charter market (with original duration in excess of three months). Of the vessels chartered in the period time charter market, 11 have an original duration of more than two years. As of November 3, 2023, the average remaining charter duration across our fleet was 0.7 years.

As of November 3, 2023, we had contracted revenue of approximately $227.6 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit. Given the volatility associated with the Capesize charter market, as of November 3, 2023, all eight of our Capesize class vessels have been chartered in period time charters, five of which have remaining charter durations exceeding one year. As of November 3, 2023, the average remaining charter duration of our Capesize class vessels was 2.1 years and the average daily charter hire was $23,692, resulting in a contracted revenue of approximately $144.0 million net of commissions, excluding the additional compensation related to the use of Scrubbers. During the third quarter of 2023, we operated 44.13 vessels, on average earning a TCE of $14,861 compared to 43.25 vessels earning a TCE of $23,403 during the same period in 2022. Our contracted fleet employment profile as of November 3, 2023, is presented in Table 1.

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15 Safety Management Overseas S.A., Safe Bulkers Management Monaco Inc., and Safe Bulkers Management Limited, each of which is referred to herein  as "our Manager" and collectively "our Managers".


Table 1: Contracted employment profile of fleet ownership days as of November 3, 2023

2023 (remaining) 74 %
2023 (full year) 94 %
2024 31 %
2025 13 %


Debt

As of September 30, 2023, our consolidated debt before deferred financing costs was $448.9 million, including the €100 million - 2.95% p.a. fixed coupon, non-amortizing, unsecured bond issued in February 2022, maturing in February 2027. As of September 30, 2023, our consolidated leverage16 was approximately 35% and our weighted average interest rate during the three-month period ended September 30, 2023 was 6.24% inclusive of the applicable loan margin. During the three-month period ended September 30, 2023, we made scheduled principal payments of $6.3 million, voluntary debt prepayments of $49.5 million and drawdown of $25.0 million on our revolving facilities and $29.7 million under a new sale and leaseback facility. The repayment schedule of our debt as of September 30, 2023, is presented in Table 2 below:


Table 2: Loan repayment Schedule as of September 30, 2023
(in USD million)

Ending December 31, 2023 2024 2025 2026 2027 2028 2029 2030-2032 Total
Secured debt 5.7 23.8 74.1 77.5 39.8 54.2 9.4 58.7 343.2
Unsecured debt 0.0 0.0 0.0 0.0 105.7 0.0 0.0 0.0 105.7
Total debt 5.7 23.8 74.1 77.5 145.5 54.2 9.4 58.7 448.9
Fleet scrap value17                 354.7

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16 Consolidated leverage is a non-GAAP measure and represents total consolidated liabilities divided by total consolidated assets. Total consolidated assets are based on the market value of all vessels, as provided by independent broker valuers on quarter-end, owned or leased on a finance lease taking into account their employment, and the book value of all other assets. This measure assists our management and investors by increasing the comparability of our leverage from period to period.
17 The fleet scrap value is calculated on the basis of fleet aggregate light weight tons ("lwt") and market scrap rate of $512.5/lwt ton (Clarksons data), on September  30, 2023.


Liquidity, capital resources, capital expenditure requirements and debt as of September 30, 2023

We had $83.3 million in cash, cash equivalents, bank time deposits and restricted cash, $148.0 million in undrawn borrowing capacity available under existing revolving reducing credit facilities and $51.0 million in undrawn borrowing capacity available under two loans relating to two newbuild vessels. We had paid $70.8 million for our capital expenditure requirements in relation to our orderbook. Furthermore, we had contracted revenue of approximately $251.9 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit, and additional borrowing capacity in connection with the financing of eight unencumbered vessels and five newbuilds upon their delivery.

We had a fleet of 45 vessels and an orderbook of seven newbuilds. The remaining capital expenditure requirements were $179.2 million in aggregate relating to these seven newbuilds and one Scrubber retrofit. The schedule of payments of the remaining capital expenditure requirements is $52.7 million in 2023, $83.5 million in 2024 and $43.0 million in 2025.

We had $448.9 million of outstanding consolidated debt before deferred financing costs, including the unsecured bond issued in February 2022.

Liquidity, capital resources, capital expenditure requirements and debt as of November 3, 2023

We had $67.1 million in cash, cash equivalents, bank time deposits, restricted cash, $158.0 million in undrawn borrowing capacity available under existing revolving reducing credit facilities and $53.5 million in undrawn borrowing capacity available under one loan relating to a newbuild vessel as well as one sale and leaseback agreement with purchase obligation in relation to a newbuild vessel. We had paid $75.1 million for our capital expenditure requirements in relation to our orderbook. Furthermore, we had contracted revenue of approximately $227.6 million, net of commissions, from our non-cancellable spot and period time charter contracts excluding the Scrubber benefit, and additional borrowing capacity in connection with the financing of eight unencumbered vessels and six newbuilds upon their delivery.

We had a fleet of 46 vessels and an orderbook of eight newbuilds. The remaining capital expenditure requirements were $233.2 million in aggregate relating to the eight newbuilds on order and one Scrubber retrofit. The schedule of payments of the remaining capital expenditure requirements is $23.7 million in 2023, $92.4 million in 2024 and $117.1 million from 2025 to 2027.

We had $464.5 million of outstanding consolidated debt before deferred financing costs, including the unsecured bond.

Dividend Policy

On November 7, 2023, the Board of Directors of the Company declared a cash dividend on the Company's common stock of $0.05 per share which is payable on December 14, 2023 to the shareholders of record of the Company's common stock at the closing of trading on November 27, 2023. As of November 3, 2023, the Company had 111,607,828 shares of common stock issued and outstanding.

In July 2023, the Board of Directors of the Company declared a cash dividend on the Company's common stock of $0.05 per share which was paid on September 1, 2023 to the shareholders of record of the Company's common stock at the closing of trading on August 18, 2023.

In October 2023, the Board of Directors of the Company declared a cash dividend of $0.50 per share on each of its Series C preferred shares (NYSE:SB) and Series D preferred shares (NYSE:SB) for the period from July 30, 2023 to October 29, 2023. The dividend was paid on October 30, 2023, to all shareholders of record as of October 18, 2023 of the Series C Preferred Shares and of the Series D Preferred Shares, respectively.

The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. There is no guarantee that the Company's Board of Directors will determine to issue cash dividends in the future. The timing and amount of any dividends declared will depend on, among other things: (i) the Company's earnings, fleet employment profile, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to the Company's growth, fleet renewal and leverage strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in the Company's existing and future debt instruments; and (v) global economic and financial conditions.

Results of 2023 Annual Meeting of Stockholders

On September 7, 2023, the Company's annual meeting of stockholders was held in Monaco. Konstantinos Adamopoulos, Kristin H. Holth and Frank Sica were elected Class III directors. The Class III directors were elected to hold office for a term ending at the annual meeting of stockholders in 2026 and until their respective successors have been duly elected and qualified. Stockholders also ratified the appointment of Deloitte, Certified Public Accountants S.A. as the Company's independent auditors for the fiscal year ending December 31, 2023.

War in Ukraine

As a result of the war between Russia and Ukraine which commenced in February 2022, the US, the EU, the UK, Switzerland and other countries and territories have announced unprecedented levels of sanctions and other measures against Russia and certain Russian entities and nationals. We intend on complying with these requirements and addressing their potential consequences. While we do not have any Ukrainian or Russian crews, our vessels currently do not sail in the Black Sea and we conduct limited operations in Russia and Ukraine, we will continue to monitor the situation to assess whether the conflict could have any impact on our operations or financial performance.

Conference Call

On Wednesday, November 8, 2023, at 9:00 A.M. Eastern Time, the Company's management team will host a conference call to discuss the Company's financial results.

Conference Call Details: Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1 877 405 1226 (US Toll-Free Dial In) or +1 201 689 7823 (US and Standard International Dial In), or +0 800 756 3429 (UK Toll-Free Dial In). Please quote "Safe Bulkers" to the operator and/or conference ID 13741912. Click here for additional participant International Toll-Free access numbers.

Alternatively, participants can register for the call using the "call me" option for a faster connection to join the conference call. You can enter your phone number and let the system call you right away. Click here for the call me option.

Slides and Audio Webcast: There will also be a live, and then archived, webcast of the conference call and accompanying slides, available through the Company's website. To listen to the archived audio file, visit our website www.safebulkers.com and click on Events & Presentations. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Management Discussion of Third Quarter 2023 Results

During the third quarter of 2023, we operated in a weaker charter market environment compared to the same period in 2022, with decreased revenues due to lower hires, decreased earnings from Scrubber fitted vessels, increased operating expenses and higher interest expenses due to increasing interest rates. During the third quarter of 2023, we operated 44.13 vessels on average earning an average TCE of $14,861 compared to 43.25 vessels earning an average TCE of $23,403 during the same period in 2022. The Company's net income for the third quarter of 2023 was $15.0 million compared to net income of $51.0 million during the same period in 2022. The main factors driving the change in net income are as follows:

Net revenues: Net revenues decreased by 31% to $64.7 million for the third quarter of 2023, compared to $93.7 million for the same period in 2022. This is primarily due to lower revenues from charter hires and decreased revenues earned by our Scrubber fitted vessels.

Vessel operating expenses: Vessel operating expenses increased by 10% to $21.8 million for the third quarter of 2023 compared to $19.7 million for the same period in 2022 mainly due to: (i) dry docking expenses which increased to $2.1 million related to two fully completed and three partially completed drydockings during the third quarter of 2023 including additional costs for low-friction paints as part of environmental upgrades which are expensed, compared to $1.1 million related to one completed drydocking for the same period of 2022, (ii) spare parts increase to $1.8  million for the third quarter of 2023, compared to $1.5 million for the same period in 2022, mainly as a result of the increased average number of vessels during the third quarter of 2023 and the increased number of dry-dockings, (iii) crew wages increase to $8.8 million for the third quarter of 2023, compared to $8.6 million for the same period in 2022, mainly due to the increased average number of vessels during the third quarter of 2023 and (iv) maintenance and technical services expenses increase to $1.8 million for the third quarter of 2023, compared to $1.1 million for the same period in 2022, mainly as a result of the increased average number of vessels during the third quarter of 2023. The Company expenses dry-docking and pre-delivery costs as incurred, which costs may vary from period to period. Excluding dry-docking costs and pre-delivery expenses of $2.6 million and $1.5 million for the third quarter of 2023 and 2022, respectively, vessel operating expenses increased by 5% to $19.2 million during the third quarter of 2023 in comparison to $18.2 million during the same quarter of 2022. Dry-docking expense is related to the number of dry-dockings in each period and pre-delivery expenses are related to the number of vessel deliveries and second hand acquisitions in each period. Other shipping companies may defer and amortize dry-docking expense, while many do not include dry-docking expenses within vessel operating expenses costs but present these separately.

Depreciation: Depreciation expense increased by $0.8 million, or 6% to $13.7 million for the third quarter of 2023, compared to $12.9 million for the same period in 2022, mainly due to the increased number of vessels during the third quarter of 2023.

Voyage expenses: Voyage expenses increased to $5.9 million for the third quarter of 2023, compared to $1.6 million for the same period in 2022, mainly due to increased bunker consumption costs for scrubber fitted vessels under charter agreements which provide for variable consideration based on the bunker consumption and the hire expense relating to the chartered-in vessel MV Arethousa.

Interest expense: Interest expense increased to $6.2 million in the third quarter of 2023 compared to $4.9 million for the same period in 2022. This change is mainly due to the increased weighted average interest rate of 6.24% during the third quarter of 2023, compared to 3.48% for the same period in 2022, as a result of the higher USD rates environment.

Daily vessel operating expenses: Daily vessel operating expenses, calculated by dividing vessel operating expenses by the ownership days of the relevant period, increased by 8% to $5,357 for the third quarter of 2023 compared to $4,949 for the same period in 2022 mainly due increased number of dry-dockings and environmental upgrades. Daily vessel operating expenses excluding dry-docking and predelivery expenses increased by 3%  to $4,720 for the third quarter of 2023 compared to $4,571 for the same period in 2022 mainly due to the inflationary environment.

Daily general and administrative expenses:18 Daily general and administrative expenses, which include management fees payable to our Managers and daily company administration expenses, increased by 7% to $1,453 for the third quarter of 2023, compared to $1,360 for the same period in 2022, as a result of increased public company expenses during the third quarter of 2023.

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18 See table 5


Balance sheet

Other financing liability: In March 2023, the Company entered into an agreement to sell MV Efrossini, a 2012 Japanese-built, Panamax class vessel to an unaffiliated third party at a gross sale price of $22.5 million and charter her back for a period of ten to fourteen months at a gross daily charter rate of $16,050 . The sale was consummated in July 2023, when the vessel was delivered to her new owners, renamed MV Arethousa, and immediately taken back on charter by the Company. We assessed the transaction according to ASC 842-40 and ASC 606 and concluded that the transfer of the asset is a sale, and that the sale was not at fair value since the net sale price was greater than the fair value of the asset at the time the sale was consummated. The difference between the net sale price and the fair value of MV Efrossini at the time the sale was consummated was recognized  as other financing liability. Other financing liability represents the outstanding balance of the reduction of the sale price plus interest accrued, net of the portion of the hire payments allocated to the other financing liability.

 
Unaudited Interim Financial Information and Other Data



SAFE BULKERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands of U.S. Dollars except for share and per share data)
 
  Three-Months Period Ended
September 30,
  Nine-Months Period Ended
September 30,
  2022     2023     2022     2023  
REVENUES:              
Revenues 97,377     67,101     273,942     209,909  
Commissions (3,663 )   (2,451 )   (10,881 )   (7,797 )
Net revenues            93,714                64,650              263,061              202,112  
EXPENSES:              
Voyage expenses (1,576 )   (5,948 )   (7,034 )   (16,105 )
Vessel operating expenses (19,692 )   (21,750 )   (58,663 )   (69,583 )
Depreciation (12,947 )   (13,735 )   (36,481 )   (39,913 )
General and administrative  expenses (5,413 )   (5,899 )   (15,984 )   (17,536 )
Gain on sale of assets     3,316  

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