Safe Bulkers, Inc. Reports Fourth Quarter and Twelve Months 2016 Results

MONACO--(Marketwired - Feb 23, 2017) - Safe Bulkers, Inc. (the "Company") (NYSE: SB), an international provider of marine drybulk transportation services, announced today its unaudited financial results for the three and twelve month period ended December 31, 2016.

Summary of Fourth Quarter 2016 Results

• Net revenues for the fourth quarter of 2016 increased by 6% to $31.7 million from $29.9 million during the same period in 2015.
  
  
• Net loss for the fourth quarter of 2016 was $4.6 million as compared to $29.9 million, during the same period in 2015. Adjusted net loss¹ for the fourth quarter of 2016 was $4.1 million as compared to adjusted net loss of $7.7 million, during the same period in 2015.
  
  
• EBITDA² for the fourth quarter of 2016 amounted to earnings of $13.1 million as compared to a loss of $13.1 million during the same period in 2015. Adjusted EBITDA³ for the fourth quarter of 2016 increased by 49% to $13.6 million from $9.1 million during the same period in 2015.
  
  
• Loss per share⁴ and adjusted loss per share⁴ for the fourth quarter of 2016 were $0.09 and $0.09 respectively, calculated on a weighted average number of 87,364,672 shares, as compared to loss per share of $0.40 and adjusted loss per share of $0.13 during the same period in 2015, calculated on a weighted average number of 83,504,266 shares. 

Summary of Twelve Months Ended December 31, 2016 Results

• Net revenues for the twelve months of 2016 decreased by 14% to $109.8 million as compared to $127.3 million during the same period in 2015.
  
  
• Net loss for the twelve months of 2016 was $56.0 million as compared to $47.9 million during the same period in 2015. Adjusted net loss for the twelve months of 2016 was $36.2 million as compared to adjusted net loss of $22.4 million, during the same period in 2015.
  
  
• EBITDA for the twelve months of 2016 increased by 16% to $15.6 million as compared to $13.5 million during the same period in 2015. Adjusted EBITDA for the twelve months of 2016 decreased by 9% to $35.5 million as compared to $39.1 million during the same period in 2015.
  
  
• Loss per share and adjusted loss per share for the twelve months of 2016 were $0.83 and $0.59, respectively, calculated on a weighted average number of 84,526,411 shares, as compared to loss per share⁴ of $0.74 and adjusted loss per share of $0.44 during the same period in 2015, calculated on a weighted average number of 83,479,636 shares.

Additional offering

In December 2016, the Company concluded a public offering (the "Public Offering") of 15,640,000 shares of common stock, par value $0.001 per share, at a price of $1.10 per share, which included 2,040,000 shares of common stock sold pursuant to the full exercise of the underwriters' overallotment option. The aggregate gross proceeds to the Company from the Public Offering, including the sale of the overallotment shares, before the underwriting discount and other offering expenses, were approximately $17.2 million providing the Company with additional liquidity. An entity owned and controlled by our Chief Executive Officer and Chairman of our Board of Directors, Polys Hajioannou, purchased 2,727,272 shares of common stock in the Public Offering.

Fleet and Employment Profile

In January 2017, the Company took delivery of Pedhoulas Rose (Hull No. 1146), a 82,000 dwt, newbuild Kamsarmax class vessel. The delivery installment of $17.4 million was financed by a pre-agreed sale and leaseback arrangement of $24.8 million, which enhanced our liquidity. The sale and leaseback arrangement will be recorded as a financing transaction, and therefore, the vessel's book value will be recorded under fixed assets and will be depreciated over time, and the sale proceeds will be recorded as debt on the Company's balance sheet. The lease period is 10 years, based on a net daily bareboat charter rate of $6,500, with a purchase obligation on the Company at the end of the 10th year at a price of $14.5 million. The arrangement also includes purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and at predetermined purchase prices.

In January 2017, the Company took delivery of Hull No. 1551, a 81,600 dwt, newbuild Kamsarmax class vessel which was subsequently sold to our Chief Executive Officer and Chairman of our Board of Directors, Polys Hajioannou, pursuant to a previously disclosed agreement which had been evaluated and approved by a Special Committee of the Company's Board of Directors, which committee was wholly comprised of independent members of the Board and advised by independent counsel. The commission of 1% of the contract price payable to the related party management company with respect to the newbuild, has been waived in Company's favor.

As of February 17, 2017, our operational fleet comprised of 38 drybulk vessels with an average age of 6.6 years and an aggregate carrying capacity of 3,421,800 million dwt. The fleet consists of 14 Panamax class vessels, nine Kamsarmax class vessels, 12 post- Panamax class vessels and three Capesize class vessels, all built 2003 onwards.

As of February 17, 2017, we had contracted to acquire our last drybulk newbuild Kamsarmax class vessel, scheduled for delivery in 2018, upon delivery of which and assuming we do not acquire any additional vessels or dispose of any of our vessels, our fleet will comprise of 39 vessels, 11 of which will be eco-design vessels, having an aggregate carrying capacity of 3.5 million dwt.

Set out below is a table showing the Company's existing and newbuild vessels and their contracted employment as of February 17, 2017:

The contracted employment of fleet ownership days as of February 17, 2017 was:

Capital expenditure requirements and liquidity

As of December 31, 2016, the remaining order book of the Company, excluding the Hull No. 1551 which had been contracted to be sold upon delivery in January 2017, consisted of two newbuild vessels, Hull No. 1146 and Hull No. 1552, which were scheduled to be delivered in 2017 and 2018 respectively. Proceeds from the agreed sale of Hull No. 1551 fully covered the associated capital expenditure requirements for this vessel.

As of December 31, 2016, the aggregate remaining capital expenditure requirements of the two newbuilds amounted to $50.8 million, consisting of $28.4 million payable in 2017, and $22.4 million payable in 2018.

As of December 31, 2016, we have agreed to $41.7 million of financing in total in respect of the $50.8 million of remaining capital expenditure requirements, consisting of an additional borrowing capacity of $24.8 million available under a sale and leaseback financing arrangement for Hull No. 1146 and an agreement to issue $16.9 million of preferred equity to an unaffiliated investor in 2018 in respect of Hull No. 1552.

As of December 31, 2016, we had liquidity of $104.8 million consisting of $93.6 million in cash and bank time deposits and $11.2 million in restricted cash, in addition to $41.7 million of financing arrangements.

As of February 17, 2017, the remaining order book of the Company consisted of one newbuild vessel, the Hull No. 1552, which is scheduled to be delivered in 2018.

As of February 17, 2017, the aggregate remaining capital expenditure requirements amounted to $32.4 million, consisting of $5.1 million payable in 2017, and $27.3 million payable in 2018.

As of February 17, 2017, we have agreed to $16.9 million of financing in respect of the $32.4 million of remaining capital expenditure requirements, consisting of an agreement to issue $16.9 million of preferred equity to an unaffiliated investor in 2018 in respect of Hull No. 1552.

As of February 17, 2017, we had liquidity of $114.0 million consisting of $101.9 million in cash and bank time deposits and $12.1 million in restricted cash, in addition to $16.9 million of financing arrangements.

Dividend Policy

The Board of Directors of the Company has not declared a dividend on the Company's common stock for the fourth quarter of 2016. The Company has 99,277,715 shares of common stock issued and outstanding as of February 17, 2017.

The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. The timing and amount of any dividends declared will depend on, among other things: (i) the Company's earnings, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to the Company's growth strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in the Company's existing and future debt instruments; and (v) global economic and financial conditions.

Management Commentary

Dr. Loukas Barmparis, President of the Company, said: "Although the chartering market improved in the last quarter of 2016 from historical lows, it still remains at unprofitable levels. In 2016, we achieved positive operating cash flows supported by our low average daily operating expenses⁵ of $3,698 per vessel which were consistent with our cost reducing efforts throughout the year. We have also improved our liquidity position through an additional public offering of common stock with gross proceeds of $17.2 million in December 2016. At present, a significant part of our fleet is employed in the period time charter market at levels which provide visibility of our cash flows and support cash positive operations for 2017, while maintaining upside potential through 41% of open days for the remainder of 2017. Overall we believe that the Company is well-positioned to withstand continued turbulence that may occur in the chartering market, while remaining well-positioned to take advantage of improved market conditions if the shipping markets turn."

Conference Call

On Friday, February 24, 2017 at 8.00 A.M. Eastern Time, the Company's management team will host a conference call to discuss the Company's financial results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (US Toll Free Dial In), 0(800) 953-0329 (UK Toll Free Dial In) or +44 (0)1452-542-301 (Standard International Dial In). Please quote "Safe Bulkers" to the operator.

A telephonic replay of the conference call will be available until March 3, 2017 by dialing 1 (866) 247-4222 (US Toll Free Dial In), 0(800) 953-1533 (UK Toll Free Dial In) or +44 (0)1452 550-000 (Standard International Dial In). Access Code: 1859591#

Slides and Audio Webcast

There will also be a live, and then archived, webcast of the conference call, available through the Company's website (www.safebulkers.com). Participants in the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Management Discussion of Fourth Quarter 2016 Results

Net loss for the fourth quarter of 2016 was $4.6 million compared to net loss of $29.9 million during the same period in 2015, mainly due to the following factors:

Net revenues: Net revenues increased by 6% to $31.7 million for the fourth quarter of 2016, compared to $29.9 million for the same period in 2015, mainly due to an increase in charter rates. The Company operated 37.00 vessels on average during the fourth quarter of 2016, earning a TCE⁶ rate of $8,936, compared to 36.00 vessels and a TCE rate of $8,251 during the same period in 2015.

Vessel operating expenses: Vessel operating expenses decreased by 7% to $12.6 million for the fourth quarter of 2016, compared to $13.5 million for the same period in 2015, while the average number of vessels increased by 3% to 37.00 vessels, from 36.00 vessels respectively. The decrease in operating expenses is due to a decrease in spares, store and various other operating expenses. Vessel operating expenses for the fourth quarter of 2016 included the cost of two dry-dockings, one of which was completed and partially expensed in January 2017, compared to three during the fourth quarter of 2015.

Impairment loss: Impairment loss amounted to zero for the fourth quarter of 2016, compared to $22.8 million for the same period in 2015, as a result of an impairment loss of $12.9 million due to the classification as Assets held for sale of the vessels Kypros Unity and Stalo, and of the write-off of the advances paid in the amount of $9.9 million following the agreed novation agreement and the novation agreement under negotiation, of the shipbuilding contracts of Hull 1718 and Hull 1552, respectively.

Gain on derivatives: Gain on derivatives was $0.3 million in the fourth quarter of 2016, compared to a gain of $0.7 million for the same period in 2015, as a result of the mark-to-market valuation of the Company's interest rate swap transactions that we employ to manage the risk and interest rate exposure of our loan and credit facilities. These swaps economically hedge part of the interest rate exposure of the Company's aggregate loans outstanding. The average remaining period of our swap contracts was 1.2 years as of December 31, 2016. The valuation of these interest rate swap transactions at the end of each quarter is affected by the prevailing interest rates at that time.

Voyage expenses: Voyage expenses decreased by 50% to $1.5 million for the fourth quarter of 2016 compared to $3.0 million for the same period in 2015, mainly due to a decrease in vessel repositioning expenses as a result of improved market conditions.

Daily vessel operating expenses ⁷ : Daily vessel operating expenses reduced by 9% to $3,711 for the fourth quarter of 2016 compared to $4,072 for the same period in 2015. Daily vessel operating expenses for the fourth quarter of 2016 include the cost of two dry dockings, one of which was completed and partially expensed in January 2017, compared to three during the same period in 2015.

Daily general and administrative expenses ⁷ : Daily general and administrative expenses, which include daily management fees payable to our Managers⁸ and daily costs incurred in relation to our operation as a public company, were reduced by 13% to $1,083 for the fourth quarter of 2016, compared to $1,238 for the same period in 2015.

Interest expenses: Interest expense increased to $5.1 million in the fourth quarter of 2016 compared to $4.2 million for the same period in 2015, as a result of the increase in the weighted average interest rate of our loans and credit facilities.

Unaudited Interim Financial Information and Other Data

About Safe Bulkers, Inc.
The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world's largest users of marine drybulk transportation services. The Company's common stock, series B preferred stock, series C preferred stock and series D preferred stock are listed on the NYSE, and trade under the symbols "SB", "SB.PR.B", "SB.PR.C", and "SB.PR.D", respectively.

Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Exchange Act of 1933, as amended, and in Section 21E of the Securities 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 that 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 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.

¹ Adjusted Net loss is a non-GAAP measure. Adjusted Net loss represents Net loss before loss on sale of assets, loss from inventory valuation, gain/(loss) on derivatives, impairment loss, other operating income/(loss) and gain/(loss) on foreign currency. See Table 1.

² EBITDA is a non-GAAP measure and represents Net income/(loss) plus net interest expense, tax, depreciation and amortization. See Table 1.

³ Adjusted EBITDA is a non-GAAP measure and represents EBITDA before loss on sale of assets, gain/(loss) on derivatives, loss from inventory valuation, impairment loss, other operating income/ (loss) and gain/(loss) on foreign currency. See Table 1.

⁴ Earnings/(loss) per share and Adjusted Earnings/(loss) per share are each non-GAAP measures and represent Net Income/(loss) and Adjusted Net income/(loss) less preferred dividend divided by the weighted average number of shares respectively. See Table 1.

⁵ See Table 2.

⁶ Time charter equivalent rates, or TCE rate, represents the Company's charter revenues less commissions and voyage expenses during a period divided by the number of our available days during such period.

⁷ See Table 2.

⁸ Safety Management Overseas S.A. and Safe Bulkers Management Limited, each a related party referred in this press release as "our Manager" and collectively "our Managers".