SB Safe Bulkers Inc

The contracted employment of fleet ownership days as of October 26, 2016 was:

Capital expenditure requirements and liquidity

As of October 26, 2016, the remaining order book of the Company, excluding the Hull No. 1551 which has been contracted to be sold upon delivery in 2017, consists of two newbuild vessels, the Hull No. 1146 and the Hull No. 1552, which are scheduled to be delivered in 2017 and 2018 respectively.

Proceeds from the agreed sale of Hull No. 1551 fully cover the associated capital expenditure requirements for this vessel.

As of October 26, 2016, the aggregate remaining capital expenditure requirements amounted to $50.5 million, consisting of $28.1 million payable in 2017, and $22.4 million payable in 2018.

We have agreed $41.7 million of financing in total, in relation to $50.5 million of remaining capital expenditure requirements, consisting of an additional borrowing capacity of $24.8 million available under a sale and lease back financing agreement for Hull No. 1146 and of $16.9 million of preferred equity issuance in 2018 for Hull No. 1552 to an unaffiliated investor.

As of October 26, 2016, we had liquidity of $92.0 million consisting of $72.2 million in cash and bank time deposits, $19.8 million in restricted cash, in addition to $41.7 million of financing arrangements.

Dividend Policy

The Board of Directors of the Company has not declared a dividend for the third quarter of 2016. The Company has 83,611,628 shares of common stock issued and outstanding as of October 31, 2016.

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: “During the first nine months of 2016 in the worst part of the shipping cycle we maintained positive cash flows from operations covering our daily vessel operating expenses ¹ including dry docking cost and initial supplies expenses, daily general and administrative expenses ⁵ and interest expense. We have worked over the past year to reduce debt maturities for the following years. We have also substantially reduced our capital expenditures by novating or reselling past relatively expensive new-build contracts. We have partially financed the purchase of the one new-build through the issuance of preferred stock and have arranged a sales and lease back financing for the other. These steps have strengthened the company's liquidity position.”   

Conference Call

On October 31, 2016 at 8:30 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 November 7, 2016 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#

 See Table 2.

Slides and Audio Webcast

There will also be a live, and then archived, webcast of the conference call, available through the Company’s website ( 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 Third Quarter 2016 Results

Net loss for the third quarter of 2016 was $24.5 million compared to net loss of $7.5 million during the same period in 2015, mainly due to the following factors:

Net revenues: Net revenues decreased by 19% to $27.1 million for the third quarter of 2016, compared to $33.5 million for the same period in 2015, mainly due to a decrease in charter rates. The Company operated 36.97 vessels on average during the third quarter of 2016, earning a TCE ⁶ rate of $7,637, compared to 35.98 vessels and a TCE rate of $8,843 during the same period in 2015.

Vessel operating expenses: Vessel operating expenses, which include dry-docking cost and initial supplies expenses, decreased by 19% to $12.3 million for the third quarter of 2016, compared to $15.1 million for the same period in 2015, while the average number of vessels increased by 3% to 36.97 vessels, from 35.98 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 third quarter of 2016 included the cost of one dry-docking, compared to three during the third quarter of 2015.  

Impairment loss: Impairment loss amounted to $17.2 million for the third quarter of 2016, compared to zero for the same period in 2015, as a result of the write off of the installments and other capitalized costs, already paid in respect of Hull No. S835 and Hull No. 1551, following the agreed novation agreement of the shipbuilding contract of newbuild of Hull No. S835 , and the memorandum of agreement for the sale upon delivery of newbuild  Hull No. 1551.

Other operating income: Other operating income amounted to $1.2 million for the third quarter of 2016, compared to zero for the same period in 2015. This mainly represents the amount awarded and paid to the Company under a claim filed in the Japanese courts in connection with the termination in October 2015 by Daiichi Chuo Kisen Kaisha of a ten-year time charter contract of a Company vessel.

Depreciation: Depreciation increased to $12.7 million for the third quarter of 2016, compared to $12.3 million for the same period in 2015, as a result of the increase in the average number of vessels operated by the Company during the third quarter of 2016.

Gain/(loss) on derivatives: Gain on derivatives was $ 0.4  million in the third quarter of 2016, compared to a loss of $1.0 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 are employed 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 1.3 years as of September 30, 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 76% to $1.2 million for the third quarter of 2016 compared to $5.0 million for the same period in 2015, mainly due to a decrease in vessel repositioning expenses caused by lower fuel prices.

Daily vessel operating expense ¹ : Daily vessel operating expenses, which include dry-docking cost and initial supplies expenses, were reduced by 21% to $3,617 for the third quarter of 2016 compared to $4,550 for the same period in 2015, as a result of reduced vessel operating expenses due to continued cost reduction initiatives. Daily vessel operating expenses include the cost of one dry docking completed during the third quarter of 2016 compared to three completed during the same period in 2015.

Daily general and administrative expenses ⁸ : Daily general and administrative expenses, which include daily fixed and variable management fees payable to our Managers ¹ and daily costs incurred in relation to our operation as a public company, were $1,196 for the third quarter of 2016, compared to $1,182 for the same period in 2015.

Interest expenses : Interest expense increased to $4.8 million in the third quarter of 2016 compared to $2.8 million for the same period in 2015, mainly as a result of the four-vessel sale and leaseback transactions concluded in September 2015, which led to the increase in the average outstanding amount of loans and credit facilities and to the weighted average interest rate of such loans and credit facilities.

⁶ 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.

⁴ See Table 2.

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’’.

⁷ 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’’.

EBITDA, Adjusted EBITDA, Adjusted Net Income/(loss), Adjusted Net income/(loss) available to common shareholders and Adjusted Earnings/(loss) per share are not recognized measurements under US GAAP.

Adjusted Net income/(loss) represents Net income/(loss) before loss on sale of assets, loss from inventory valuation, gain/(loss) on derivatives, impairment loss, other operating income  and gain/(loss) on foreign currency. Adjusted Net income/(loss) available to common shareholders represents Adjusted Net income/(loss) less Preferred dividend.

EBITDA represents Net income/(loss) before interest, income tax expense, depreciation and amortization. Adjusted EBITDA represents EBITDA before loss on sale of assets, loss from inventory valuation, gain/(loss) on derivatives, impairment loss, other operating income  and gain/(loss) on foreign currency. EBITDA and Adjusted EBITDA are not recognized measurements under US GAAP. EBITDA and Adjusted EBITDA assist the Company’s management and investors by increasing the comparability of the Company’s fundamental performance from period to period and against the fundamental performance of other companies in the Company’s industry that provide EBITDA and Adjusted EBITDA information. The Company believes that EBITDA and Adjusted EBITDA are useful in evaluating the Company’s operating performance compared to that of other companies in the Company’s industry because the calculation of EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions and the calculation of Adjusted EBITDA generally further eliminates the effects from loss on sale of assets, loss from inventory valuation, impairment loss, other operating income, gain/(loss) on derivatives and gain/(loss) on foreign currency, items which may vary for different companies for reasons unrelated to overall operating performance.

EBITDA, Adjusted EBITDA, Adjusted Net income/(loss), Adjusted Net income/(loss) available to common shareholders and Adjusted Earnings/(loss) per share have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under US GAAP. EBITDA and Adjusted EBITDA should not be considered as substitutes for net income and other operations data prepared in accordance with US GAAP or as a measure of profitability. While EBITDA and Adjusted EBITDA are frequently used as measures of operating results and performance, they are not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.

(1)

Ownership days represents the aggregate number of days in a period during which each vessel in our fleet has been owned by us.

(2)

Available days represents the total number of days in a period during which each vessel in our fleet was in our possession, net of off-hire days associated with scheduled maintenance, which includes major repairs, drydockings, vessel upgrades or special or intermediate surveys.

(3)

Operating days represents the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, excluding scheduled maintenance.

(4)

Fleet utilization is calculated by dividing the number of our operating days during a period by the number of our ownership days during that period.

(5)

Average number of vessels in the period is calculated by dividing ownership days in the period by the number of days in that period.

(6)

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

(7)

Daily vessel operating expenses include the costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys and other miscellaneous items. Daily vessel operating expenses are calculated by dividing vessel operating expenses for the relevant period by ownership days for such period.

(8)

Daily general and administrative expenses include daily fixed and variable management fees payable to our Manager and daily costs in relation to our operation as a public company. Daily general and administrative expenses are calculated by dividing general and administrative expenses for the relevant period by ownership days for such period.

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.

For further information please contact:

Company Contact:

Dr. Loukas Barmparis

President
Safe Bulkers, Inc.

Athens, Greece

Tel.: +30 2 111 888 400

Fax: +30 2 111 878 500

E-Mail: directors@safebulkers.com  

Investor Relations / Media Contact:

Nicolas Bornozis, President

Capital Link, Inc.

230 Park Avenue, Suite 1536

New York, N.Y. 10169

Tel.: (212) 661-7566

Fax: (212) 661-7526

E-Mail: safebulkers@capitallink.com