Thank you for standing by, ladies and gentlemen. And welcome to the Safe Bulkers Conference Call to discuss the Fourth Quarter and Full Year 2021 Financial Results. Today, we have with us from Safe Bulkers, Chairman and Chief Executive Officer, Mr. Polys Hajioannou; President, Dr. Loukas Barmparis; 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. [Operator Instructions] 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.

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 these 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 drybulk 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 changes 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.

Barmparis. Please go ahead, sir..

Good morning. I’m Loukas Barmparis, President of Safe Bulkers. Welcome to our conference call and webcast to discuss the financial results for the fourth quarter and the full year of 2021. We will start our presentation in slide three.

We are deeply concerned about the Russian and Ukraine conflict, which against international laws and loyalty [ph] has out broken and we hope that it will end soon avoiding further clashes in Ukraine. We do not have any Ukrainian or Russian crews on both our vessels and we don’t have any vessels currently sailing in the Black Sea.

We intend to comply with the sanctions in bulk and we will continue to monitor closely the situation to assess the impact of the war on the global economy and on the drybulk fleet. As we can see from the slide, major commodity trades will be affected. In slide number four, we present the synopsis of our quarterly results.

2021 was a very good year for our company. We were able to renew our fleet with environmentally advanced vessels, enter into several favorable time charters, substantially deleverage and improve our liquidity. As a result of our strong performance, the company is declaring a $0.05 dividend per share.

In terms of profitability, we reached $92.4 million in net revenues, $65.2 million of net income, $82.4 million of EBITDA and $0.39 of adjusted earnings per share. In terms of performance, we reached time charter equivalent rate of $26,180, aggregate daily OpEx and G&A of 6.6000.

In terms of liquidity and capital resources, we have about $388 million as of March 4, 2022, of which $194 million is in cash, $140 -- $94 million is in RCFs, reserve and credit facilities and secured commitments. Furthermore, we have additional borrowing capacity in relation to four unencumbered vessels and seven newbuilds upon their deliveries.

Further to that, we have additional borrowing capacity in relation to four additional unencumbered vessels and seven newbuilds up their deliveries. Most recently in February, we have successfully issued a €100 million five-year unsecured non-amortizing bond at a coupon of 2.95% per annum.

Our secured debt stood at $329.4 million as of March 4, 2022 and we paid $125.3 million for the five second-hand vessels with 8.8 years average age and we collected $109.8 million for the seven vessels we sold with 14.3 years average age, effectively renewing our fleet with younger and most efficient vessels.

Finally, we declared the dividend $0.05 per share, noting at the same time, we’re renewing our fleet with second-hand and Phase 3 newbuilds ahead of the competition and that during 2021, we successfully delivered it to our company. Allow me now to guide you through the company’s key investment highlights as presented in slide five.

Safe Bulkers is a top 10 pure drybulk vessel owner in Panamax segments with carryover of 60 plus years of track record experience in terms of management led by Polys Hajioannou.

With strong company balance sheet fundamentals, ample liquidity, low leverage, secured cash flows from reliable counterparties, we have secured with nine Phase 3 Tier III newbuilds and replacement of five second-hand vessels for us it expansion in EU [ph] ahead of peer competition and ahead of the expected impact of the environmental regulations from 2023 onwards.

We have an additional revenue yearly capacity of about $20 million plus from also the new scrubber fitted vessels due to the inflated fuel price differential.

Our 40 vessels today is 80% comprised of Japanese vessels with superior specifications and commercial and operational upgrades, with both substantial premium booked in chartering and resale value. The orderbook remains at 20 years low and market fundamentals are positive for 2022.

We believe the company is well positioned for the long run with environmental based advantage. Moving to slide seven, we present the development of CRB Commodity Index which currently stands at five-year high with further upside potential.

As I indicated basic commodity futures prices, for example, energy, agriculture, trade, precious metals and industrial metals will represent leading indicators for shipping.

We have seen a strong demand for commodities across the board during 2021 and there are certain prices further amplified during 2022 as a result of the ongoing Ukrainian conflict. The general forecast of IMF before the Ukrainian conflict set the global GDP expected growth at 4.4% for 2022 and 3.8% for 2023.

The forecasted global drybulk tonne-mile demand is expected to increase by 2.2% in 2022, supported by recovery related industrial materials like iron ore, coal and agricultural, while the expected drybulk fleet growth stands at 2% for 2022 , which means that the squeeze in supply vessel will be a realistic scenario.

Further to that, the USA have allocated about $1 trillion of stimulus program for infrastructure spending for bridges, roads, while China spends yearly about $120 billion on similar infrastructure projects assuming 8.1% GDP growth in 2021, the best growth pace in a decade. IMF forecast at 4.8% GDP growth for 2022 and 5.2% of 2023.

Lastly, the EU overall recovery package of €2.4 billion for the period of 2021 to 2027 is a further boost for global demand. Let’s turn to slide eight 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 be healthy.

Capes lately have been volatile driven by commodity dynamics which we will analyze. The forward freight agreements curve presented in red color is about 30,000 to 35,000 for 2022. Similarly, for Panamaxes, as shown in the bottom graph, the FFA curve is about 30,000 to 35000 for 2022.

The prevailing commodities market coupled with strong supply fundamentals are likely to support the freight markets throughout 2022. In slide nine, we present our status orderbook deliveries. In this position the expected charter market environment, we have two deliveries in 2022, five in 2023 and during the first quarter of 2024.

Our first newbuild delivery is in May. In the same slide in the bottom graph, we also present the record low orderbook for the forward years for Capes and Panamax vessels. Turning to slide 10, we touch upon the target market valuation about certain acquisitions and about orderbook.

During the business cycle, as far -- as part of our fleet renewal strategy, we have invested in nine new newbuild vessels of the newest design compliant with that recent IMO regulations NOX emissions. So we have acquired two Panamax in 2k second hand vessels, the model and design build in Japanese shipyards.

The average acquisition price of about nine newbuilds was about $32.5 million, as compared with the current average market value, which is about $41.6 million. For the five second-hand average prices was $25.1 million, as compared with the current average market value of $28.2 million.

This time is three new investment has created a pleasant and inflated well to our shareholders of close to $7 million. Certain recovery has previously invested scrubber technology to 17 of these vessels.

The certain actually prices of about six months is more evident in today’s market has pushed the very low [inaudible] all vessel is the full differential at high levels, which translated to increase the revenues for the scrubber fitted vessels.

Presently is high in Singapore centered about 280 dose the tonne and that continue the future markets the balance for 2022 expansion about $190 per tonne. The scrubber fitted vessel is about 7,500 mega tonnes per year [inaudible] gain return of about $25 million per annum in aggregate for our carbon 17 scrubber fitted vessel.

All in all, our newbuild and scrubber represented significant increase of the intrinsic value of our company of about $120 million. Now let me pass the floor to our CFO, Konstantinos Adamopoulos, for our financial overview..

Thank you, Loukas, and good morning to everyone. As we start with our quarterly financial highlights, so I am on slide 12.

During the fourth quarter -- the fourth quarter of 2021 we operated and significantly improved charter market compared to the same period of 2020, with lower interest expenses, reduced market expenses and increased revenues, also include earnings from scrubber fitted vessels.

Our quarterly net revenues stood at $92.4 million versus $52.2 million last year. Net revenues increased by 77% compared to the same period in 2020, mainly due to the increased time charter that we want trade as a result of the improved market assisted by the additional revenues earned by our scrubber fitted vessels.

We had TCE of 26,800 -- $26180 compared to a TCE of $12,390 during same period in 2020. The net income for the fourth quarter of 2021 reached $65.2 million, compared to net income of $7.6 million during the same period in 2020. Our daily time charter revenues stood at $26,180 versus $15,319 same quarter last year.

Our daily OpEx stood at $5,149 versus $3,978 and our daily OpEx excluding dry docking and pre-delivery expenses stood at $4,666 versus $3,855 for the last quarter of 2020.

Vessel operating expenses increased, mainly affected by increased dry docking expenses, increased spare parts, stores and provisions, related works performed during dry-dockings, increased provision of technical services and increased crew repatriation expenses due to the COVID-19.

The aggregate figure for both OpEx and G&A for the last quarter of 2021 was $6,183 demonstrating our focus on lean operations.

We believe this number for both OpEx and G&A is one of the industries lower as we include in OpEx all dry dockings and pre-delivery expenses and in our G&A, our manager fees, directors and officers compensation, as well as all expenses related to the administration of our company.

Our adjusted EBITDA for the four quarter of 2021 increased to $67.6 million, compared to $26.3 million for the same period in 2020.

Our adjusted earnings per share for the fourth quarter of 2021 was $0.39 calculated on a weighted average number of 121.6 million shares, compared to $0.04 during the same period in 2020 calculated on a weighted average number of 102.2 million shares.

Let’s conclude our presentation on slide 13 with our quarterly operational highlights for the fourth quarter of 2021 in comparison to the same period of 2020. As a general note, 2021 was a very good year for our company.

We’re able to place orders, renew our fleet with environmentally advanced vessel, enter into several favorable time charters, substantial deliveries and approval liquidity. As a result of our performance, the company’s Board of Directors had decided to declare a $0.05 dividend to common share.

In addition, in February of last month, we have successfully issued a five-year unsecure bond in the amount of €100 million granted by Safe Bulkers with coupon of 2.95% due semi-annually.

We would like to emphasize that the company is maintaining a healthy liquidity position of about $194 million as of March 4 and another $194 million of RCF and secured commitments, resulting in a combined liquidity of about $388 million that provides us with significant strong power.

Our press release presents a more detail of financial and operational results. And now we’re ready to take your questions..

Thank you. [Operator Instructions] Thank you. We will now take your first question. This comes from line of Chris Wetherbee of Citi. Please go ahead..

Hey. Thanks guys. This is Eli Winski on for Chris Wetherbee. Just wanted to start with rates here and the perception around the volatility.

So, last couple quarters we had line of sight to them continuing to escalate, but with what’s happening right now in the broader environment, do you guys see any more possibility for higher fluctuations or do we think they’re going to continue to remain elevated particularly in spot contract?.

You mean volatility on the charter market -- in the charter markets?.

Yeah. Yeah. Exactly.

Is there more now than there has been, you think with some of the geopolitical issues or do we still expect demand is high in terms of the read through to your customers?.

Yes. We expect that there would be a fair amount of volatility, because of what is happen right now, because there are big things on the prices of commodities and the price of oil, especially.

And a lot depends on how long the war will take and how long this conflict will keep going, and of course, we expect sanctions will be there for quite a long time, which is not necessarily bad for shipping, could be well -- could be good for volumes and tonne miles. But the freight rates will fluctuate a lot because of these changes of bulker prices.

I mean, we saw this week changes of $20, $30 on the price of Brent on one side to the other side. So all this is affecting the trend. But overall the trend is strong, because models are expensive and the orderbook is very low. So we expect volatility indeed for the next few months..

Sure. What are your customers saying about this in terms of the duration of contracts? I think you said that the average contract duration right now is 1.2 years, is I believe that’s what it said in the release.

So do you see that, that more and more trying to shift to longer term in terms of their preferences?.

No. I think the trend in dry bulk is the charter rates and the offered contracts up to one year on our size of vessel and the bigger ones in the Capesizes, you may find the little bit longer, but on the Panamaxes is generally six months to 12 months charters..

Got it. Thanks.

And then one more for me, you guys declared $0.05 dividend, stronger liquidity position, what does the long-term capital allocation look like for Safe Bulkers?.

Long-term capital location?.

CapEx..

Yes. Look the….

Capital….

We started the dividend this quarter in Q4 of last year, which was the first year of a good market after six years or seven years of low market. And we started with the comfortable dividend and in line with also the other actions the company is taking to deleverage to take delivery of the newbuilding vessels with the least possible debt on them.

So all depends on the freight market. We believe we have a strong freight market for this year and possibly next year. There are good signs that next year will be good as well..

Thank you, guys..

Thanks..

But our remaining CapEx for the next couple of years is $250 million, $207 million..

Thank you. We will now take your next question. This comes from Ben Nolan of Stifel. Please go ahead. Your line is now open..

Hey, guys. This is Ben Nolan at Stifel. I have a couple and I -- you talked a little bit about your chartering strategy, although we’ve seen this week one of your competitors on a newbuild put a longer duration contract on a vessel.

You guys obviously have some very high specification newbuilds and it sort of is something that you guys have done often in the past.

I am curious if there’s much depth to that market and if it’s something that you guys would consider doing on a few of those new vessels?.

Look, it’s much easier to do it on larger ships, long-term charter, because there’s more horizon on there on -- also on the freight market. So charters can be guided by Capesize in the freight market. In the smaller sizes like Panamaxes, both Panamaxes, the curve is very steep for the top here.

So doesn’t make a lot of sense on when the market is so much under the supply with new tonnes, there’s no -- not a lot of new tonnes to enter the market in the next three years. It doesn’t make sense for an owner to go and look three years or five years charters on the Panamaxes or on the Kamsarmaxes.

And on the Capesize, I consider this feature, which done that was a pretty good feature at the time they -- it was done on a newbuild vessel was upon delivery. So I see the point of view of the owner and I say that, I believe it was a good mix..

Okay. And then switching gears a little bit, obviously, you guys have a lot of scrubbers on your vessels.

I assume that that is working very much to your benefit at the moment, any thoughts about going out and finishing out the fleet with scrubbers maybe as they come up for dry dock or effectively adding to your scrubber exposure?.

Yeah. It doesn’t make a lot of sense to put the vessels for right now with finishing scrubbers, because what we see now the spike in the spreads and we temporarily because of what is happening in Ukraine. This should may last for two months or three months. I don’t think it’ll last for the whole year.

And so to put ships are going there in the dry dock for extra period of 15 days, 20 days when the market is $35,000 a day. It doesn’t make sense.

We did it in 2019, when the market was $5,000 or $6,000 or $7,000, we put the ships in the dry dock to do this extra bit of time there to fit the scrubbers in anticipation that the spread would be decent spread. So right now I don’t see us doing anything more.

We have a Capesize vessel, which we’re doing right now to plan since a year ago to do it, but we don’t have plans.

We’re more focused on environmental improvements that we can do on our fleets of how we can upgrade our ships and reduce their CII and their energy efficiency indexes, because I think this, when all this story of the war settles down, this will come back in focus and we have to be prepared for the next day..

Okay. That’s helpful. And the last for me, I believe I saw in the release that you guys had not been active under the ATM program, which is the first time in a while.

Is that an indication that, you sort of, you are where you are and you like where you are and you don’t need more capital to do anything else or as you just trying to, yeah?.

It’s clear that we consider the stock price still not at the level that is worth considering and we don’t plan to use it. So….

Okay..

For the time being it’s at the level that we don’t really need any more liquidity. So that’s why since September we didn’t touch that, that scheme..

Okay..

On the other hand, as you have seen, we have increased our liquidity. We have extra liquidity through the vote. We’re waiting for the right opportunity to invest in new technologies and in fleet renewal, replacing the older ships with a bit younger one, apart from the newbuildings we have.

And for us the most important is to prepare for the next day on the new environmental changes that, as I tell you now, we will forget about them for three months, but thereafter I’m in the climate change is there, it won’t go away because of the war. I mean, we’re not focused to it now.

Of course, we have to see how especially Europe will deal with the shortage of gas and the shortage of energy. But in three months time, I believe that the focus will be back on the climate and we don’t want to derail from our initial planning of making environmental investments, but we will come the next two years, three years very fast..

Understood. All right. I appreciate it. Thank you, guys..

Thank you. And we take our next question. This comes from line of Randy Giveans of Jeffries. Please go ahead. Your line is open..

Hey, gentleman. Randy Giveans from Jeffries.

How’s it going?.

Yeah. Fine..

Fine..

Fine. Thank you..

Hey. I guess looking at the first quarter, a lot of your peers kind of giving some quarter-to-date rate guidance.

Can you provide us with the same on the spot side of the market?.

The spot market is improving the last two weeks, three weeks quite substantially, as we all see, and the first two months of the quarter have been done. So the first two months of the year are definitely lower than the Q4, but there’s a catch up in the third month of the quarter. So I think that -- but is looking good.

So we’re not guiding of what will be the other, but you expect in the two months are a lot lower than the one and not higher. The balance will be little bit tip than the lower side from the previous quarter. So if the last quarter the number was 20, how much was it, 26, 26..

26..

And then this quarter may be a little bit less. That’s the….

Okay..

So that would be huge later..

Okay.

And then on the dividend, great to see a dividend announcement from you guys, how did you decide on this amount? How should we think about going forward? Is there a policy in place or is this a flexible dividend based on kind of market conditions?.

No. It’s a -- it’s more like a, let’s say, sustainable dividend, because for us, as I tell you, we are one of the few companies that we have made timely renewal of the fleet, which we have to take now delivery of all the ships, starting with the first one in two months time.

And then we have every couple of months a newbuilding at the end of 2023 in the beginning of 2024. For the ships, we expect to hit the market in a good freight rate environment.

As we have seen the new ships, certainly, they will be very attractive to charters and would be able to secure longer than one year charter, maybe two-year or three-year charters at the right time of the market. So we thought to start with this dividend right now. We’re very confident for the next two years and we thought that we should start it now.

And at the same time, keep enough liquidity for the newbuilds and for the environmental investments. Of course we review our dividend policy every quarter and always there is no assurance that we will continue to pay the dividend, but as I said, the dividend is designed to -- so to be meaningful for, let’s say, the following period..

Got it. That makes sense. All right.

And in terms of the unsecured, the very impressive in terms of the rates there, use of proceeds, I know you had a few options kind of are you leaning towards one or the other, is that market can it be tapped again, right, to another €50 million Euro or it ever maybe kind of on the upside of that?.

No. We don’t plan to use this market again. We used it once. It was a good one, because it was the first drybulk company to do the bond in the Athens Stock Exchange. We consider the price favorable.

Of course conditions have changed the last month with interest rates and it’s not something you tap every other quarter and you go in, you do it once, you go for five years and then you see what happens after five years, if there is appetite for refinancing it in an appropriate money at what spread or if you just repay the investors.

So this gives ample of liquidity to the company to make investments either on new ships or modern ships or environmental investments, which will helps us to operate the fleet with advantage to that of the competition.

Because as I told you, I mean, in six months time, the all -- three months or six months time all the focus will be back on the climate. We shouldn’t forget that..

Got it. Well, thank you, again..

Thanks, Randy..

Your next question today comes from the line of Magnus Fyhr of H.C. Wainwright. Please go ahead. Your lines now open..

Good afternoon, gentlemen. This is Magnus Fyhr, H.C. Wainwright..

Okay..

Just a follow up question on the current cash position, you mentioned you have $250 million of CapEx going forward. Can you break that out between the three years? I guess most of it is in 2023 and how much you plan to use for installment versus debt. Should we assume, like, 60%,.

The majority is coming in 2023 because of deliveries are in 2023 and most of it is payable at the time of deliver 60% or 70%. It’s time -- at the time of deliver. So we right to say that most of this CapEx is in 2023.

Look, I mean, we plan to put a minimum debt on the new ships, not on all of them, because as we say that, we are -- we want to keep the debt near the scrub value of the fleet and so we could produce more profits for our shareholders. Also, I believe that is very important in shipping to remember that’s a significant business.

There will be definitely opportunities in the next two years or three years to invest money in shipping. We cannot take everything for granted, but this market will last 10 years. We have to have the funds and be able to invest in the no part of the cycle in this -- anything happens in during the next two years or three years.

The CapEx impact -- the CapEx of the company is $55 million in the -- in 2022, $143 million in 2023 and $47 million at the beginning of 2024. Our last delivery is very early 2024 in the early part of 2024 like January and February.

So we have a fleet that is coming in the next 20 months and that the company every two months will take or another every two months we will be taking a newbuild vessel and this will grow the hour fleet by around 25% in the next 20 months. So we’re on a good track with the liquidity that will generate, we will reward investors and shareholders.

And at the same time, make all the environmental investments to stay ahead of the game..

All right. Thank you for that color.

And just on the prefs, do you have an amount in mind there given that with all the cash on the balance sheet to retire some of those prefs?.

The prefers you mean. Yes..

Yeah..

It’s in the mind -- it’s in our mind to do that as well, a certain part of it in the next few quarters to be allocated into some retirement of prefers and then we’ve said that also when we should the Board that part of it will be going there as well.

But the company and the Board will decide what percent goes in what element, because ship prices are going to be elevated. You understand, we are not planning to invest in expensive vessels. We’ll wait our opportunity. We have fleet expansion anyway.

And obviously the price of vessels as we see now, the last two weeks, three weeks, maybe all sellers are asking $5 million more for drybulk vessel. We’re not going to jump on those prices.

We can afford to be patience, people with liquidity and not -- who have not invested on ships may jump on expensive acquisitions, while in our case we can afford to wait..

Very good. That’s it for me. Thank you..

Thank you..

Thank you..

Thank you. We do have one more question on the line. [Operator Instructions] We will now take our next question. This comes from the line of Climent Molins of Value Investor's Edge. Please go ahead..

Good morning. Clemen Mullins, I am from Boudi Investors Edge. Congratulations for this quarter.

Your balance sheet has improved significantly over the past year and I was wondering if you could provide some commentary on how you think about the preferred, is really mean part of the preferred outstanding something you would consider to further reduce your cost of capital?.

Look, the capital structure of the company as we have said has improved substantially and we had set an approximate target for our leverage of about 30% in that region, 35%, which was achieve in the -- as we go in the ahead. The thought process is that second point of time we may retire some prefers. We don’t know exactly.

We cannot say anything about how much. What we know is that about, I mean, substantial amount will remain, some of it can maybe retired. So we have, let’s say, a strong percentage of prefers, a strong percentage of bonds about some million that we have already in Europe have already issued and some are banking loans that we cover the position.

The company, as we go ahead, we have about nine days to be delivered to us. So the asset value, the net asset value of the company will increase, while the debt leverage will not follow the same path.

So we intend to maintain somehow this capital structure, the following years, which gives us benefit in good markets, because we have -- we do have the right capital structure, we have lower expenses and also in good and bad markets, it’ll work for us and we have -- and will create for us opportunities this liquidity to move if the second opportunities that we may locate in the market..

All right. That’s helpful. Regarding the bond you issued in the Greek market and what we have to be a very attractive rate.

Will you look to hedge the FX risk or are you comfortable with this your exposure?.

You mean if the bond, you may think that. look, at the certain point, we’ll hit some part of the exposure, but you have to remember as a company, we have around $30 million a year expenses in euro, so we need $150 million euros in five years. So the euros are -- we have kept as euros, because anyway we can spend them.

There will be opportunities as we see one right now that is happening because of this unfortunate story with the Ukrainian war that euro has depreciated to levels that companies considering to hit some part of the exposure..

All right. That’s all for me. Thank you for taking my questions and congratulations again for this quarter..

Thank you very much..

Thank you. It appears there are no further questions at this time..

Okay. So thank you very much to all the participants and we’re looking forward to discuss again with you in our next quarter results, which would come about -- in about three months from now. Thank you..

Thank you all for participating. This does conclude our conference for today..