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: November 1, 2017

Safe Bulkers, Inc. Reports Third Quarter and Nine Months 2017 Results

Monaco – October 31, 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 nine months period ended September 30, 2017.

Summary of Third Quarter 2017 Results

·

Net revenue for the third quarter of 2017 increased by 38% to $37.3 million from $27.1 million during the same period in 2016.

·

Net income for the third quarter of 2017 was $6.7 million as compared to net loss of $24.5 million, during the same period in 2016. Adjusted net loss ¹ for the third quarter of 2017 was $1.8 million as compared to $9.0 million, during the same period in 2016.

·

EBITDA ² for the third quarter of 2017 amounted to earnings of $27.4 million as compared to a loss of $6.2 million during the same period in 2016. Adjusted EBITDA ³ for the third quarter of 2017 increased by 103% to $18.9 million from $9.3 million during the same period in 2016.

·

Earnings per share ⁴ and Adjusted loss per share ⁴ for the third quarter of 2017 were $0.04 and $0.05 respectively, calculated on a weighted average number of 101,521,234 shares, as compared to a Loss per share of $0.34 and Adjusted loss per share of $0.15 during the same period in 2016, calculated on a weighted average number of 83,601,283 shares.

Summary of Nine Months Ended September 30, 2017 Results

·

Net revenues for the nine months of 2017 increased by 35% to $105.7 million from $78.1 million during the same period in 2016.

·

Net income for the nine months of 2017 was $1.9 million as compared to a net loss of $51.3 million, during the same period in 2016. Adjusted net loss for the nine months of 2017 was $7.1 million as compared to $32.0 million, during the same period in 2016.

·

EBITDA for the nine months of 2017 increased to $59.8 million as compared to $2.5 million during the same period in 2016. Adjusted EBITDA for the nine months of 2017 increased by 133% to $50.8 million as compared to $21.8 million during the same period in 2016.

·

Loss per share ⁴ and Adjusted loss per share for the nine months of 2017 were $0.10 and $0.19, respectively, calculated on a weighted average number of shares of 100,731,192, as compared to loss per share of $0.74 and Adjusted loss per share of $0.51 during the same period in 2016, calculated on a weighted average number of shares of 83,573,418.

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   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, gain on loan write off, early redelivery cost, other operating income, impairment 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, gain on debt extinguishment,  other operating income, early redelivery cost, impairment loss 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 deemed dividend divided by the weighted average number of shares respectively. See Table 1.

Fleet and Employment Profile

As of October 25, 2017, our operational fleet comprised of 38 drybulk vessels with an average age of 7.3 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 October 25, 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 October 25, 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)

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.

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 $9,900.

4)

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.

5)

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.

6)

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 October 25, 2017 was:

Order book, capital expenditure requirements and liquidity as of October 25, 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 $27.8 million consisting of $0.5 million payable in 2017 and $27.3 million payable in 2018.

We had liquidity of $80.2 million, consisting of $69.9 million in cash and bank time deposits and $10.3 million in restricted cash.

In addition we have secured $16.9 million of preferred equity financing for Hull 1552 and have the capacity to borrow against one unencumbered vessel.

Update on the sale and leaseback transactions

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, terminating the relevant bareboat charters representing an annualized cash outflow of $4.7 million. The transaction consummated in September 2017 and the Company financed the acquisition of the vessels through cash on hand and new credit facilities.

The sale and leaseback transaction had been accounted as a financing transaction. The outstanding obligation of these two vessels amounted to $41.8 million as of the transaction date. Deferred finance costs of $1.4 million were written off upon the consummation of the transaction.

Refinancing of loan facilities

In September 2017, we successfully concluded the settlement of $74.9 million loans outstanding at a discount, with a new loan facility of $49.6 million and cash on hand of US$17.1 million, resulting in a net gain on debt extinguishment of $8.2 million.

Dividend Policy

The Board of Directors of the Company has not declared a dividend to its common stock holders for the third quarter of 2017. The Company had 101,526,708 shares of common stock issued and outstanding as of October 25, 2017.

The Company declared in October 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 July 30, 2017 to October 29, 2017 payable on October 30, 2017 to the respective shareholders of record as of October 23, 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: “Highlights of the third quarter include, improvement of our capital structure towards reducing finance costs and our break-even point, continuous reduction of adjusted losses per share in an improving charter market and for the first time after several quarters, earnings per share on unadjusted basis, taking into account the write off of $8.2 million of debt.”   

Conference Call

On November 1, 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 November 10, 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 ( 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 2017 Results

Net income for the third quarter of 2017 was $6.7 million compared to net loss of $24.5 million during the same period in 2016, mainly due to the following factors:

Net revenues: Net revenues increased by 38% to $37.3 million for the third quarter of 2017, compared to $27.1 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 third quarter of 2017, earning a TCE ⁶ rate of $10,419, compared to 36.97 vessels and a TCE rate of $7,637 during the same period in 2016.

Vessel operating expenses: Vessel operating expenses, which include dry-docking cost and initial supplies expenses, increased by 9% to $13.4 million for the third quarter of 2017, compared to $12.3 million for the same period in 2016, as a result of the average number of vessels increasing by 3% to 38.00 vessels, from 36.97 vessels respectively and increased maintenance and spare parts costs partly offset by no dry-docking costs incurred  for the third quarter of 2017, compared to one during the third quarter of 2016.  

Gain on debt extinguishment : In September 2017, the Company entered into a discount settlement agreement with the lenders to prepay and settle loans amounting to $74.9 million at a discount which resulted in a net gain of $8.2 million.  The settlement was funded from a new loan facility of $49.6 million and cash on hand of US$17.1 million.

Interest expenses : Interest expense increased to $6.1 million in the third quarter of 2017, compared to $4.8 million for the same period in 2016, as a result of the increase in the weighted average loan outstanding and the increase in the weighted average interest rate of our loans and credit facilities.

Daily vessel operating expenses ⁵ : Daily vessel operating expenses, which are calculated by dividing vessel operating expenses for the relevant period by ownership days for such period, increased by 6% to $3,830 for the third quarter of 2017 compared to $3,617 for the same period in 2016, due to increased maintenance and spare parts costs.

Daily general and administrative expenses ⁵ : Daily general and administrative expenses, which include management fees payable to our Managers ⁷ decreased by 3% to $1,163 for the third quarter of 2017, compared to $1,196 for the same period in 2016.

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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   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’’.