Loukas Barmparis - President Polys Hajioannou - Chairman and CEO Konstantinos Adamopoulos - CFO.

Magnus Fyhr - Seaport Global Securities.

Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the Second Quarter 2017 Financial Results. Today, we have with us from Safe Bulkers, Chairman and Chief Executive Officer Polys Hajioannou; President, Dr. Loukas Barmparis and Chief Financial Officer, 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 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 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 not are 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.

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 second quarter of 2017. Let's start our presentation with the developments in our industry. In slide three, we present the Cape and Panamax Average 4TC.

During the first half of 2017, we have seen signs of improvement of the charter market compared to historical lows set back in the first quarter of 2016. Presently Cape market is correcting, while Panamax market show some strength following correction. Still however, charter market is volatile in the non-profitable levels.

Charter rates for Capes are now down to $8,400 per day while for Panamaxes are up to $9,600. Asset values, as shown in slide four have recovered and haven't yet been substantially influenced by the seasonal correction of the rates.

A five-year old Cape is sold at about $31 million compared to the low of $21 million in March 2016, and a five-year old Panamax is sold at about $19 million compared to $11 million lows last year. Let's move on to examine the status of the supply and demand [ph]. In slide five, we see information about the net fleet change in Capes and Panamaxes.

Dark blue bars denote deliveries and light blue bars scrapping, while the number of the bar, above the bar represents the net increase. We observed in 2017 a relatively small net increase, in the number of both Capes and Panamaxes compared to the total size of the fleet.

The excessive order book of the past years is substantially exhausted this year, as shown in slide six, especially for Panamaxes where most of our fleet operates. Some request for new orders encouraged by the improvement by the improved charter market of the first quarter were frozen due to charter market correction.

But now it is being built up again always at the reasonable levels. The cash liquidity and the time lap between the placement of an order until its delivery, is creating the base for an improved market in 2018.

We expect the technological constraints related to new regulations for ballast water treatment plant and for SOx emissions will also influence the market. In the next few slides, we show certain information in relation to demand for dry bulk services, which is directly related to the global economic development.

In slide seven, we present certain data in relation to iron ore trade. During 2016, China's iron ore imports grew in consumption with advances in consumption volume by domestic steel mills. In March 2017, Chinese iron ore imports reached a record levels and in June reached a 15% a year-on-year rise.

The peak in demand has been correlated with the commodity price and eventually with the freight rates. In slide eight, we present the development of the coal demand. Chinese coal imports grew strongly during the second quarter of 2017. The pick in demand has been correlated with the commodity price and eventually with the freight rates.

China still relies heavily on coal, as it remains a strategic fuel for electricity production. During summer time, the low hydro level are expected to boost on demand. Demand for grain are shown in slide nine, supports historically the dry bulk transportation demand.

China's soybean demand has been growing at 5% rate per annum, and China's soybean imports have more than doubled over the last 10 years. In slide 10, we present the key takeaways of our discussion. Excessive past order-book will be exhausted mainly in 2017.

Reasonable additional dry bulk orders have been placed, reducing growth of dry bulk fleet, financing constraints remain, seasonal correction creates concerns for the future project - prospects.

China was and will continue to be a key player in dry bulk transportation through the development of plants for infrastructure projects and certain urbanization, and substitution of Chinese domestic production. And overall projects for global growth remain positive. Now our CFO, Konstantinos Adamopoulos will present our quarterly financials..

Thank you, Loukas, and good morning to all. Let's now move in slide 11 and see our quarterly financial highlights for the second quarter of 2017 and compare it to the same period of 2016. Net revenues increased by 34% to $35 million from $26.2 million, mainly due to an increase in charter rates.

Our TCE equivalent rate per vessel increased by 30% to $9,978 per day from $7,675 per day during the same period in 2016. Daily vessel earnings expenses increased by 2% to $3,893 compared to $3,814 for the same period in 2016.

Daily G&A expenses, which include daily management fees payable to our managers and daily costs incurred in relation to our operation as a public company, increased by 4% to $1,107 for the second quarter of 2017 compared to $1,115 for the second quarter of 2016.

Our adjusted EBITDA for the second quarter of 2017 was $16.2 million compared to $8.8 million for the same period last year.

We still remain unprofitable, however, our adjusted loss per share for the second quarter of 2017 was $0.07 calculated in a weighted average number of 101.4 million shares, reduced as compared to $0.15 during the same period of last year, calculated on a weighted average number of 83.6 million shares.

Slide 12, we present our quarterly fleet data and average daily indicators compared to the same period of last year. Liquidity in a cyclical industry like ours is a key point and I will like to show you in the next slide what we have achieved. Slide 13, we focus on our expenses, both OpEx and G&A.

The aggregate figure for both OpEx and G&A for the second quarter was $5,050 from $4,989 - the second quarter of 2017 includes cost of three dry dockings such as one dry docking during the same quarter last year.

Our OpEx number includes OpEx includes all items like dry-docking, initial supplies from new buildings et cetera, compared to our peers on average we're seeing about $1,500 in daily savings during the first half of 2017 from daily OpEx and daily G&A representing about $20.5 million in annualized savings or $0.20 per share in savings.

Slide 14, the light blue bars show that the effect we have achieved by our cost-cutting efforts were sustainable during all four quarters of 2016 and to the first half of 2017. The dark blue bars present our TCE and show the improvement of the market from its lows during early 2016 and our relevant performance.

At this point, we would like to emphasize that we have positive operational cash flows and we have controlled the financing investment cash outflows.

The liquidity we preserve helps us grow through this cycle and can be used to reduce financial obligations, as we have demonstrated through firstly our recent exchange offering of Series B Preferred Shares and B, we exercise over better options regarding two Capes and Panamax vessels which are going to be under sailing agreement at an aggregate REIT price of $43.8 million.

This transaction will confirm in September 2017 and we'll be finally making sure of - and commit -.

As shown in slide 15, we have only one remaining new build in our order-book, which is scheduled to be delivered next year, which will be finance through an issuance of $16.9 million of preferred shares, or the level of the owning company of the vessel, to a non-related investor at 2.95% dividend.

In total, we have outstanding $31.4 million of CapEx and we need to spend essentially less than $15 million from our liquidity for that. As of July 19, 2017, our liquidity was $98.9 million. Moving on to slide 16, we show information about our quarterly cash flows.

For the second quarter of 2017, we achieved positive operating cash flows of $26.6 million which was a result of better market observed and performance supported by our low operating expenses.

The negative cash flows we had from investing and financing activities were mainly due to the delivery of two new build vessel, one of which was sold up on delivery and due to the recent exchange offering our Series B preferred shares.

Overall, we believe that the company with a liquidity of $98.9 million as of July 19, with positive cash from operations and controlled outflows for investing and financing activities, is well positioned to take advantage of the improved market conditions, if and when the shipping market turns sustainable.

Our press release presents in more detail our financial and operating results. We wish now to take your questions. Thank you..

Thank you. We will now begin the question and answer session. [Operator Instructions] And your first question today comes from the line of Magnus Fyhr from Seaport Global. Please go ahead. Your line is open. Magnus, your line is now open. Please ask your question..

Yeah, thank you. Good afternoon.

Just one question on capital allocation, you're almost done with your newbuild program and I was just wondering that yards especially some of the Chinese yards have starting to get a little aggressive on pricing, you have mostly ordered your ships from Korea and Japanese yards, but is new building something you will consider going forward or it just be interesting to see you there?.

Yes, at this point we do not plan to place any new building orders. There are many second-hand vessels in the market and if the company wish to start further acquisitions, we'll do so on the second-hand market..

And with the recent weakness in the market, do you see sellers getting a little bit more rolling here to come down in price, how do you see developments here in the last few months?.

We've seen that the prices are holding, we don't expect them to come off because they're already low, they are low enough. We don't expect further reduction of prices. The thing is what we before we invest, we want to see better freight market, which we expect we'll start seeing in the fourth quarter of this year.

As its seasonal expected, with the recent move up of commodity prices and another indicator, the lower USD value. We believe that spot market will improve as we enter in the final quarter of the year i.e. October time with the excellence of growing seasonal of North America.

So, at that time, we believe it would be, maybe better market and that will maybe allow us to enter the second-hand acquisition market, but not the new building market..

Yeah, that's good to hear. Second question, on your demand slide on coal, you mentioned imports substitution is expected to continue going forward. There has been some recent I guess on the Tier 2 ports to reduce I guess the imports to set new quotas.

Do you think those for the lower quality coal, what's your view there going forward on the imports as far as the Tier 1 ports and domestic reduction?.

I think the restriction imposed by China and certain ports is not the main important ports. I would say, third tier ports, only one of the ports mentioned - Panamax ports, so I think any influence on our size of vessels will be minimal.

On the other hand, we believe that the environmental reasons will be a long-term process that we are not talking about this year and next year, we are talking about the next 10 years, it will be a slow process and better-quality coal from countries like Australia or further, I feel that will come into play in subsequent years.

We may see increase on miles as a result of these changes..

Thank you. That's all I had..

Thank you..

Thank you. [Operator Instructions] We have no further request coming through at this time. Please continue. My apologies, Magnus Fyhr has a follow-up. Please go ahead. Your line is open..

Well, since I am the only one on the call here, I might as well ask another question.

Just the question on the balance, what a treatment system has been pushed out to 2019, you think that will have an impact here on also scrapping going forward or do you think most owners will takes their 17 and 20-year-old through their surveys?.

Definitely on the 17 or the 20-year-old, I don't think that will be so beneficial to consider ballast water treatment. As far as our company is concerned, we think that ships, all the ship is 14 years old. So, ships under 15 years old I think the company should be prepared to do it early in the half.

I don't think that our company is planning a base, the recent extension of two years. We are planning bases that previews regulation and we're getting ready to start installing the ballast water treatments as from the forthcoming dry dockings in the beginning of 2018.

So, I think proven company should plan and apply this regulation early now, because of the systems, there are enough systems already approved and some more are getting approved by U.S. Coast Guard in the coming months. So, I think there will be many options available for ship owners.

Definitely, I don't think it's worthwhile bothering on ships of 20 years old, but ships that are under 15 years old, I think owners should not postpone the application of this rule..

Yes, and you mentioned with more assistance getting approved.

What you see the cost currently, has the cost come down for these systems or can you elaborate on that, what the cost is for different classes?.

The cost has not come down yet, but I think that there is no more than in the region $0.5 million per ship. So, company hasn't got to do a whole fleet in one year, you have five years over which you can apply this course. So, I think that it's prudent to start applying this from the forthcoming dry dockings in 2018.

So, you have moved the cash flow profile on your fleer. So, our company were planning bases applying this from the first dry dockings that we will have in 2018..

All right, thanks. Thank you. Have a great summer..

Thanks. Same to you..

Thank you. And we have no further questions at this time. [Operator Instructions]. We have heard to have no questions coming through this time. Please continue..

Thank you very much for having our conference call for the second quarter. During this summer period, I guess many of you are out doing vacations. And we wish you all the best and looking forward to discuss again our financial results for the third quarter later on this year. Thank you..

Thank you. Ladies and gentlemen, that does conclude your presentation for today. Thank you all for participating. You may now disconnect..

Thank you..

Thank you..