Safe Bulkers, Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the SafeBalkans conference call to discuss the second quarter 2021 financial results. Today we have with us from SafeBalkans Chairman and Chief Executive Officer, Mr. Polis Hadjianou, President, Dr. Lucas Barm Paris, and Chief Financial Officer, Mr. Konstantinos Adampoulos. At this time, all participants are in a listen-only mode. There'll be a presentation followed by a question and answer session. at which time if you wish to ask a question, you will need to press star 1 on your telephone keypad and wait for your name to be announced. 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. Forward-looking statement. 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 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, change in the demand for dry bulk 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 is based. And now, I pass the floor to Dr. Banparis. Please go ahead, sir.

Welcome to our conference call and webcast to discuss the financial results for the second quarter of 2021. We are happy to present the financial results for the second quarter of 2021. A synopsis is profitability, fleet renewal at the edge of the technology, and the leveraging targeting to create shortly a company where each net debt is comparable to steel value of the vessels, creating value for our shareholders. The above are presented in slide 4. We reached $81.6 million in net revenues, $50.2 million of EBITDA, and 31 cents of adjusted earnings per share. We ordered eight vessels, GHG EDI Phase 3, NOX Tier 3, compliant, Japanese Nubix with early deliveries, two in 2022, four in 2023, and two in Q1 2024, at very competitive prices ahead of our competition. At the same time, we have sold six vessels, three of which are yet to be delivered, with 47.6 million outstanding sale proceeds, and acquired two second-hand Panamaxes. We believe that by 2024 we will be able to renew about one-fourth of the fleet, with phase 3 compliant new bits, while substituting at the same time some older vessels with younger second-hand vessels. In terms of deleveraging, we have a 125.5 million decrease in debt, from 607.7 as of 2020 year end to 482.2 as of July 23, 2021. At the same time, we maintain our financial flexibility by preserving a strong cash position of $115.6 million and our ongoing borrowing capacity available under revolving reducing credit facilities to $67 million. All these actions, we believe, will position the company to a whole new level of competitiveness well ahead of the competition. We are here for the long run. In slide 5, we show balance sheet analysis. The assets are presented, of course, in their book value, noting that presently we believe that asset values substantially exceed the book values. Let's turn to slide 7 to have a quick look on present charter market conditions. As shown on the top graph, the CAPES market for the year to date is outperforming 2020. Presently, CAPES are trading at about 32,000. The year to date average at about 24.8,000 as compared to 2020 average for the same period, which was 9,600. Similarly, for capital markets, the market remains strong throughout this year. Presently, trades at the region of 32,000, with a year-to-date average of 23.9,000, as compared to 7.9,000 for the same period in 2020. Current market prospects with strong demand and balanced order book are reflected in the FFA year, which is marked in healthy and sustainable levels. Turning to the next slide, number eight, will present the development on pricing of certain commodities, which are leading indicators for the shipping. The continuous increase on prices during the last period is signifying their underlying demand. The strong demand from China continues, and the control of COVID-19 will lead to the opening and normalization of other importing countries, as for example, India. Furthermore, leading countries such as the United States and China have been preparing for post-pandemic plans to boost their economies. These facts are expected to enhance industrial growth and altogether to boost the demand for dry bulk cargoes further. On the slide 9, we present the status of the feed in terms of values and expected supply. On the top graph, we present the values of five-year-old capes and Panamaxes as assessed by Baltic Exchange. During the last month, it is evident a sharp increase of the vessels' values. For capes in particular, the values have set more than 40% since the same period in 2020, and have gained about 21 million per vessel since the lows in 2016. Similarly, for five-year-old Panamaxes, the values have gained about 45% since the same period in 2020, and have gained about 18 million per vessel since 2016 lows. The above assessment is indicative for the average boat type vessel. Japanese-built vessels built at high specifications have increased demand and can achieve even higher values. Our fleet consists of mostly Japanese-built vessels with high specifications and many commercial and operational upgrades. Looking on the order book on the bottom graph, we note that the growth of the fleet for both Capes and Panamaxes is minimal and does not exceed the 3% on each year. Taking into account the expected scrapping, we may conclude that the expected demand for dry-bath vessels for the next years to come will be significantly higher than the actual supply of vessels. Under current market conditions, at CPIATs both in Japan and China, we do not expect that the order book may increase significantly for the next couple of years, The shipyards are occupied with orders from other sectors, such as containers and tankers, and there is no space for additional drive-back orders. Furthermore, only few shipyards have developed new environmentally efficient designs, which, together with the ongoing environmental discussions for emissions, is expected to discourage new orders. Turning to the next slide, 10, we touch upon the current status of fuels and their pricing. Our company has invested in the exhaust gas cleaning technology, which allows our ships fitted with scrubbers to comply with IMO 2020 regulations for sulfur emissions by burning high sulfur fuel oil instead of IMO compliant fuel, which is the very low sulfur fuel oil. The differential in the price between very low sulfur fuel oil and high sulfur fuel oil, the so-called high five, is translated to revenues for scrubber fitted vessels. Presently, the high-five differential in Singapore, for example, sets at about $125 per metric ton. According to future markets, as shown in the graph on the bottom, these prices are sustainable through 2023. A scrubber fitted post-Panamax burns about 7,500 per year. This brings the scrubber gain to about 900,000 per year, or about 2,500 per day. The recovery of global economies, the restoration of mobility and the recovery of crude oil prices may lead to even wider high-five differential. As shown in the top graph, presently the Brent prices are fading to pre-pandemic levels at the highs of the last five years. is minimal, and its lowest level since 2002, as decarbonization discussions not favor new orders. Most CPUs are preoccupied with containers and tangle orders until 2024. And only a few CPUs have We have experienced an exceptionally strong start of 2021 with robust volumes of iron ore, coal and grain. Demand for commodities has been exceptionally strong during the first quarter. We have seen increased government spending on post-pandemic stimulus programs and continuing greening of the global economy. We have experienced brink prices recovery, which may lead to even wider high-five spread differential than that of today of about $120 per ton. And lastly, the aging of the fleet and the increased environmental restrictions for emissions may enhance the scrap a support for our process in relation to the market conditions that will prevail in the following quarters. Now let me pass the floor to our CFO, Konstantinos Adamopoulos, for our financial overview.

Thank you, Lucas, and good morning to everyone. Let me start with our chartering performance in slide 13, where we present our quarterly TCE, which stood at $21,098 Moving on to slide 14, we present our quarterly daily OPEX, which stood at $4,874, and our quarterly daily GNA, which stood at $1,448. The aggregate figure of those two numbers is $6,322, which demonstrates our focus on lean operations. We believe that this number is one of the industry's lowest, if not the lowest, given the fact that we include in our OPEX all our dry documents with every expenses, and in our GNA, our management fees, directors and officers' compensation, and all expenses related to our administration. Moving on to our debt profile, as seen in slide 15, we present our repayment schedule as of the end of June of this year. As of June 30, we had $127.4 million in cash, cash equivalents, bank-time deposits and restricted cash. We had another $67 million in undrawn borrowing capacity, available under evolving reduced security facilities, and $54.7 million available in secured commitments for loan and trade and lease-back agreements. In relation to Furthermore, excluding the vessels committed for sale, which had not been delivered yet, we had additional borrowing capacity in relation to one unencumbered existing vessel and to three new builds upon their delivery. Slide 16 will present our debt amortization schedule versus the scrap value of our fleet. We have a smooth debt repayment profile for the next two years, gradually delivering our company following considerable debt repayments. If you now move to slide 17 with our quarterly financial highlights for the second quarter of 2021 compared to the same period of last year. As a general note, during the second quarter of 2021, we operated in an improved charter market environment compared to the second quarter of 2020. With lower interest expenses, while our net revenues of $81.6 million compared to $48.3 million for the same period in 2020, were further increased by the earnings from scarlet fitted vessels and our reduced mortgage expenses. During the second quarter of 2021, we had a transacted equivalent rate of $21,098, compared to $8,094 for the same period in 2020. The net income from the second quarter of this year reached 32.4 million, compared to a net loss of 13.9 million during the second quarter of 2020. Net revenues increased by 59%, to 81.6 million for the second quarter of 2021, compared to 48.3 million for the same period in 2020. as a result of the improved market, assisted by the additional revenues earned by our scrapped fitted vessels. Daily vessel OPEX increased by 3% to $4,874 compared to $4,729. This increase was a result of the combined effect of reduced dry dockings and provisions of technical services, but increased crew repatriation expenses Daily vessel OPEX, excluding dry docking and pre-delivery expenses, increased by 9% to $4,568 for the second quarter of 2021, compared to $4,207 for the same period in 2020. Our adjusted EBITDA for the second quarter of 2021 increased to $54.1 million, compared to $6.3 million for the same period last year. Our adjusted earnings per share for the second quarter of 2021 was 31 cents, calculated in a weighted average number of 100.9 million shares, compared to a loss per share of 16 cents during the same period in 2020, calculated in a weighted average number of 102.7 million shares. Closing our presentation in slide 18, we present our quarterly fleet data and average daily indicators compared to the same period last year. We would like to emphasize that the company is maintaining strong cash position of 115.6 million as of July 23, that provide us with flexibility to follow our plan, aiming to gradually renew our fleet with a view of forthcoming environmental changes and regulations, and further deliver as our balance sheet is targeting to create value for our shareholders. Once again, we would like to thank our seafarers for their commitment and dedication throughout this tough period. Our basic list presents in more detail our financial and operational results, and we are now ready to take your questions.