Safe Bulkers, Inc.

Thank you for standing by, ladies and gentlemen. A welcome to the SafeBulkers conference call to discuss the third quarter 2021 financial results. Today we have with us from SafeBulkers, Chairman and Chief Executive Officer, Mr. Polis Hajiwanu, President Dr. Lucas Bamparis, and Chief Financial Officer, Mr. Konstantinos Adamopoulos. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session at which time if you wish to ask a question you'll 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 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 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 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.

Good morning to all. I'm Lucas Barbaris, President of SafeBalkers. Welcome to our conference call and webcast to discuss the financial results for the third quarter of 2021. We are happy to report that our profitability has increased during the third quarter of 2021 compared to the previous quarter. A synopsis is that as we move to year end, we are gradually nearing our target leverage, maintaining a healthy liquidity position, and making significant progress on our fleet renewal strategy. We have also begun contracting period time charges to provide better visibility to our future cash flows. The above are presented in more detail in slide number four. We reached 92.5 million in net revenues, $72.4 million of EBITDA, and $0.40 of adjusted earnings per share. We have another eight new bills, Greenhouse Gas EBI Phase 3, NOx Tier 3, compliant Japanese, from Japanese cities, with early deliveries, two in 2022, four in 2023, and two in first quarter of 2024, at very competitive prices ahead of our competition. At the same time, we have sold seven vessels, two of which are yet to be delivered, with 37.3 million outstanding sale proceeds and a relevant $7.3 million outstanding debt. And we have acquired four second hands, one of which is yet to be delivered, with 28.1 million outstanding targets. We believe that by 2024, we will be able to renew about one-fourth of the fleet with phase three compliant new builds, while substituting at the same time some older vessels with younger second-hand vessels. In terms of the leveraging, we have a 214.3 million decrease in debt from 616.2 million as of 2020, year end, to 401 million as of October 29th, 2021. At the same time, we maintain our financial flexibility by preserving a healthy cash position of 92.2 million, 88.9 million in undrawn borrowing capacity available under revolving reducing credit facilities, 46.2 million in secured commitments from loan and sale and lease back arrangements, and 29.3 million additional incremental revolving reducing credit facility upon the expedited consummation of an agreed new credit facility. 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 five, we saw balance sheet analysis. The assets are presented, of course, in their book value, noting that presently we believe that asset values exceed the book values considerably. Let's turn to slide number seven to have a quick look on present charter market conditions. As shown on the top graph, the CAPES market for the year to date continues to perform 2020. CAPES lately have been volatile, driving by dynamics which we will analyze in our presentation, reaching a high of 87,000 per day, and currently are trading at about $27,000 per day. The year-to-date average is about $33,800 as compared to 2020, average for the same period, which was $13,000. Similarly, for capital markets, the market remains strong throughout this year, peaking twice close to $40,000 per day, basically trading at $26,000 with a year-to-date average of $27,200 per day as compared to $9,500 for the same period in 2020. The prevailing energy crisis and the cold shortage in China coupled with the COVID-19 restrictions are likely to support the market. Then to the slide eight, we present the development on pricing of certain commodities which are leading indicators for shipping. We have seen a strong demand for commodities across the board during 2021, and the rapid surge in prices is followed by a recent correction. In the case of iron ore, as presented in the top left, the excessive increase of prices, which is now followed by a correction, had been initially driven by the strong demand from China, while lately decisional trading patterns are easing the market. In the case of coal, the shortage in stockpiles and the need for coal resulted in the commodity price surge. Presently, an effort to control the market is evident, and traders defer buying and dissipating cheaper future prices, resulting in a short-term trade freeze until prices fall in line with expectations. However, the forthcoming winter in Northern Hemisphere, in connection with the continuing industrial production, is expected to keep the demand for coal robust. Soya beans peaked in the first half of of 2021 and are presently subdued, but this is relevant to the seasonality of this trade, which is normally peaking after the first quarter of each year. Lastly, what is noteworthy is that the price of copper presented in the bottom right graph has remained near in its five years high for an extended period, which signifies strong industrial growth backed by the post-pandemic economic recovery plans. On the slide nine, We present the status of the fleet in terms of values and future supply. On the top graph, we present the values of five-year-old capes in Panamax as assessed by both exchanges. During the last month, a sharp increase of the vessel values has been evident. For capes in particular, the values have surged more than 48% since the same period in 2020, gained about 26 million per vessel since the loss of 2016. Similarly, for five-year Panamaxes, the value have increased about 59% since the same period in 2020, and have gained about 22.5 million per vessel since 2016 loss. The above assessment is indicative for the average ported-type vessel. Japanese-built vessels, of course, built at high specifications have increased demand and can achieve even higher values. Our fleet consists mainly of Japanese-built vessels with high specifications and many commercial and operational upgrades. Looking at the order book on the bottom graph, we note that the growth of the fleet for both CAPEs and Fana matches is minor. In case of CAPEs, the total order book is in the region of 4.5% of the existing fleet, which is evenly spread until 2024. For Panama, the total order book stands at 7.8%, which in its vast majority to be delivered in 2022, and minimum deliveries thereafter. Under the card market shift building conditions at shipyards, 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 dry bulk orders. Presently, there is no availability for dry bulk new building orders earlier than 2024. Therefore, the order book is unlikely to increase further the next two years. In the next slide, the slide number 10, we present the age profile of the dry bulk trade in combination with the forthcoming IMO regulations for controlling the greenhouse gas emissions and especially the vessel's energy efficiency. From a recent study for the vessels under the classification of NKA, about 86% of the dry bag vessels would require some kind of action or retrofitting to comply with upcoming EEXI regulations, such as reducing speed or retrofitting with innovative propulsion technologies or energy-saving devices. IMO has set the goal to reduce carbon intensity by 40% within the next decade up to 2030. As presented in the top left graph, about 50% of the cape size and 53% of Panamax fleet is younger than 10 years of age. By the time of full implementation of the IMO regulations, the remaining half of the capes and Panamaxes currently above 10 years of age will be eliminated as non-commercially viable and competitive vessels. Squeezing the supply of vessels may well be a realistic scenario. Let me remind you at this point that we have expanded our fleet renewal, having obtained having ordered eight greenhouse gas EDI Phase 3 and OXTR3 compliant Japanese new builds with competitive delivery times until 2024. Turning to slide number 11, we touch upon the current status of fuels and their pricing. Brent, which is the main driver of fuel prices, has surged during the past period, reaching levels of $85 per barrel. Our company, has invested in exhaust gas cleaning technology, which allows our ships to be fitted with scrubbers to comply with IMO 2020 regulations for shelter emissions by burning high-surface fuel oil instead of IMO-compliant fuel, which is the very low-surface fuel oil. The differential in the price between very low-surface fuel oil and high-surface fuel oil, the so-called high-five, is translated to revenues for the scrub-fitted vessels. Presently, high-five in Singapore, for example, starts at about $140 per metric ton. According to future markets, as shown in the graph on the bottom, these prices are sustainable through 2023 in the region of about $120 per metric ton. The scrubber fitted post-Panama expense about 7,500 metric tons. 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 higher, even wider high-five differential. Let me summarize the key market takeaways in slide number 12. We have experienced a strong market of 2021 with robust volumes of iron ore, coal, and grain. Demand for commodities has been exceptionally strong during the first quarter. Energy crisis expected to lift their coal volumes and sustain robust Panamax market. Coal shortages in China, together with COVID-19 restrictions, maintain congestion in discharge ports. FFA market levels suggest sustainability of healthy charter levels. The order book is minimal as decarbonization discussions not favor orders. Most shipyards are preoccupied with containers and tankers orders until 2024. and only a few shipyards have developed new environmental efficient vessels. We have seen increased government spending on post-pandemic stimulus programs and continuing greening of the global economy. We have experienced brand prices recovery, which may lead to even wider high-fiber spread differential than that of today of about $120 per ton. And lastly, aging of lead and increased environmental restriction for emissions may enhance the scrapping activity. Now, let me pass the floor to our CFO for our financial overview.

Thank you, Lucas, and good morning to everyone. Let me start with our chartering performance in slide 14, where we present our quarterly TCE, which stood at $24,427 per day, versus our quarterly OPEX, which stood at $4,608 per day. Moving to slide 15, we present our quarterly daily OPEX, of $4,608, and our quarterly daily GNA was $1,590. The aggregate figure for both OPEX and GNA for Q3 2021 was $6,198, demonstrating our focus on lean operations. We believe that this number is one of the interest is lower, if not the lowest, given the fact that we include in our OPEX all our dry docking and pit delivery expenses, and in our GNA, our management fees and directors and officer compensation, and all expenses related to the administration of our listed companies. Moving to that profile, as seen in slide 16, we present our repayment schedule as of September 30, 2021. As of that date, we had $186 million in cash and cash equivalents, back time deposits and restricted cash, $88.9 million in undrawn borrowing capacity available under revolving reducing credit facilities, and $46.2 million in secured commitments for loan and sale in these back agreements in relation to two new built vessels. Furthermore, excluding the two vessels that committed for sale which have not been delivered yet, We had additional borrowing capacity in relation to three debt-free existing vessels and six new builds upon their delivery. In slide 17, we 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 deleveraging our company following considerable debt repayments we have made the previous quarters. Let's now move to slide 18 with our quarterly financial highlights for the third quarter of 2021 compared to the same period of last year. As a general note, during the third quarter of 2021, we operated in an improved charter market compared to the first and second quarters of this year with lower interest expenses with net revenues of $92.5 million during the third quarter of 2021 compared to $51.9 million for the same period in 2020. The revenues were further increased by the earnings from scalloped fitted vessels and the reduced vogel expenses. During the third quarter of 2021, we had a time charge equivalent of $24,427 compared to $12,575 during the same period of last year. The net income for the third quarter of 2021 reached $55.4 million compared to $3.3 million last year. Net revenues increased by 78% to $92.5 million compared to $51.9 million for the same period in 2020, mainly due to the increased time charter equivalent rates as a result of the improved markets and also assisted by the additional revenues earned by our SCRABA fitted vessels. Daily OPEX decreased by 6% to $4,608, compared to $4,896 for the same period in 2020, and that was affected by reduced ownership days by 3% due to vessel sales, no dry dockings during the third quarter of 2021, and increased crew repatriation expenses due to the COVID-19 pandemic. Daily vessel operating expenses, excluding dry docking and pre-delivery expenses, increased by 3% to $4,608 compared to $4,459. Our adjusted EBITDA for the third quarter of 2021 increased to $67.7 million compared to $22.3 million for the same period in 2020. Our adjusted EPS for the third quarter of 2021 was $0.40, calculated on a weighted average of 119.9 million shares, compared to zero during the same period in 2020, calculated on a weighted average number of 102.2 million shares. Closing our presentation in slide 19, we saw our quarterly flip data and average daily indicators compared to the same period last year. We would like to emphasize that the CONAP is maintaining a healthy cash position of $92.2 million as of end October 2021, which provide us with flexibility as we move to year-end nearing a targeted leverage, making significant progress in our fleet renewal strategy and contracting period time charges to provide better visibility to our future cash flows. Our press release presents in more detail Our financial and operating results, we wish now to take your questions.