Safe Bulkers, Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the Safe Brokers Conference call on the fourth quarter ended December 31st, 2023 Financial Reveal. We have with us Mr. Polis Hajuanu, Chairman and Chief Executive Officer, Dr. Lucas Vampari, President, and Mr. Konstantinos Adamopoulos, Chief Financial Officer of the company. 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, please 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, February 13, 2024. The archived webcast of the conference call will soon be made available on the SafeBulkers website, www.safebulkers.com. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter ended December 31, 2023 earnings release. which is available on the Safe Brokers website, again, www.safebrokers.com. I would now like to turn the conference call to one of your speakers today, President Dr. Lucas Barbaris. Please go ahead, sir.

Good morning. I'm Lucas Barbaris, President of Safe Brokers. Welcome to our conference call and webcast to discuss the financial results for the fourth quarter of 2023. During the last quarter of the year, we operated in an improved charter market environment compared to the previous quarter. The company continues to maintain a strong capital structure while implementing its strategy of gradual fleet renewal that leads to decreasing fleet average age. Our ongoing efforts to upgrade our existing vessels coupled with our fleet renewal will enable us to remain competitive while reducing our carbon footprint. Yesterday, just before the issuance of our earnings-based release, we announced the sale of our oldest vessel, MBE Maritim. This gives me the opportunity to focus on our investment strategy, which takes into account our existing ESG policy and prepares our company for the new, more stringent regulatory environment in relation to carbon emissions. In slide three, we present the environmental regulations timeline. We have been trying to be ahead of the market, for example, by placing Phase III orders when only Phase II regulations kicked in, and sell older vessels, and more recently by placing orders for dual fuel vessels. You see in slide four the challenge that the dry bulk shipping industry faces as we move with steady steps towards 2030. Advanced Phase III energy efficiency vessels are only a few, creating operational and commercial for the early movers. We move to early and in slide five, given our recent deliveries, we have maintained a very competitive average age and we intend to do the same in the years to come with the remaining order book. All our actions should build up a green fleet advantage as presented in the top right graph of slide six. Our fleet is comprised of eco-vessels built after 2014, conventional vessels which have been environmentally upgraded, and phase 3 new bits which now account for 20% of our fleet. Only 6 of our 46 vessels in our fleet vessels are scheduled to be upgraded. On the bottom graph, a synopsis of our fleet renewal is presented with 12 vessels sold the last few years, having average age of 15 years old. and 16 versus acquired, nine of which new builds and seven secondhand with lower average age of nine years old. Let's now focus on the market. In slide seven, there has been significant volatility in the CAPE market. It's worth noting that all eight of our CAPEs are period chartered with an average remaining charter duration of about two years at an average daily rate of about $23,600 with the market currently at about 20.5 thousand. On the Panamax side, the charter market remains stable. The expectation, as defined by the paper market, is optimistic. The interesting point here in slide A is that the supply side is relatively weak, creating upside potential after the Chinese New Year holidays. The total dry bulk order book stands at single digits. We remain cautiously optimistic about the medium-term prospects of the freight market, in the coming years due to this healthy order book. About 25% of the medium-sized fleet is older than 15 years, thus the effect of fleet aging and environmental regulations are expected to accelerate scrapping. Japanese-built vessels have more efficient design, and please note that 82% of our fleet is Japanese-built versus 40% of the global fleet, which means that our fleet can compete better in the post-carbon environmental phase of the market. We are one of the very few drive-by companies with a Phase III order book ahead of our years, timely placed at lower than the personal market values, signifying our intention to compete on the basis of operational and environmental performance. Moving to slide 9, we present the development of the CRB Commodity Index, reflecting the basic commodity commodities futures prices, which represent leading indicators for shipping, including energy, agricultural and industrial measures. We continue to witness the rise of intensification of geopolitical tensions, noting the Middle East region, Red Sea, and Ukraine. We witnessed a greater than expected resilience in U.S. and several larger emerging markets. and developing economies, as well as significant fiscal support in China. Inflation, falling faster than expected in most regions, is in the midst of unwinding supply-side issues and restrictive monetary policies. The January forecast of IMF raised marginally the projected global GDP growth for 2024 to 3.1%, as global inflation projection for 2024 stands at 5.8%, lower than the previous forecast. According to BIMCO, the forecasted global drive-back demand growth stands at 1% increase for 2024. Yet the battle against inflation is not clearly won, with inflation expectations well anchored in major economies. In China, the IMF generally projections of GDP growth for 2024 stood at 4.6%. China recovery seems stable, even after taking into account the fiscal support even though the Chinese inflation is near zero due to the existing domestic difficulties, such as the elevated debt, weakness in the property sector, structural factors such as aging, which weigh on growth. On the other hand, India's growth is said to remain resilient, despite the global challenges underpinned by robust domestic demand, strong public infrastructure, investments, and a strengthening financial sector, as we saw in the IMF's January projection for a 6.5% increase in GDP for 2024. Concluding our market view, in slide 10, there has been an increased industry-wide volatility driven by tight monetary policies and rising geoconflict. There are signs of a disinflation and forecasts of stable growth for the next two years. Demand for technological efficiency creates opportunities for those willing to invest, and as Seybaldis has done. It is evident that the ESG adherence becomes increasingly important for the years to come. Environmentally efficient fleets may lead to a two-tier market with differentials in earning capability. We believe that the combined effect of the aging of the fleet, the low order book, lower selling space of the new regulations and GIG targets We favor fleets comprising of efficient vessels tightening the market. I will conclude in slide 11, where we present certain of our key characteristics which differentiate us from our peers. The key fundamentals are our strong alignment of interest with a significant percentage of management ownership, the comfortable leverage, the ample liquidity and contracted revenues, our track record and of course the quality and competitiveness of our fleet. Our operating model is positioned to capitalize on the new more strict environmental regulations with assets focused on environmental competitiveness and ESG strategy. At the same time, we are committed to reward shareholders with meaningful dividends while actively building our future fleet competitiveness with a substantial fleet expansion. Our chief financial officer will continue the presentation. Mr. Adinos, the floor is yours.

Thank you, Lucas, and good morning to all. As a general note, during the fourth quarter of 2023, we operated in a weaker charter market environment compared to the same period in 2022, with decreased revenues due to lower charter hires, decreased earnings from scabby fee diversions, decreased operating expenses, and higher interest expenses due to higher interest rates. Let's focus now on our liquidity, our cash flows, and our capital structure, which is presented in slide 12. We are maintaining a comfortable leverage of around 37%. Our debt of $516 million remains comparable to our fleet's scrap value of $341 million, although our fleet is only 10 years old. Our weighted average interest rate stood at 6.31% for our consolidated debt, This is inclusive of the applicable low margin with a portion of 100 million euros being fixed at a coupon of 2.95% with an unsecured five-year bond. We have paid 85 million for our capital expenditure requirements in relation to our existing order book. The remaining capex were 223 million. Our liquidity and capital resources stand up strong at approximately 312 million, which together with the contracted revenue of about 270 million provide flexibility to our management in capital allocation. Furthermore, we have additional borrowing capacity in relation to eight existing unencumbered vessels and six and seven new builds upon their delivery. Moving on to slide 13, with our quarterly financial highlights for the fourth quarter of 2023 compared to the same period of 2022. Our adjusted EBITDA for the fourth quarter of 2023 stood at $50.7 million, compared to $56 million for the same period in 2022. Our adjusted earnings per share for the fourth quarter of 2023 was 25 cents. This was calculated on a weighted average number of 111.6 million shares, compared to 29 cents during the same period in 2022. And that was calculated in a weighted average number of 118.9 million shares. We will present in slide 14 our quarterly operational highlights for the fourth quarter of 2023 compared to the same period of 2022. During the fourth quarter of 2023, we operated on average 45.93 vessels, earning an average time chart equivalent of $18,321. compared to 44 vessels and an average TCE of $21,078 during the same period in 2022. Our net income for the fourth quarter of 23 was $27.6 million compared to net income of $34.9 million during the same period in 2022. In conclusion, in slide 15, we present our recent new-build deliveries. Based on our financial performance, the company's board of directors declared $0.05 dividend per common share. We would like to emphasize that the company is maintaining a healthy cash position, revolving credit facilities, and a drone borrowing capacity. Altogether, a combined liquidity and capital resources north of $300 million. Furthermore, we have contracted revenue from our non-cancellable spot and period time charter contracts of more than $240 million. and this is net of commissions and before any scrubbed revenue, and additional borrowing capacity in relation to eight unencumbered existing ships and seven new boats upon their delivery. We believe our strong liquidity and our comfortable leverage will enable us to expand the fleet while still rewarding our shareholders. Thank you, and we are now ready to accept questions.