SOURCE: Safe Bulkers, Inc.

Safe Bulkers, Inc.

November 08, 2010 16:05 ET

Safe Bulkers, Inc. Reports Third Quarter and Nine Months Ended September 30, 2010 Results and Declares Quarterly Dividend

ATHENS, GREECE--(Marketwire - November 8, 2010) - 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-month periods ended September 30, 2010. The Company also declared a quarterly dividend of $0.15 per share for the third quarter of 2010.

Summary of Third Quarter 2010 Results

--  Net revenue for the third quarter of 2010 increased by 11% to
    $40.8 million from $36.9 million during the same period in 2009.
--  Net income for the third quarter of 2010 decreased by 1% to
    $22.0 million from $22.2 million during the same period in 2009.
--  EBITDA(1) for the third quarter of 2010 increased by 8% to
    $28.6 million from $26.5 million during the same period in 2009.
--  Earnings per share for the third quarter 2010 equaled $0.33, calculated
    on weighted average number of shares of 65,874,601, compared to $0.41
    in the third quarter 2009, calculated on weighted average number of
    shares of 54,512,014.
--  Declaration of a dividend of $0.15 per share for the third quarter
    of 2010.

Summary of Nine Months Ended September 30, 2010 Results

--  Net revenue for the nine months ended September 30, 2010 decreased by
    10% to $115.7 million from $128.0 million during the same period in
    2009.
--  Net income for the nine months ended September 30, 2010 decreased by
    45% to $78.5 million from $142.2 million during the same period in
    2009.
--  EBITDA for the nine months ended September 30, 2010, decreased by 40%
    to $95.5 million from $159.2 million during the same period in 2009.
--  Earnings per share for the nine months ended September 30, 2010 equaled
    $1.26, calculated on weighted average number of shares of 62,431,775
    compared to $2.61 in the nine months ended September 30, 2009,
    calculated on weighted average number of shares of 54,509,508.

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

Fleet and Employment Profile

The Company's operational fleet as of September 30, 2010, was comprised of 15 drybulk vessels with an average age of 3.80 years. The Company has contracted for seven additional drybulk newbuild vessels with deliveries scheduled at various times through 2013. The newbuilds consist of three Post-Panamax, two Kamsarmax, one Panamax and one Capesize vessel.

As of November 1, 2010, the contracted employment of the Company's fleet was 85% of fleet ownership days for the remaining days of 2010, 68% for 2011, 58% for 2012 and 52% for 2013, including vessels which will be delivered to us in the future.

In August 2010, we entered into a new period time charter for the Kanaris, a 177,000 dwt Capesize class vessel, for a minimum duration of 12 months and a maximum duration of 14 months, at a gross daily charter rate of $31,000, less 5% total commissions. Upon the completion of this new period time charter, the vessel will commence a 20-year period time charter under a contract the Company entered into in 2008.

In October 2010, we entered into a new period time charter for the Maria, a 76,000 dwt Panamax class vessel, for a duration of 34 months to 36 months, with a forward delivery date in second quarter of 2011, at a gross daily charter rate of $20,250 less 3.5% total commissions.

Dividend Declaration

The Company declared a cash dividend on its common stock of $0.15 per share payable on or about November 26, 2010 to shareholders of record at the close of trading of the Company's common stock on the New York Stock Exchange (the "NYSE") on November 19, 2010.

The Company had 65,876,507 shares of common stock outstanding as of November 1, 2010.

The Board of Directors of the Company is continuing a policy of paying out a portion of the Company's free cash flow at a level it considers prudent in light of the current economic and financial environment. 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) our earnings, financial condition and cash requirements and availability, (ii) decisions in relation to our growth strategies, (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends, (iv) restrictive covenants in our existing and future debt instruments and (v) global financial conditions. We can give no assurance that dividends will be paid in the future.

Management Commentary

Dr. Loukas Barmparis, President of the Company, said: "As we head towards the year end our attention is focused on increasing our charter coverage for future periods. Our charter coverage has reached 85% for the remainder of this year and 68% for 2011. We believe our strong balance sheet provides us with considerable financial flexibility. We continue to monitor market condition for further acquisition opportunities. At the same time, we have paid our tenth consecutive quarterly dividend, in line with our dividend policy."

Conference Call

On Tuesday, November 9, 2010 at 09:00 A.M. EST, 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.

A telephonic replay of the conference call will be available until November 19, 2010 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 Third Quarter 2010 Results

Net income decreased by 1% to $22.0 million for the third quarter of 2010 from $22.2 million for the third quarter of 2009. This decrease is mainly attributable to the following factors:

Net revenues: Net revenues were $40.8 million for the third quarter of 2010, an 11% increase compared to $36.9 million for the third quarter of 2009. Net revenues increased due to an increase in operating days. The Company operated 15.0 vessels on average during the third quarter of 2010, earning a Time Charter Equivalent ("TCE")(2) rate of $29,605, compared to 13.2 vessels and a TCE rate of $30,113 during the third quarter of 2009. The decrease in the TCE rate resulted mainly from lower time charter rates.

Vessel operating expenses: Vessel operating expenses increased 18% to $5.9 million for the third quarter of 2010, compared to $5.0 million for the same period in 2009. The increase is mainly attributed to increased crew, repairs, maintenance and spare parts costs. Such costs increased mainly due to an increase in ownership days to 1,380 or 13% in the third quarter of 2010 from 1,218 in the third quarter of 2009, and higher drydocking costs due to the timing of the drydock. Daily vessel operating expenses for the same periods, increased by 4% to $4,294 for the third quarter 2010, compared to $4,130 for the third quarter of 2009.

Early redelivery income/(cost): During the third quarter of 2010, we recorded $0.2 million of early redelivery cost mainly related to the early termination of a period time charter for our vessel Maria, versus $2.9 million of early redelivery income relating to the early termination of period time charters of our vessels Pedhoulas Leader and Stalo for the same period in 2009. Maria was redelivered early at our request on August 24, 2010, instead of November 30, 2010, the latest agreed redelivery date at the charterer's option, as per the relevant charter party agreement. In connection with the early redelivery of Maria, we paid cash compensation of $0.2 million to the relevant charterer.

(Loss)/Gain on derivatives: Loss on derivatives decreased to $3.9 million in the third quarter of 2010, compared to $6.0 million for the same period in 2009, 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 hedged the interest rate exposure of 89.6% of the Company's aggregate loans outstanding for a weighted average remaining period of swap contracts of 2.3 years as of September 30, 2010. The valuation of these interest rate swap transactions at the end of each quarter is affected by the prevailing interest rates at that time.

Depreciation: Depreciation increased to $5.2 million in the third quarter of 2010, compared to $3.4 million for the same period in 2009, as a result of the increase in the average number of vessels operated by the Company during the third quarter of 2010.

Cash, time deposits & restricted cash: As of September 30, 2010, we had $136.8 million in cash and short-term time deposits, $5.4 million in long-term restricted cash and $50.0 million in a long-term floating rate note. Additionally, we have $24.0 million in an undrawn loan commitment to be secured by our vessel Panayiota K.

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

Management Discussion of the Nine Months Ended September 30, 2010 Results

Net revenues: Net revenues for the nine months ended September 30, 2010, decreased by 10% to $115.7 million from $128.0 million during the same period in 2009. The Company operated 14.4 vessels on average during the first nine months of 2010, earning a TCE rate of $29,583, compared to 12.9 vessels and a TCE rate of $36,241 during the first nine months of 2009.

Net income: Net income for the nine months ended September 30, 2010, was $78.5 million, a decrease of 45% from net income of $142.2 million in the first nine months of 2009. The decrease of $63.7 million is mainly attributed to: (i) early redelivery income of $0.1 million compared to $75.0 million, (ii) zero loss on asset cancellations compared to $20.7 million, (iii) gain on sale of assets of $15.2 million, compared to none, (iv) loss from derivatives of $13.0 million, compared to loss from derivatives of $3.2 million and (v) net revenue of $115.7 million compared to $128.0 million, during the first nine months of 2010 and 2009 respectively.

          Unaudited Interim Financial Information and Other Data


                            SAFE BULKERS, INC.
        UNAUDITED CONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS

                              Three-Month Period      Nine-Month Period
 (In thousands of U.S.        Ended September 30,     Ended September 30,
 Dollars, except for share  ----------------------  ----------------------
 and per share data)           2009        2010        2009        2010
                            ----------  ----------  ----------  ----------
REVENUES:
 Revenues                       37,791      41,599     130,965     117,790
 Commissions                      (885)       (767)     (2,927)     (2,057)
 Net revenues                   36,906      40,832     128,038     115,733

EXPENSES:
 Voyage expenses                  (261)       (184)       (480)       (476)
 Vessel operating expenses      (5,030)     (5,926)    (14,408)    (16,838)
 Depreciation                   (3,409)     (5,242)     (9,952)    (14,252)
 General and administrative
  expenses                      (1,774)     (1,945)     (5,502)     (5,008)
 Early redelivery
  income/(expense)-net           2,887        (193)     74,951         132
 Loss on asset
  cancellations                      -           -     (20,699)          -
 Gain on sale of asset               -           -           -      15,199
 Operating income               29,319      27,342     151,948      94,490


OTHER (EXPENSE) / INCOME:
 Interest expense               (1,941)     (1,754)     (8,819)     (4,771)
 Other finance costs              (143)        (49)       (391)       (183)
 Interest income                 1,025         474       1,866       2,246
 Loss on derivatives            (6,006)     (3,928)     (3,175)    (13,046)
 Foreign currency
  (loss)/gain                      (57)        (16)        903          (6)
 Amortization and write-off
  of deferred finance
  charges                          (38)        (60)        (86)       (215)
 Net income                     22,159      22,009     142,246      78,515
 Earnings per share               0.41        0.33        2.61        1.26
 Weighted average number of
  shares                    54,512,014  65,874,601  54,509,508  62,431,775




                            SAFE BULKERS, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


                                                December 31,  September 30,
 (In thousands of U.S. Dollars)                     2009          2010
                                                ------------- -------------
ASSETS

    Cash, time deposits & restricted cash              76,322       136,791
    Restricted cash                                     6,392             -
    Asset held for sale                                16,969             -
    Other current assets                                5,965         3,822
    Total fixed assets                                467,513       590,448
    Long-term investment                               50,000        50,000
    Restricted cash: non-current                        4,763         5,423
    Other non-current assets                              800           950
    Total assets                                      628,724       787,434

LIABILITIES AND EQUITY

    Current portion of long-term debt                  15,742        25,137
    Liability directly associated with asset
     held for sale                                     34,500             -
    Other current liabilities                          15,309        17,491
    Long-term debt, net of current portion            420,994       472,070
    Other non-current liabilities                      44,960        49,887
    Shareholders' equity                               97,219       222,849
    Total liabilities and equity                      628,724       787,434

                                                ------------- -------------




Fleet Data

                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2009      2010      2009      2010
                                    --------  --------  --------  --------
FLEET DATA
Number of vessels at period end        14.00     15.00     14.00     15.00
Average age of fleet (in years)         3.54      3.80      3.54      3.80
Ownership days (1)                     1,218     1,380     3,529     3,917
Available days (2)                     1,217     1,373     3,520     3,896
Operating days (3)                     1,202     1,372     3,505     3,870
Fleet utilization (4)                   98.7%     99.4%     99.3%     98.8%
Average number of vessels in the
 period (5)                            13.24     15.00     12.93     14.35

AVERAGE DAILY RESULTS
Time charter equivalent rate (6)    $ 30,113  $ 29,605  $ 36,241  $ 29,583
Daily vessel operating expenses (7) $  4,130  $  4,294  $  4,083  $  4,299



(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 RECONCILIATION
(In thousands of U.S. Dollars)

                            Three Months Ended   Nine Months Ended
                              September 30,        September 30,
                            ------------------- -------------------
                              2009       2010      2009      2010
                            --------- --------- --------- ---------
Net Income                     22,159    22,009   142,246    78,515
Plus Net Interest Expense         916     1,280     6,953     2,525
Plus Depreciation               3,409     5,242     9,952    14,252
Plus Amortization                  38        60        86       215
EBITDA                         26,522    28,591   159,237    95,507

EBITDA represents net income before interest, income tax expense, depreciation and amortization. EBITDA is not a recognized measurement under US GAAP. EBITDA assists 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 information. The Company believes that EBITDA is 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, items which may vary for different companies for reasons unrelated to overall operating performance.

EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under US GAAP. EBITDA should not be considered a substitute for net income and other operations data prepared in accordance with US GAAP or as a measure of profitability. While EBITDA is frequently used as a measure of operating results and performance, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.


Fleet Employment Profile as of November 1, 2010

Set out below is a table showing our existing vessels and their contracted
employment.

                                     Charter
                              Year   Rate (a)
Vessel Name             DWT   Built   USD/day   Charter Duration (b)
-----------           ------- ------ ---------- ---------------------
                                         17,750   Sep 2010 - Apr 2011
Maria                  76,000   2003     20,250   Apr 2011 - Apr 2014
                      ------- ------ ---------- ---------------------
Vassos                 76,000   2004     29,000   Nov 2008 - Oct 2013
                      ------- ------ ---------- ---------------------
                                         15,500   Jun 2009 - Jan 2011
Katerina               76,000   2004     20,000   Mar 2011 - Mar 2014
                      ------- ------ ---------- ---------------------
Maritsa                76,000   2005 28,000 (c)   Mar 2010 - Mar 2015
                      ------- ------ ---------- ---------------------
Pedhoulas Merchant     82,300   2006     27,250   Apr 2010 - Apr 2011
                      ------- ------ ---------- ---------------------
Pedhoulas Trader       82,300   2006 41,500 (d)   Aug 2008 - Jul 2013
                      ------- ------ ---------- ---------------------
Pedhoulas Leader       82,300   2007     18,500   Jul 2009 - Nov 2010
                      ------- ------ ---------- ---------------------
Stalo                  87,000   2006     34,160   Mar 2010 - Feb 2015
                      ------- ------ ---------- ---------------------
Marina                 87,000   2006 41,500 (e)   Dec 2008 - Dec 2013
                      ------- ------ ---------- ---------------------
Sophia                 87,000   2007     34,720   Oct 2008 - Sep 2013
                      ------- ------ ---------- ---------------------
Eleni                  87,000   2008 41,640 (f)   Nov 2008 - Mar 2015
                      ------- ------ ---------- ---------------------
Martine                87,000   2009     40,500   Feb 2009 - Feb 2014
                      ------- ------ ---------- ---------------------
Andreas K              92,000   2009     20,500   Nov 2009 - Nov 2010
                      ------- ------ ---------- ---------------------
Panayiota K            92,000   2010     22,750   Apr 2010 - Apr 2011
                      ------- ------ ---------- ---------------------
                                         31,000   Aug 2010 - Aug 2011
Kanaris               177,000   2010     25,928   Aug 2011 - Apr 2031
                      ------- ------ ---------- ---------------------


(a) Either gross charter rate or average gross charter rate for charter
    parties with variable rates among periods or for consecutive charter
    parties with the same charterer under similar basic terms.
(b) Delivery / redelivery dates reflect the Company's best estimates.
    Actual delivery / redelivery dates can differ pursuant to the terms of
    the relevant charter contract.
(c) Five-year variable rate contract, first and second year at $32,000,
    third year at $28,000, and fourth and fifth years at $24,000.
(d) Five-year variable rate contract, first year at $69,000, second year at
    $56,500, third year at $42,000, and fourth and fifth years at $20,000.
(e) Five-year variable rate contract, $61,500 from Dec. 2008 to Mar. 2009,
    $57,500 from Apr. 2009 to Dec. 2009, $52,500 from Dec. 2009 to
    Dec. 2010, $42,500 from Dec. 2010 to Dec. 2011, $32,500 from Dec. 2011
    to Oct. 2012, $31,500 from Oct. 2012 to Dec. 2012 and $21,500 from
    Dec. 2012 to Dec. 2013.
(f) Three contracts in direct continuation, the first from Nov. 2008 to
    Oct. 2009 at $70,000, the second from Oct. 2009 to Mar. 2010 at $66,400
    and the third from Apr. 2010 to Mar. 2015 at $34,160.




The contracted charter coverage, including newbuilds, based on Company's
best estimate as of November 1, 2010, is:

                             2010 (remaining)           85%
                             2011                       68%
                             2012                       58%
                             2013                       52%

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 is listed on the NYSE, where it trades under the symbol "SB". The Company's current fleet consists of 15 drybulk vessels, all built post-2003, and the Company has contracted to acquire seven additional drybulk newbuild vessels to be delivered at various times through 2013.

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 the 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 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
    Tel.: +30 (210) 899-4980
    Fax: +30 (210) 895-4159
    E-Mail: directors@safebulkers.com

    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