Safe Bulkers, Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the SafeBulkers conference call on the first quarter 2025 financial results. We have with us Mr. Pallis Hajianu, Chairman and Chief Executive Officer, Dr. Lucas Barampas, President, and Mr. Constantinos Adamopoulos, Chief Financial Officer of the company. At this time, all participants are in 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. 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 results projected from these 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 first quarter 2025 earnings release, which is available on the SafeBulkers website. Again, www.safebulkers.com. I would now like to turn the conference call to one of your speakers today, the chairman and CEO of the company, Mr. Paulus Hajianou. Please go ahead, sir.

Hello. I will do the presentation. So, good morning to all. I'm Lucas Barbaris, president of SafeBudgets, and I'm welcoming you to our official results. During the first quarter of 2025, we faced softer chatter markets due to seasonality, geopolitical uncertainties, and concerns related to tariffs, which could affect global trade and growth. We maintained our strong balances and took delivery of our 12th new build. In this volatile environment, we continued to renew our fleet, focusing on environmental performance in relation to IMO regulations and the creation of long-term value for our shareholders, maintaining a strong capital structure, ample liquidity, and a leverage of about 7%. Further to our repurchase program of roughly 3% of the company's common stock, which we fully completed, we've declared a 5 cents per share dividend, rewarding our common shareholders. We remain focused on capital allocation towards our new builds program, on improving our operational efficiency and environmental footprint, as all our actions are targeting to increase the wealth of our shareholders. Following a comprehensive review of the forward-looking statements, language, which is presented in slide two, let's proceed to examine the supply-side dynamics in slide four. The dry-bark fleet is projected to grow by about 2.8% on average in 2025 and in 2026 due to stable new deliveries and increased recycling with Panamax vessels, comprising the largest share. The order book now stands at about 11% of the current fleet, and new building orders have slowed. Asset prices are projected to weaken further, and second-hand ships' prices may fall in line with the freight market. Recycling volumes are anticipated to rise as the market continues to prompt the retirement of older vessels. 30% of ship capacity in the order book will be capable of using alternative fuels upon delivery, and out of those ships, 40% can use LNG, 37% methanol, and 23% ammonia. However, the dual-fuel order book in the dry-bulk sector is minimal. We do have two dual-fuel new builds on order with delivery by Q2027, and currently about 25% of the existing global fleet is older than 15 years. Sea-bunkers fleet now counts 12 phase 3 vessels on the water, all delivered after 2022. In addition, 24 vessels have been environmentally upgraded and 11 are eco-vessels, having superior design efficiencies. 80% of our fleet comprises of Japanese-built vessels, surpassing the global average of 40%, while our off-average fleet age is about 10 years old. We believe that as energy-efficient designs will have an advantage in the coming years, we will become even more commercially competitive as we have on our order book six more Phase III vessels, which will place prices well below the prevailing market to be delivered to us by the first quarter of 2027, positioning us favorably to compete within the stringent greenhouse gas targets. It is worth noting that MEPC83 has adopted the new environmental global fuel standard, which conceptually is similar to fuel EU regulation. The global implementation of a fuel standard that penalizes the excess of fuel carbon intensity compared to specific predetermined reducing limits broadens the scope of the regional fuel EU and will substantially affect the vessel tradability 2028 onwards, promoting the use of alternative fuels and the energy-efficient phase three vessels. The recent decisions of the MEPC-83 dictate a faster pace towards decarbonization. Moving on to slide 5, we present an overview of the demand and basic commodities trade. The combination of trade war, as expressed through tariffs, and the Chinese property crisis elevate policy uncertainty and pose a considerable downside risk for global growth and against disinflation. For our segment, we anticipate a softer freight rate market and supply grows faster than demand, and we expect an increasing focus on the existing fleet, decarbonization, and on energy-efficient new buildings. The global GDP growth expectations for 2025 and 2026, as reflected in the IMF's April forecast, call for a growth of around 2.8% in the coming years, combined by a gradual control of inflationary pressures. According to BIMCO, the forecasted global dry bag demand will be from minus 1% to 0% in 2025, followed by a growth of from 1.5% to 2.5% in 2026, with grains and mineral bags being the best performing sectors. China's slower growth may hinder demand for dry bag commodities like iron ore and coal. Iron ore shipments are estimated to slightly grow as a result of weak Chinese demand and increased recycled steel usage. Coal trade will be affected by the rising renewable energy use in Asia and the increased coal production in China and India. Grain and minor bulk shipments are predicted to rise and expected to be a key growth driver. The IMF projects China's GDP growth to be 4% in 2025 and in 2026, signaling a slowdown in consumption amid delayed stabilization in the property market and persistently low consumer confidence and trade uncertainty. India, on the other hand, continues to perform and is projected to experience the fastest growth among major economies with a forecasted 6.2% GDP increase in 2025 and 2026. Increased renewable energy and industrial growth will be key drivers for India's economic momentum. Its expanding domestic market and manufacturing sector may continue to contribute positively to the dry bulk demand, with infrastructure investments playing a vital role. Summing up the supply-demand equilibrium on slide six, the supply growth is expected to continue to outpace demand, except in pressure on freight rails. The Cape Market segment has been weaker through the year. On the other hand, all eight of our capes are presently period charted, with an average remaining charted duration of two years and an average daily charted rate of $23,000. There is about 16,000 on the spot market, providing us visibility of cash flows, topping 137 million USD in contract revenue. excluding the scrubber benefit. On the Panamax front, the charter market stands short at about 11,500. Moving to slide eight, we present an overview of our quarterly highlights. We have declared our 14th consecutive quarterly dividend for five cents, representing a 5.5% dividend yield, while at the same time, our free cash flow finance our new building program. Furthermore, we completed the repurchase program of 3 million common shares. We maintained output liquidity, profitability and capital resources of 276 million and the comfortable leverage of 37%. Why we achieved zero vessels for 2024 in the D&E Carbon Intensity CII rating of IMO. Lastly, recently we took delivery of our 12 Phase III Nucleic, serving as a testament to our commitment towards sustainability. In slide nine, we present our return to shareholders of 73.6 million paid in common dividends and 69 million paid in common shares. Repurchases since 2022. We have been consistent in generating sustainable returns across market fluctuations as a result of our track record, management, and our overall business model. Concluding the company's update in slide 4, we present our strong fundamentals. SafeBarkers is a drive-by company with 390 million market cap, 47 businesses underwater, We have 317 million scrap value. We maintain significant firepower with 128 million gas, 149 million in un-drown RCFs, and 176 million borrowing capacity against our significant order book of six newbies, mainly in Japanese CPUs. We consistently focus on our majority Japanese-built fleet, which has advantage on energy efficiency and lower CO2 taxation. We have now a CII rating of zero versus at the bottom ratings of D&E for 2024. We maintain a young technologically advanced fleet, strong balance, it's comfortable leverage, and a low net debt per vessel of 8.5 million for a 10-year-old fleet. We have built a resilient business model with cash flow visibility of 203 million in revenue backlog, health expansion for sizable fleet that achieves scale, and a minimum 5% annualized dividend yield strategically positioned to leverage on the environmentally regulatory landscape. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly financial overview. Konstantinos, the floor is yours.

Thank you, Lucas, and good morning to all. in a weaker target market environment compared to the same period in 2024, with decreased revenues, decreased earnings from scattered fitted vessels, and increased operating expenses. Moving now on slide two, with our quarterly financial highlights for the first quarter of 2025 compared to the same period of last year. Our adjusted debita for the first quarter of 2025 stood at $29.4 million, million for the same period in 2024. Our adjusted earnings per share for the first quarter of 2025 was 5 cents, calculated in the weighted average number 105.1 million shares, compared to 20 cents during the same period in 2024, calculated in the weighted average number of 110.4 million shares. On the graph on the top, during the first quarter, vessels on average, earning an average daily time charge equivalent of $14,655, compared to 47.08 vessels on average, earning a time charge equivalent of $18,158 during the same period in 2024. Our daily vessel operating expenses increased by 6% to $5,000. compared to $5,442 for the same period in 2024. Daily virtual learning expenses, excluding dry-talking and pre-delivery expenses, increased by 10% to $5,546 for the first quarter of 2025 compared to $5,038 for the same period in 2024. Concluding our presentation, slide 13, we present a quick overview of our quarterly operational highlights for the first quarter of 2025. We would like to highlight that based on our financial performance, the company's board of directors declared a 5 cent dividend per common share. We would like to emphasize that the company is maintaining a healthy cash position of around 122 million as of May 9, 2025, Another $128 million is available in committed revolving trade facilities. So, we have to combine liquidity and capital resources of $250 million. Furthermore, we have contracted revenue from our non-transferable spot and period time charter contracts of $179 million, federal commissions, and this before any additional strapped revenue. We also have additional borrowing capacity in relation to six new builds upon their delivery, and one existing new build which is debt-free. We believe our strong liquidity and our comfortable leverage provides flexibility to our management in capital allocation, and this would enable us to expand the fleet further, build a resilient company, create a long-term prosperity for our shareholders. Thank you, and we are now ready to take your questions.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, you may press star 1 from your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. While we pause to assemble the queue, we'll just file one to ask a question. Thank you. Our first question comes from the line of Omar Nocta with Jefferies. Please receive your questions.

Thank you. Hi, guys. Good afternoon. Thank you for the update. Clearly, you've been buying back shares at a fairly decent rate, I'd say, clearly over the past few years. You launched a $5 million share buyback three months ago. You finished it up fairly quickly. How are you thinking about buybacks from here? Obviously, it's still a lot of uncertainty. macro. But the outlook maybe seems to have gotten slightly better, perhaps, just based off of the way the financial markets have acted here, you know, post this China-U.S. agreement. And maybe that brings about a more positive attitude. Just wanted to get a sense from you, how does that sort of this backdrop affect your view on further share purchases from here?

Yes, as you are aware, we always react on a very consistent basis and according to certain principles. So, the things that we are considering in order to initiate a buyback program is, first of all, what is the condition of the market. So, in profitable markets, we tend to buy more shares. The second is the price of our stock. So, either stock price, if we build at the If the price is depressed, we may initiate buyback programs. Generally, as already said several times, we believe that our stock is undervalued, so quite often it's worth investing for everybody, not only for us. It's worth investing in our stock instead of buying a new ship.

Makes sense. And I guess maybe just as you kind of think about the idea of buying your stock, obviously NAV seems to cross different metrics or different, whomever is calculating it, it's definitely materially above the current stock price. What would you, how could you, could you maybe just give perhaps how you're seeing the sale and purchase market as it is now? We understand that values have been rather elevated given where freight rates are and some of the uncertainty in the market. Can you just give a flavor of what you're seeing in ship values and how things are looking directionally?

Yes. For me, the S&P values, I would say, have dropped in the last six months around 25% on the older ships and around 10% or 15% on the very modern ships. So it's not really attractive prices to start buying ships right now, considering where the freight market is. So at this point of time, we're not doing much. We have our new buildings, take delivery off. And we are doing the buyback from time to time. But of course, also the buyback, we don't want to do it too fast or too much in a hurry because, you know, the company still has to take delivery of six shifts. And we don't want to do a very fast buyback until the market improves So we are there, and we are waiting for the opportune time to buy stock, once it remains depressed, in a situation that we have better signs of some improvement in the freight market. If the freight market stays at current levels, we are not going to rush. buying more stock at central trade market because we have to keep all companies' options open.

Yes, that makes sense. Great. Well, thank you. I'll turn it back.

The next question is from the line of Clement Mullins with Value Investors Edge. Please proceed with your question.

Hi. Good afternoon, and thank you for taking my questions. I wanted to start by following up on Omar's questions on buybacks. Could you confirm whether the 3 million share program was exhausted during the first quarter? And if not, how much was spent post-quarter end?

Yes, this I think we have reported and has been exhausted, yes. All 3 million have been purchased. So the program has been completed.

I was asking if you could clarify whether any repurchases were done after quarter N for modeling purposes mostly.

After quarter N. Only in the first quarter. I mean, the whole repurchase program was completed within the first quarter.

That's very helpful. Thank you. I also wanted to ask about your CAPE sizes, which are all now employed on medium-term contracts. You have a couple of those coming open later this year. Is there any appetite to trade them on spot, or would you prefer to fix them on time charters?

Yes, one has come open. It's coming open this month. At the moment, the period charter rates are not at the levels we would hold for a long period. We will opt for an invoice in the spot market at the current levels and try then after a month or so to refix that maybe on period if there is a better environment. The other one will come often. It's another one that most likely will come open around August. Again, we will judge at the time if we will go if she's delivered in August. That's the earlier part of the window. If she's delivered at that point, we will now see at the time what is the best thing to do. Generally, we are trading the spot market. Unless we see employment, period of employment of a couple of years above 20,000, then we consider the period of employment.

Makes sense. Thank you. That's everything from me. Thank you for taking my questions, and congratulations for the quarter. Thank you.

Thank you. At this time, I'll turn the floor back to management for closing remarks.

Thank you very much for attending our results, this webcast, and we're looking forward to discussing again with you in the next

This will conclude today's conference. I'm going to disconnect your lines at this time. Thank you for your participation. Have a wonderful day.