SB Safe Bulkers Inc

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 27, 2017

Safe Bulkers, Inc. Reports Second Quarter and Six Months 2017 Results

Monaco – July 26, 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 six months period ended June 30, 2017.

Summary of Second Quarter 2017 Results

·

Net revenue for the second quarter of 2017 increased by 34% to $35.0 million from $26.2 million during the same period in 2016.

·

Net loss for the second quarter of 2017 was $1.6 million as compared to $9.0 million, during the same period in 2016. Adjusted net loss ¹ for the second quarter of 2017 was $2.3 million as compared to $8.7 million, during the same period in 2016.

·

EBITDA ² for the second quarter of 2017 increased to $17.0 million as compared to $8.4 million during the same period in 2016. Adjusted EBITDA ³ for the second quarter of 2017 increased to $16.2 million from $8.8 million during the same period in 2016.

·

Loss per share ⁴ and Adjusted loss per share ⁴ for the second quarter of 2017 were $0.07 and $0.07 respectively, calculated on a weighted average number of 101,363,578 shares, compared to a Loss per share of $0.15 and Adjusted loss per share of $0.15 during the same period in 2016, calculated on a weighted average number of 83,571,957 shares.

Summary of Six Months Ended June 30, 2017 Results

·

Net revenues for the six months of 2017 increased by 34% to $68.3 million from $50.9 million during the same period in 2016.

·

Net loss for the six months of 2017 was $4.9 million as compared to $26.8 million, during the same period in 2016. Adjusted net loss ¹ for the six months of 2017 was $5.8 million as compared to $23.0 million, during the same period in 2016.

·

EBITDA ² for the six months of 2017 increased to $32.3 million as compared to $8.7 million during the same period in 2016. Adjusted EBITDA ³ for the six months of 2017 increased to $31.4 million as compared to $12.5 million during the same period in 2016.

·

Loss per share ⁴ and Adjusted loss per share ⁴ for the six months of 2017 were $0.13 and $0.14, respectively, calculated on a weighted average number of 100,329,624 shares, as compared to Loss per share ⁴ of $0.40 and Adjusted Loss per share ⁴ of $0.36 during the same period in 2016, calculated on a weighted average number of 83,557,124 shares.

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

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

Fleet and Employment Profile

As of July 19, 2017, our operational fleet comprised of 38 drybulk vessels with an average age of 7.1 years and an aggregate carrying capacity of 3.4 million dwt. Our 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. Taking into account our last contracted drybulk newbuild Kamsarmax class vessel, scheduled for delivery in 2018, our fleet will comprise of 39 vessels, 11 of which will be eco-design vessels, with an aggregate carrying capacity of 3.5 million dwt, assuming no additional vessel acquisitions or disposals.

Set out below is a table showing the Company’s existing and newbuild vessels and their contracted employment as of July 19, 2017:

1)

The start date represents either the actual start date or, in the case of a contracted charter that had not commenced as of July 19, 2017, the scheduled start date.  The actual start date and redelivery date may differ from the referenced scheduled start and redelivery dates depending on the terms of the charter and market conditions and does not reflect the options to extend the period time charter.

2)

The charter agreement grants the charterer the option to extend the period time charter for an additional 10 to 14 months period at a gross daily charter rate of $9,000.

3)

The charter agreement grants the charterer the option to extend the period time charter for an additional 10 to 14 months period at a gross daily charter rate of $9,000.

4)

The charter agreement grants the charterer the option to extend the period time charter for an additional 10 to 15 months period at a gross daily charter rate of $8,200.

5)

Vessel sold and leased back on a net daily bareboat charter rate of $6,500 for a period of 10 years, for which the Company agreed to exercise its purchase option in September 2017, at a predetermined purchase price.

6)

Vessel sold and leased back on a net daily bareboat charter rate of $6,500 for a period of 10 years, with a purchase obligation at the end of the 10th year and purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and predetermined purchase prices.

7)

The charter agreement grants the charterer the option to extend the period time charter for an additional 10 to 14 months period at a gross daily charter rate of $9,900.

8)

The charter agreement grants the charterer the option to extend the period time charter for an additional 11 to 14 months period at a gross daily charter rate of $10,000.

9)

The charter agreement grants the charterer the option to extend the period time charter for an additional 12 to 16 months period at a gross daily charter rate of $12,500.

10)

The charter agreement grants the charterer the option to extend the period time charter for an additional 12 to 16 months period at a gross daily charter rate of $12,500.

11)

A period time charter of ten years at a gross daily charter rate of $23,100 for the first two and a half years and of $24,810 for the remaining period. In January 2017, the period time charter was amended to reflect substitution of the initial charterer with its subsidiary guaranteed by the initial charterer and changes in payment terms; all other charter terms remained unchanged.  The charter agreement grants the charterer an option to purchase the vessel at any time beginning at the end of the seventh year of the charter, at a price of $39 million less a 1.00% commission, decreasing thereafter on a pro-rated basis by $1.5 million per year.  The Company holds a right of first refusal to buy back the vessel in the event that the charterer exercises its option to purchase the vessel and subsequently offers to sell such vessel to a third party. The charter agreement also grants the charterer the option to extend the period time charter for an additional twelve months at a time at a gross daily charter rate of $26,330, less 1.25% total commissions, which option may be exercised by the charterer a maximum of two times.

The contracted employment of fleet ownership days as of July 19, 2017 was:

Order book, capital expenditure requirements and liquidity as of July 19, 2017

The remaining order book consisted of one newbuild vessel; our wholly-owned subsidiary Pinewood Shipping Corporation has contracted to acquire Hull No. 1552 with scheduled delivery date in 2018 and has agreed to issue $16.9 million of preferred equity to an unaffiliated investor upon delivery.

The remaining capital expenditure requirements amounted to $31.4 million, consisting of $4.1 million payable in 2017 and $27.3 million payable in 2018

We had liquidity of $98.9 million, consisting of $86.7 million in cash and bank time deposits and $12.2 million in restricted cash, in addition to $16.9 million of preferred equity financing and the capacity to borrow against one unencumbered vessel.

Update on the sale and leaseback transaction

In June 2017, we exercised options under the sale and leaseback agreements to purchase two Kamsarmax class vessels at an aggregate predetermined price of $43.8 million. The transaction will consummate in September 2017, and the Company will finance the acquisition of the vessels through cash on hand and committed credit facilities of up to $30.0 million.

The sale and leaseback transaction has been accounted as a financing transaction. Following the exercise of the purchase options, the outstanding obligation of these two vessels, amounting to $43.5 million as of end June 2017, has been included in the current portion of long term debt. Deferred finance costs will be written off upon the consummation of the transaction.

Preferred Shares Exchange offer

In March 2017, the Company announced the commencement of an exchange offer (the “Exchange Offer”) for any and all of its outstanding 8.00% Series B Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share (the “Series B Preferred Shares”). The Exchange Offer expired and was settled in April 2017.

Holders who elected to exchange their Series B Preferred Shares in the Exchange Offer received, for each such Series B Preferred Share, (i) $22.50 in cash and (ii) two newly issued shares of common stock of the Company.

Pursuant to the Exchange Offer, a total of 1,106,254 Series B Preferred Shares were tendered, representing 74.46% of the 1,485,768 Series B Preferred Shares outstanding at the commencement of the Exchange Offer. The Exchange Offer resulted in a cash payment of $24.9 million and the issuance of 2,212,508 shares of common stock to holders of validly tendered and accepted Series B Preferred Shares. Following settlement of the Exchange Offer, 379,514 shares of the Series B Preferred Shares remained outstanding.

The difference of $2.1 million, between (i) the cash paid to the preferred shareholders and the fair value of issued common shares and (ii) the carrying amount of the preferred stock immediately before the exchange net of issuance costs, was recorded as preferred deemed dividend during the second quarter of 2017.

Dividend Policy

The Company has not declared a dividend on the Company’s common stock for the second quarter of 2017. The Company had 101,515,760 shares of common stock issued and outstanding as of July 19, 2017.

The Company declared in July a cash dividend of $0.50 per share on its 8.00% Series B Cumulative Redeemable Perpetual Preferred Shares (NYSE: SB.PR.B), on its 8.00% Series C Cumulative Redeemable Perpetual Preferred Shares (NYSE: SB.PR.C) and on its 8.00% Series D Cumulative Redeemable Perpetual Preferred Shares (NYSE: SB.PR.D) for the period from April 30, 2017 to July 29, 2017 payable on  July 31, 2017 to the respective shareholders of record as of July 24, 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 and leverage 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: ‘‘In the second quarter of 2017, we continued to see improved rates for our new time charters resulting in improved quarterly revenues on a year over year basis. We are also targeting to reduce our financial outflows by refinancing two Kamsarmax vessels which were under a sale and leaseback arrangement”.

Conference Call

On Thursday, July 27, 2017 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 August 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 Second Quarter 2017 Results

Net loss for the second quarter of 2017 decreased to $1.6 million compared to net loss of $9.0 million during the same period in 2016, mainly due to the following factors:

Net revenues: Net revenues increased by 34% to $35.0 million for the second quarter of 2017, compared to $26.2 million for the same period in 2016, mainly due to an increase in charter rates and to a lesser extent an increase in the average number of vessels. The Company operated 38.00 vessels on average during the second quarter of 2017, earning a TCE ⁶ rate of $9,978, compared to 36.00 vessels and a TCE rate of $7,675 during the same period in 2016.

Interest expenses : Interest expense increased to $5.9 million in the second quarter of 2017 compared to $4.9 million for the same period in 2016, as a result of the increase in the weighted average interest rate of our loans and credit facilities.

⁶ Time charter equivalent rates, or TCE rate, represent 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.

Vessel operating expenses: Vessel operating expenses, which include dry-docking cost and initial supplies expenses, increased to $13.5 million for the second quarter of 2017 compared to $12.5 million for the same period in 2016, mainly as a result of the increased average number of vessels by 6% to 38.00 vessels, from 36.00 vessels respectively. Furthermore, vessel operating expenses for the second quarter of 2017 included the cost of three dry-dockings, compared to one dry-docking during second quarter of 2016.  

Daily vessel operating expenses ⁷ : Daily vessel operating expenses which are calculated by dividing vessel operating expenses for the relevant period by ownership days for such period, increased by 2% to $3,893 for the second quarter of 2017 compared to $3,814 for the same period in 2016.

Daily general and administrative expenses ⁷ : Daily general and administrative expenses, which include management fees payable to our Managers ⁸ , increased by 4% to $1,157 for the second quarter of 2017, compared to $1,115 for the same period in 2016.

⁷ See Table 2.

⁸   Safety Management Overseas S.A. and Safe Bulkers Management Limited, each of which is a related party that is referred to in this press release as “our Manager” and collectively “our Managers’’.