SOURCE: Safe Bulkers, Inc.

August 11, 2008 16:07 ET

Safe Bulkers, Inc. Reports Second Quarter and First Half 2008 Results and Declares Quarterly Dividend

ATHENS, GREECE--(Marketwire - August 11, 2008) - 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, 2008 and declared a quarterly dividend of $0.1461 per share.

Second Quarter 2008 Highlights

--  Net income of $44.5 million, an increase of 28% from $34.8 million in
    the second quarter of 2007, and earnings per share of $0.82, an increase of
    28% from pro forma earnings per share of $0.64 in the second quarter of
    2007.
--  EDITDA(1) of $51.1 million, an increase of 33% from $38.4 million in
    the second quarter of 2007.
--  Net revenue for the second quarter 2008 increased by 48% to $51.4
    million from $34.7 million during the same period in 2007. An average of 11
    vessels were operated during the second quarter of 2008 earning a Time
    Charter Equivalent ("TCE")(2) rate of $52,069 compared to an average 10.03
    vessels and a TCE rate of $37,924 during the second quarter of 2007.
--  Declaration of a pro-rated dividend of $0.1461 per share for the second
    quarter of 2008.
--  In June 2008, completed initial public offering and listing on the New
    York Stock Exchange ("NYSE").
    

First Half 2008 Highlights

--  Net income and earnings per share of $68.1 million and $1.25 per share,
    for the six months ended June 30, 2008 compared to $154.8 million and $2.84
    per share for the six months ended June 30, 2007, which includes $112.4
    million gain on sale of assets in 2007. Net income and earnings per share
    excluding gain on sale of assets increased by 60% from $42.5 million or
    $0.78 per share in the first half of 2007 to $68.1 million or $1.25 per
    share in the first half of 2008.
--  Net revenue for the half year ended June 30, 2008, increased by 55% to
    $100.7 million from $65.0 million during the same period in 2007. On
    average, 11 vessels operated earning a TCE rate of $50,889 in the first
    half of 2008 compared to an average of 10.44 vessels earning a TCE rate of
    $34,348 in the same period in 2007.
--  Adjusted EDITDA(3)of $81.0 million, an increase of 63% from $49.6
    million in the same period of 2007.
    

Dividend Declaration

The Company has declared a cash dividend on its common stock of $0.1461 per share payable on or about August 29, 2008 to shareholders of record at the close of trading of the Company's common stock on the NYSE on August 22, 2008.

The Company's current expectation is to pay a quarterly dividend of $0.475 per share. The dividend announced by the Company today represents the pro rata portion of such amount for the period beginning June 3, 2008 (the date of closing of the Company's initial public offering) through June 30, 2008. The Company has 54.5 million shares of common stock outstanding.

Fleet Expansion and Employment Profile

--  In July 2008, the Company acquired a high-quality Post-Panamax class
    vessel, which, after the delivery of all contracted newbuilds, will
    increase the Company's fleet from 11 vessels currently in service to 20
    vessels by the second half of 2010.
--  In July 2008, the Company announced that it entered into a 10-year time
    charter for a Capesize class vessel with a delivery date during the first
    half of 2010, at a gross daily rate of $40,000 less 1.00% total
    commissions.
--  In August 2008 the Company announced that it entered into a charter
    agreement for a minimum duration of 22 and a maximum duration of 24 months
    for a Panamax class vessel, with a delivery date on about April 2009, at a
    gross daily rate of $73,000 for the first 12 months of the charter term
    followed by $52,500 for the remaining period (an average daily rate of
    $63,000) less 1.25% total commissions.
--  Following the above transactions, as of the day of this press release,
    the Company's operational fleet is comprised of 11 drybulk vessels with an
    average age of 3.23 years. The Company has also contracted for an
    additional 9 drybulk carriers with deliveries scheduled between the second
    half of 2008 and the second half of 2010.
--  As of July 31, 2008, the contracted employment of the Company's fleet
    under period time charters is as follows: 95% of fleet ownership days for
    2008, 89% for 2009 and 65% for 2010. This includes vessels which will be
    delivered to the Company in the future but have already been chartered-out
    as of their delivery date.
    

Management Commentary

Polys Hajioannou, Chairman of the Board of Directors and Chief Executive Officer of the Company, said:

"We are very pleased to announce our first results and to declare our first dividend as a public company. On June 3, 2008, we completed our listing on the NYSE, whereby our founders sold 10 million shares at $19 per share in our successful initial public offering, which is a further strategic milestone in the development of our company.

"During the second quarter 2008, our net income increased by 28% compared to the same period of 2007 reflecting both higher charter rates and a larger fleet size.

"We have benefited from a balanced chartering policy which provides us with a high level of contracted base cash flow, but at the same time allows us to benefit from a continued strong market. Our most recent period time charter for one of our Panamax vessels that we announced earlier this month, at an average daily rate of $63,000 less 1.25% commissions for a period between 22 and 24 months, with nine months forward delivery, demonstrates our ability to develop direct business with the industry's major charterers. It also indicates our commitment to pursue a prudent chartering strategy, as at this strong average daily rate there would be rather limited advantage to keep this vessel open, in pursuit of a further possible spot market upside.

"We have taken advantage of our strong financial position to contract for the acquisition of a high-quality newbuild Post-Panamax class vessel. This vessel acquisition, which we announced in July 2008, will increase our fleet to 20 vessels after the delivery of all contracted newbuilds by the second half of 2010. Given our young and modern fleet, our strong cash flow generation and high time charter coverage, we are confident that we will be able to meet our objectives to profitably grow our business and to increase our distributable cash flow per share in the coming years."

Conference Call

On Tuesday, August 12, 2008 at 10:00 A.M. EDT, the Company's management team will host a conference call to discuss the 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.

In case of any problem with the above numbers, please dial 1 (866) 223-0615 (US Toll Free Dial In), 0(800) 694-1503 (UK Toll Free Dial In) or +44 (0)1452 586-513 (Standard International Dial In). Please quote "Safe Bulkers" to the operator.

A telephonic replay of the conference call will be available until August 19, 2008 by dialling 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 to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Management Discussion of Second Quarter 2008 Results

Net income increased 28% to $44.5 million for the second quarter of 2008 from $34.8 million of the second quarter of 2007. This increase is attributable to the following factors:

Net revenues: Net revenues were $51.4 million for the second quarter of 2008, a 48% increase compared to $34.7 million for the second quarter in 2007 due to an increase both in prevailing charter rates from a TCE of $37,924 to $52,069 and operating days from 913 to 986 for this period. Net revenues for the second quarter 2008 compared to the first quarter 2008 increased by 4% from $49.3 to $51.4 million.

Vessel operating expenses: Vessel operating expenses increased to $4.8 million for the second quarter of 2008, a 50% increase compared to $3.2 million for the same period in 2007. This increase is attributable mainly to:

--  two scheduled dry-dockings undertaken in the second quarter of 2008,
    compared to none in the second quarter of 2007;
--  increased crew wages;
--  an increase in ownership days; and
--  increased insurance cost due to increase of vessels' insured values.
    

The daily vessel operating expenses increased to $4,826 for the second quarter 2008, compared to $3,541 for the second quarter of 2007. Daily vessel operating expenses are influenced considerably by the number of dry dockings during the reported period as the cost of dry dockings is recorded as an expense in the period incurred. During 2008 four dry-dockings are scheduled three of which have already been completed in the first half of 2008 and a fourth is expected to be undertaken in the second half of 2008.

General and administrative expenses: General and administrative expenses increased to $2.5 million for the second quarter of 2008, compared to $0.3 million for the second quarter of 2007, primarily attributable to $1.4 million of largely one-time expenses related to the Company's initial public offering and $0.8 million related to the implementation of new management agreement terms effective on January 1, 2008.

Interest expense: Interest expense increased to $4.2 million in the second quarter of 2008 from $1.6 million for the same period in 2007, attributable primarily to additional indebtedness and conversion of certain existing loans into U.S. dollar currency ("USD"). The weighted average interest rate was 4.165% in the second quarter of 2008, compared to 2.894% in the second quarter of 2007. The weighted average of loans outstanding during the second quarter of 2008 was $401.9 million, compared to $221.9 million during the second quarter of 2007. The higher average indebtedness reflects additional indebtedness to finance vessel acquisitions (including advances for newbuildings) and indebtedness used for general corporate purposes, including dividends.

(Loss) / Gain on derivatives: Gain on derivatives increased to $7.2 million in the second quarter of 2008 compared to a loss of $0.5 million for the same period of 2007, as a result of the mark-to-market valuation of certain interest rate swap transactions. At the end of the second quarter of 2008 there were seven interest rate swap transactions outstanding, while none were outstanding at the end of the second quarter of 2007. Through these interest rate swaps, the Company has effectively hedged the interest rate exposure of approximately 66% of its aggregate loans outstanding. The valuation of these interest rate swap transactions at the end of each quarter is affected by the prevailing long term interest rates at that time.

Foreign currency gain / (loss): The effect of foreign currency exchange differences on loans denominated in foreign currencies was diminished in the second quarter of 2008 as most loans have been converted to USD.

(1) EBITDA represents net income plus interest expense, tax, depreciation and amortization. See "EBITDA Reconciliation."

(2) Refer to definition of "TCE" in Note 6 of Fleet Data Table.

(3) Adjusted EBITDA represents EBITDA after giving effect to the removal of the gain on sale of assets of $112.4 million for the six months ended June 30, 2007. See "EBITDA Reconciliation."

Unaudited Interim Financial Information and Other Data


                            SAFE BULKERS, INC.
      COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
               FOR THE PERIODS ENDED JUNE 30, 2007 AND 2008


                              Three Months Period     Six Months Period
                                    Ended                   Ended
                            ----------------------  ----------------------
(In thousands of U.S.
 Dollars except for share    June 30,    June 30,    June 30,    June 30,
 and per share data)           2007        2008        2007        2008
                            ----------  ----------  ----------  ----------
REVENUES:
 Revenues                       36,069      53,388      67,524     104,639
 Commissions                    (1,331)     (1,990)     (2,499)     (3,914)
 Net revenues                   34,738      51,398      65,025     100,725
EXPENSES:
 Voyage expenses                  (113)        (58)       (106)       (117)
 Vessel operating expenses      (3,233)     (4,832)     (5,925)     (8,827)
 Depreciation                   (2,280)     (2,585)     (4,357)     (5,170)
 General and administrative
  expenses - Management
  fee to related party            (260)     (2,511)       (513)     (4,717)
 Early redelivery cost               -        (197)    (14,882)       (565)
 Gain on sale of assets              -           -     112,360           -
 Operating income               28,852      41,215     151,602      81,329

OTHER (EXPENSE) / INCOME:
 Interest expense               (1,626)     (4,239)     (3,270)     (8,273)
 Other finance costs               (27)        (77)        (81)       (160)
 Interest income                   340         205         551         582
 (Loss) / gain on
  derivatives                     (525)      7,160        (484)      4,568
 Foreign currency gain /
  (loss)                         7,825         234       6,575      (9,925)
 Amortization and write-off
  of deferred finance charges      (19)        (18)        (81)        (44)
 Net income                     34,820      44,480     154,812      68,077
 Pro form earnings per share      0.64           -        2.84           -
 Pro forma weighted average
  number of shares(4)       54,500,000           -  54,500,000           -
 Earnings per share                  -        0.82           -        1.25
 Weighted average number of
  shares                             -  54,500,000           -  54,500,000

(4) Gives retroactive effect to the shares issued to Vorini Holdings Inc. in connection with our initial public offering.


                            SAFE BULKERS, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                AS OF DECEMBER 31, 2007 AND JUNE 30, 2008

                                                  December 31,   June 30,
 (In thousands of U.S. Dollars)                       2007        2008
                                                  ------------ -----------
ASSETS

  Total current assets                                  98,883      26,024
  Total fixed assets                                   308,340     347,080
  Other noncurrent assets                                  434       8,165
  Total assets                                         407,657     381,269

LIABILITIES AND EQUITY

  Current portion of long-term debt                     16,620      18,328
  Long-term debt, net of current portion               306,267     388,096
  Other liabilities                                     30,372      27,705
  Shareholders equity/(deficit)                         54,398     (52,860)
  Total liabilities and equity                         407,657     381,269




Fleet Data

                                    Three Months Ended   Six Months Ended
                                          June 30,           June 30,
                                      2007      2008      2007      2008
                                    --------  --------  --------  --------

FLEET DATA
Number of vessels at period's end      11.00     11.00     11.00     11.00
Weighted average age of fleet (in
 years)                                 2.11      3.12      2.11      3.12
Ownership days (1)                       913     1,001     1,890     2,002
Available days (2)                       913       986     1,890     1,977
Operating days (3)                       913       986     1,890     1,970
Fleet utilization (4)                  100.0%     98.5%    100.0%     98.4%
Average number of vessels in the
 period (5)                            10.03     11.00     10.44     11.00
AVERAGE DAILY RESULTS
Time charter equivalent rate (6)    $ 37,924  $ 52,069  $ 34,348  $ 50,889
Daily vessel operating expenses (7) $  3,541  $  4,826  $  3,135  $  4,409

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

(2) Available days represent 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 represent 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 rates, or TCE rates, represent our charter revenues less commissions and voyage expenses during a period divided by the number of our available days during the 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 by ownership days for the relevant period.


EBITDA AND ADJUSTED EBITDA RECONCILIATION
(In thousands of U.S. Dollars)

                                 Three Months Ended     Six Months Ended
                                       June 30,             June 30,
                                   2007       2008      2007        2008
                                 -------    -------   -------     -------

Net Income                        34,820     44,480   154,812      68,077
Plus Net Interest Expense          1,287      4,034     2,719       7,691
Plus Depreciation                  2,280      2,585     4,357       5,170
Plus Amortization                     19         18        81          44
EBITDA                            38,406     51,117   161,969      80,982
Less Gain from Sale of Assets          -          -  (112,360)          -
Adjusted EBITDA                   38,406     51,117    49,609      80,982

EBITDA represents net income plus net interest expense, tax, depreciation and amortization. The Company's management uses EBITDA as a performance measure. The Company believes that EBITDA is useful to investors, because the shipping industry is capital intensive and may involve significant financing costs.

Adjusted EBITDA represents our EBITDA after giving effect to the removal of the gain on sale of assets for the relevant periods. Adjusted EBITDA assists our management and investors by increasing the comparability of our fundamental performance with respect to our vessel operation, without including the gains we have received through the sale of assets during the relevant periods. We believe that this removal of the gain on sale of assets allows us to better illustrate the operating results of our vessels for the periods indicated.

EBITDA and Adjusted EBITDA is not an item recognized by GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a Company's operating performance required by GAAP. The Company's definition of EBITDA and Adjusted EBITDA may not be the same as that used by other companies in the shipping or other industries. The Company excluded gain on sale of assets to derive an adjusted EBITDA figure as gain on sale is a non-recurring item.

Fleet Employment Profile as of July 31, 2008

Set out below is a table showing our vessels and their contracted employment. The contracted charter coverage based on the Company's best estimate with respect to charter duration as of July 31, 2008 is:

                        2008                     95%
                        2009                     89%
                        2010                     65%

This includes vessels that will be delivered to us in the future but have already been chartered-out as of their delivery date.



                            Year   Shipyard    Charter     Time Charter
Vessel Name          Dwt   Built(a)(Country)    Rate(b)     Duration(c)
                   ------- ------- --------- ----------- -----------------
                                               ($/day)
Panamax class

MV Efrossini        76,000    2003     Japan  69,600(1st)Feb 2008-Feb 2011
                                              59,600(2nd)
                                              49,600(3rd)

MV Maria            76,000    2003     Japan  67,000(1st)Feb 2008-Feb 2011
                                              46,000(2nd)
                                              46,000(3rd)


MV Vassos           76,000    2004     Japan  43,000     Oct 2007-Nov 2008
                                              OPEN(g)    Dec 2008
                                              29,000     Jan 2009-Jan 2014


MV Katerina         76,000    2004     Japan  62,000     Feb 2008-Mar 2009
                                              73,000     Apr 2009-Mar 2010
                                              52,500     Apr 2010-Feb 2011

MV Maritsa          76,000    2005     Japan  53,500     Jan 2008-Feb 2009
                                              OPEN(g)    Mar 2009-Jan 2010
                                              28,000(d)  Feb 2010-Feb 2015


Kamsarmax class

MV Pedhoulas
 Merchant           82,300    2006     Japan  38,500     Nov 2007-Nov 2008
                                              75,000(e)  Nov 2008-Nov 2009

MV Pedhoulas Trader 82,300    2006     Japan  76,500     June2008-July2008
                                              69,000(1st)July2008-July2013
                                              56,500(2nd)
                                              42,000(3rd)
                                              20,000(4th)
                                              20,000(5th)

MV Pedhoulas Leader 82,300    2007     Japan  36,750     Dec 2007-Dec 2009


Post-Panamax class

MV Stalo            87,000    2006     Japan  48,500     July2007-Aug 2009
                                              OPEN(g)    Sept2009-Mar 2010
                                              34,160     Apr 2010-Mar 2015

MV Marina           87,000    2006     Japan  72,200     June2008-Aug 2008
                                              OPEN(g)    Sept2008-Nov 2008
                                              61,500(1st)Dec 2008-Dec 2013
                                              51,500(2nd)
                                              41,500(3rd)
                                              31,500(4th)
                                              21,500(5th)

MV Sophia           87,000    2007     Japan  89,500     July2008-Aug 2008
                                              OPEN(g)    Sept2008-Oct 2008
                                              34,720     Nov 2008-Nov 2013


NEWBUILDS

Kamsarmax class

Hull no. 2054       81,000 Q1,2010     Korea  OPEN(g)

Hull no. 2055       81,000 Q2,2010     Korea  OPEN(g)


Post-Panamax class

MV Eleni            87,000  Nov 08     Japan  70,000     Nov 2008-Oct 2009
                                              66,400     Oct 2009-Mar 2010
                                              34,160     Mar 2010-Mar 2015

MV Martine          87,000  Jan 09     Japan  40,500     Jan 2009-Jan 2014

Hull no. 1039       92,000 Q3,2009     Korea  OPEN(g)

Hull no. 1050       92,000 Q1,2010     Korea  OPEN(g)

[TBD] (f)          90,000+ H2,2010      (f)   OPEN(g)


Capesize class

MV Pelopidas       176,000 Q1,2010     China  40,000     H1 2010-H1 2020

MV Kanaris         176,000 Q1,2010     China  OPEN(g)    Q1 2010-Oct 2011
                                              25,928     Nov 2011-Nov 2031



(a) For newbuilds, the dates shown reflect the expected delivery dates. Q and H followed by a number denote the relevant quarter or half year respectively.

(b) Numerical notation adjacent to the charter rate denotes the year in which this is applicable.

(c) Stated delivery / redelivery dates could alter according to charter contract and reflect company's best estimate as of July 31, 2008.

(d) Average rate quoted among various options which could alternatively be exercised.

(e) Charterer holds option to extend charter duration to five years, in which case the average rate will be $45.000.

(f) Information not disclosed.

(g) Vessel is available for new charter party contracts either in the spot or in the period time charter market.

About Safe Bulkers, Inc.

The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly grain, iron ore and coal, along worldwide shipping routes for some of the world's largest users of marine drybulk transportation services. The Company's common stock is listed on the NYSE where it trades under the symbol "SB." The Company's fleet consists of 11 drybulk vessels, all built post 2003, and the Company has contracted to acquire an additional nine drybulk newbuild vessels to be delivered at various times beginning in the second half of 2008 through 2010.

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 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 are not limited to the ability to satisfy the closing conditions of the acquisition, 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.

Contact Information

  • For further information please contact:

    Company Contact:
    Dr. Loukas Barmparis
    President
    Safe Bulkers, Inc.
    Athens, Greece
    Telephone: +30 (210) 895-7070

    Investor Relations / Media Contact:
    Ramnique Grewal
    Vice 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