Safe Bulkers sees net revenue drop on weak market

SafeBulkers

Safe Bulkers, Inc., an international provider of marine drybulk transportation services, announced its unaudited financial results for the three and twelve month period ended December 31, 2015.

Summary of Fourth Quarter 2015 Results
Net revenue for the fourth quarter of 2015 decreased by 24% to $29.9 million from $39.1 million during the same period in 2014.

Net loss for the fourth quarter of 2015 was $29.9 million as compared to $0.1 million, during the same period in 2014. Adjusted net loss1 for the fourth quarter of 2015 was $7.7 million as compared to Adjusted net income1 of $4.7 million, during the same period in 2014.
EBITDA2 for the fourth quarter of 2015 decreased to $13.1 million loss as compared to earnings of $13.4 million during the same period in 2014. Adjusted EBITDA3 for the fourth quarter of 2015 decreased by 50% to $9.1 million from $18.3 million during the same period in 2014.

Loss per share4 and Adjusted loss per share4 for the fourth quarter of 2015 were $0.40 and $0.13, respectively, calculated on a weighted average number of shares of 83,504,266, as compared to a Loss per share of $0.04 and Adjusted earnings per share of $0.01 during the same period in 2014, calculated on a weighted average number of shares of 83,454,102.

Summary of Twelve Months Ended December 31, 2015 Results
Net revenues for the twelve months of 2015 decreased by 17% to $127.3 million as compared to $154.1 million during the same period in 2014.

Net loss for the twelve months of 2015 was $47.9 million from net income of $14.6 million during the same period in 2014. Adjusted net loss for the twelve months of 2015 was $22.4 million as compared to Adjusted net income of $17.5 million, during the same period in 2014.
EBITDA for the twelve months of 2015 decreased by 80% to $13.5 million as compared to $66.7 million during the same period in 2014. Adjusted EBITDA for the twelve months of 2015 decreased by 44% to $39.1 million as compared to $69.6 million during the same period in 2014.

Loss per share and Adjusted Loss per share for the twelve months of 2015 were $0.74 and $0.44, respectively, calculated on a weighted average number of shares of 83,479,636, as compared to Earnings per share4 (“EPS”) of $0.06 and Adjusted EPS4 of $0.10 during the same period in 2014, calculated on a weighted average number of shares of 83,446,970.

Fleet and Employment Profile
Vessel Deliveries: In January 2016, the Company took delivery of Troodos Sun (Hull No. 1686), a 85,000 dwt, Japanese eco-design newbuild Post-Panamax class vessel. Upon her delivery, the vessel was employed in the spot charter market.

Vessel Sales: In February 2016, subsidiaries of the Company entered into agreements for the sale of the Stalo, an 87,000 dwt Post-Panamax vessel built in 2006, and the Kypros Unity, a 78,000 dwt Panamax vessel built in 2014, to entities controlled by Mr. Hajioannou, our Chairman and Chief Executive Officer. In addition, another company controlled by Mr. Hajioannou assumed the obligations of one of the Company’s subsidiaries under a shipbuilding contract for Hull No. 1718, a 84,000 dwt, Japanese eco-design newbuild Post-Panamax scheduled for delivery in the first half of 2019. Another company controlled by Mr. Hajioannou is currently in negotiations to assume the Company’s obligations under a shipbuilding contract for Hull No. 1552, a 81,600 dwt, Japanese eco-design newbuild Kamsarmax scheduled for delivery in the first half of 2018.

These transactions were negotiated and approved by a Special Committee of the Company’s Board of Directors, composed of the Board’s independent members and advised by independent counsel. The Special Committee was formed and authorized by the Board of Directors of the Company to evaluate and negotiate the transactions when Mr. Hajioannou’s proposal with respect to these proposed transactions was received. The Special Committee obtained two appraisals from independent third party brokers for each of the two vessels and for each of the two newbuildings, and negotiated the terms of the sales of the vessels and the contract novations.

The sale price for the Stalo was $9.0 million in cash, which represents the higher of the two appraisals for that vessel, and the price for the Kypros Unity was $20.0 million in cash, which likewise represented the higher of the two appraisals for that vessel that the Special Committee had obtained. Both vessels are operating in the spot market and expect to be delivered to the buyer in March 2016. The subsidiary of the Company that owns the Kypros Unity has an outstanding loan balance of $16.7 million, net of deferred finance charges, which is secured by the vessel and which will be repaid prior to its delivery to the buyer. The remaining capital expenditure requirements of the Company under the shipbuilding contract for Hull No. 1718 were $28.4 million compared to $26.5 million, the higher of its two appraisals obtained for such newbuild. The sale commissions of 1% of the contract prices payable to the related party management company5 on the three transactions have been waived.
The remaining capital expenditure requirements of the Company under the shipbuilding contract for Hull No. 1552 are $28.5 million.

The sale of the Stalo and of the Kypros Unity and the novation of Hull No. 1718 will result in: (i) a $28.4 million reduction in the Company’s capital expenditure obligations; (ii) a reduction in the Company’s existing indebtedness of $16.7 million, net of deferred finance charges; and (iii) an improvement of $12.3 million in the Company’s liquidity. An aggregate non-cash impairment loss of $22.8 million was recorded as of December 31, 2015, with respect to the sale of the Stalo and of the Kypros Unity; the novation of Hull No. 1718 and the novation under negotiation of Hull No. 1552.

Dividend Policy

The Board of Directors of the Company has not declared a dividend for the fourth quarter of 2015. The Company has 83,522,338 shares of common stock issued and outstanding as of February 5, 2016.

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 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: “We continue to execute on our strategy of further increasing our liquidity and enhancing our financial flexibility to address the historically low charter market conditions. The sale and novation transactions with Mr. Hajioannou announced today will materially reduce our capital expenditure obligations in the near term and our existing indebtedness and significantly improve our liquidity position. These transactions, together with our continued cost reduction initiatives that led us to daily operating expenses for the fourth quarter, including three dry-dockings, of $4,072 and the recently announced refinancing of credit facilities that pushed back balloon payments to 2021 and onwards, create value for our Stockholders, while we maintain sufficient liquidity and financial flexibility to weather this challenging portion of the marine dry bulk shipping cycle and take advantage of the future recovery.”

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