-- 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 80,982EBITDA 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