Safe Bulkers, Inc., an international provider of marine drybulk transportation services, announced its unaudited financial results for the three month period ended March 31, 2017.
Summary of First Quarter 2017 Results
Net revenue for the first quarter of 2017 increased by 35% to $33.3 million from $24.7 million during the same period in 2016.
Net loss for the first quarter of 2017 was $3.3 million as compared to $17.8 million, during the same period in 2016. Adjusted net loss1 for the first quarter of 2017 was $3.4 million as compared to $14.4 million, during the same period in 2016.
EBITDA2 for the first quarter of 2017 increased to $15.4 million compared to $0.3 million during the same period in 2016. Adjusted EBITDA3 for the first quarter of 2017 increased to $15.2 million from $3.8 million during the same period in 2016.
Loss per share4 and Adjusted loss per share4 for the first quarter of 2017 were $0.07 and $0.07 respectively, calculated on a weighted average number of shares outstanding of 99,284,181, compared to a Loss per share of $0.25 and Adjusted loss per share of $0.21 during the same period in 2016, calculated on a weighted average number of shares outstanding of 83,542,291.
Exchange Offer for Series B Preferred Shares
In April 2017, the Company concluded an exchange offer (the “Exchange Offer”) for any and all of its outstanding 8.00% Series B Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (the “Series B Preferred Shares”). Pursuant to the Exchange Offer, the Company accepted for purchase the 1,106,254 Series B preferred Shares that were validly tendered and not withdrawn, representing 74.46% of the Series B Preferred Shares outstanding prior to the completion of the Exchange Offer. In the aggregate, the Exchange Offer resulted in a cash payment of $24.9 million and the issuance of 2,212,508 shares of common stock to holders of validly tendered and accepted Series B Preferred Shares. As of May 12, 2017, 379,514 Series B Preferred Shares, with an aggregate face value of $9.5 million, remain outstanding.
Fleet and Employment Profile
In January 2017, the Company took delivery of Pedhoulas Rose (Hull No. 1146), a 82,000 dwt, newbuild Kamsarmax class vessel. The delivery installment of $17.4 million was financed by a pre-agreed sale and leaseback arrangement of $24.8 million, which enhanced our liquidity. The lease period is 10 years, with a net daily bareboat charter rate of $6,500, with a purchase obligation for the Company at the end of the 10th year at a price of $14.5 million. The arrangement also includes purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and at predetermined purchase prices. The Company has determined that this sale and leaseback arrangement is a financing transaction, and therefore, the vessel’s cost was recorded under fixed assets and will be depreciated over the vessel’s useful life, and the sale proceeds were recorded as debt on the Company’s balance sheet.
In January 2017, the Company took delivery of Hull No. 1551, a 81,600 dwt, newbuild Kamsarmax class vessel which was subsequently sold to our Chief Executive Officer and Chairman of our Board of Directors, Polys Hajioannou, pursuant to a previously disclosed agreement which had been evaluated and approved by a Special Committee of the Company’s Board of Directors, which committee was wholly comprised of independent members of the Board and advised by independent counsel. The commission of 1% of the contract price payable to the related party management company with respect to the newbuild, was waived in the Company’s favor.
As of May 12, 2017, our operational fleet was comprised of 38 drybulk vessels with an average age of 6.9 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 be comprised 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.
Order book, capital expenditure requirements and liquidity as of May 12, 2017
The remaining order book of the Company consisted of one newbuild vessel, Hull No. 1552, which is scheduled to be delivered in 2018.
The Company’s remaining capital expenditure requirements amounted to $31.9 million, consisting of $4.6 million payable in 2017 and $27.3 million payable in 2018.
We have agreed to finance Hull No. 1552 by issuing $16.9 million of preferred equity of one of our wholly-owned subsidiaries to an unaffiliated investor in 2018.
We had liquidity of $92.8 million, consisting of $80.6 million in cash and bank time deposits and $12.2 million in restricted cash, in addition to $16.9 million of preferred equity financing and the capacity to borrow against one unencumbered vessel.
The Board of Directors of the Company has not declared a dividend on the Company’s common stock for the first quarter of 2017. The Company had 101,503,155 shares of common stock issued and outstanding as of May 12, 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.
Dr. Loukas Barmparis, President of the Company, commented: “Our net revenues increased by 35% reflecting the improved market conditions during the first quarter of 2017, resulting in a substantial decrease of our net loss compared to the same period last year. As our liquidity position has improved, we completed an exchange offer in April for approximately $27.7 million in face value of our 8% Series B Preferred Shares, reducing our future financial obligations with respect to preferred dividend payments.”