Safe Bulkers (NYSE:SB) reported first-quarter financial results on Thursday. The transcript from the company's first-quarter earnings call has been provided below.

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View the webcast at https://newsite-safebulkers.irwebpage.com/webcast_2026-1Q.html

Summary

Safe Bulkers Inc reported an increased EPS of $0.18 for Q1 2026, up from $0.05 in the same period last year, with revenues benefiting from higher charter hires.

The company declared an increased dividend of $0.06 per share and expanded its investor base with a parallel listing on Euronext Athens.

Strategic initiatives include the renewal of its fleet with new builds and the sale of older vessels, as well as environmental upgrades for improved fuel efficiency.

Safe Bulkers anticipates a 2-3% growth in dry bulk demand for 2026 and continues to focus on maintaining a competitive fleet with a lower average age than the industry.

The company maintains strong financial flexibility with significant liquidity and a healthy balance sheet, supporting sustainable growth and shareholder returns.

Full Transcript

OPERATOR

Thank you for standing by, ladies and gentlemen, and welcome to Safe Bulkers Inc's conference call for the first quarter 2026 financial results. We have with us today Mr. Polys Hajioannou, Chairman and Chief Executive Officer, Dr. Lucas Barbaris, President, and Mr. Konstantinos Adamopoulos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There'll be a presentation followed by a question and answer session, at which time if you wish to ask a question, please press Star one on your telephone keypad and wait for your name to be announced.

Following this conference call, if you need any further information on the conference call or on the presentation, please contact Capital Link at 212-661-7566. I must advise you that this conference call is being recorded today. The archived webcast of the conference call will soon be on Safe Bulkers' website at www.safebulkers.com. Many of the remarks today contain forward-looking statements. Based on current expectations, actual results may differ materially from results projected from those forward-looking statements.

Additional information concerning factors that can cause actual results to differ materially from those in the forward-looking statements is contained in the first quarter 2026 earnings release available on Safe Bulkers' website again at www.safebulkers.com. I would now like to turn the conference call over to one of our speakers today, the Chairman and CEO of the company, Mr. Polys Hajioannou. Please go ahead, sir.

Lucas Barbaris, President

Good morning to all. I will do the talking. I'm Lucas Barbaris, President of Safe Bulkers, and I'm welcoming you all to our quarterly results presentation. During the first quarter of 2026, we operated in an improved charter market environment compared to the same period in 2025, with increased revenues due to higher charter hires and slightly increased earnings from standard fitted vessels. The dry bulk market witnessed increased market volatility mainly due to geopolitical factors.

The increase of dividend to $0.06 per common share and the opportunity to access European investors through the parallel listing in Euronext Athens, a platform of eight stock exchanges in Europe, are the two highlights of the previous period. In the first quarter of 2026, we increased our EPS to $0.18 from an EPS of $0.05 for the same period last year. While we declared $0.06 per share for dividend and continued the renewal of our fleet with four new builds and the sale of our oldest Kamsarmax and our oldest Panamax vessels.

Following a comprehensive review of the forward-looking statements language presented in slide 2, let us proceed to examine the supply side dynamics in Slide 4. The dry bulk fleet is projected to grow by about 4% in 2026 due to stable new deliveries, with fleet growth estimated to be highest for the Panamax segment. About 30% of the dry bulk fleet is over 15 years old. The total book now stands at about 30% of the fleet. The forecast for dry bulk supply as per BIMCO is to grow 2% in 2026 in the open state of Cornwall scenario versus 1% growth in case of a closure.

For reference, about 1% of dry bulk capacity is currently tracked in base and Gulf asset prices remain elevated in line with the current freight market. Currently, about 10% of ship capacity in the dry bulk order book will be able to use alternative fuels upon delivery. However, the dual fuel order book remains small in the dry bulk segment. The postponement of the adoption of the global fuel standard by IMO, as well as recent discussions, may move the path on decarbonization towards more pragmatic solutions.

In our total order book and 24 phase three basis plates since 2020, we do have two dual fuel new builds on order with deliveries in Q1 2027, able to operate with fossil fuels until alternative fuels become available and economically viable. Hedging for the increased more freeze and carbon intensity limits of the fuel EU regulation after 2030 and the potential adoption of new regional or global regulations, Safe Bulkers now counts the two phase three vessels on the water, all delivered from 2022 onwards.

In addition, 21 vessels have undergone environmental upgrades and 11 vessels are echo incorporating superior fuel efficiency characteristics. Approximately 80% of our fleet is Japanese-built compared with a global average of roughly 40%, underscoring our focus on construction quality, asset durability, reserve value, and fuel efficiency. We also underline the improved quality of our Chinese ships, which incorporate improvements in durability and fuel efficiency.

Our average fleet age of 10.5 years is approximately 2 years younger than the global fleet average of 12.5 years, strengthening our competitive position in terms of operational performance and fuel consumption. Our commercial competitiveness will strengthen as we will be taking delivery of our remaining order book of 11 phase 3 vessels by 2029. Safe Bulkers' fleet is expected to comprise of 45% phase 3 vessels, positioning us favorably to compete based on fuel efficiency while the shipbuilding capacity will continue to be constrained, leading to longer lead times.

Moving on to slide five, we present an overview of the demand and basic commodities trade. The global GDP growth expectations from 2026 and 2027, as reflected in the IMF's April forecast, call for a growth around 3% in the coming years, accompanied by gradual control of inflationary pressures. BIMCO forecasts a global dry bulk demand growth of about 3% in 2026 on the open formula scenario. Cargo volumes are projected to expand about 2% in 2026. Iron ore demand is expected to grow up to 3% in 2026 in the open Hormuz scenario.

Lower prices driven by increased exporter output effectively stimulate trade and enhance competitiveness versus a lower grade domestic Chinese supply. However, increased Chinese port inventories may soften import demand in the second half of 2026. Coal shipments are projected to decline by 1 to 2% in 2026. The International Energy Agency expects global coal demand to fall by 1.5% between 2025 and 2027, with coal imports declining up to 4%. Chinese demand is projected to fall by 1.5%, while India and Asian regions remain growing pockets.

Thermal coal trade is weakening. Coking coal remains relatively resilient. However, the growth for moose has reversed short term this coal trend and Chinese SIPOT have supported trade. Grains remain the strongest performing major bulk, with shipments estimated to grow about 5% in 2026 in the open Hormuz scenario. Strong crop harvests in the US, EU, Argentina, Russia, and Brazil underlie this growth. However, China's policy push towards greater self-sufficiency and reduced soy meal usage presents a downside risk.

Minor bulk growth in an open Hormuz scenario is expected to be quite strong for 2026. Energy transition-related demand remains supportive, though bauxite trade growth may moderate due to China's aluminum production gap. Fertilizer demand continues to be a key factor affected by the Hormuz closing, as China remains a central shrink factor for dry bulk. Its broader economic economy, strong exports offset weaker domestic demand, still being affected by property sector crisis and manufacturing overcapacity.

Its GDP is forecasted to grow by 4.4% in 2026. The great tensions between the US and China, although a truce has been reached and recently reaffirmed, remain a key source of global economic uncertainty. Domestic production policy and coal and grain import substitution strategies represent downside risk to Safe Bulkers' trade. India continues to perform and is projected to experience the fastest growth among major economies, with a forecasted 6.5% GDP increase in 2026.

Its expanding domestic market and manufacturing sector may continue positively to the dry bulk demand, with infrastructure investments playing a vital role. Following its decisive supermajority victory in the February snap elections, the Japanese government has secured a strong political mandate to implement a more proactive fiscal strategy aimed at accelerating Japan's transition from prolonged deflation to sustainable growth. This approach includes targeted fiscal stimulus and public investments to boost demand and sustain economic momentum.

Summing up the supply-demand equilibrium in Slide 6, in the open Hormuz scenario, the supply growth is expected to be 2% by 50-month growth of 3% for 2026. The freight market has shown strength during 1Q26 and continues to be healthy to date, with Cape Spot at about 32,000 and Panama Spot at about 20,000. In relation to our Cape size class vessels, all seven were chartered under period time charters with an average remaining charter duration of 1.7 years and an average daily charter hire of about 24.6 thousand, topping 110 million in contract revenue backlog from Cape alone.

Moving to Slide 8, we are proud that Safe Bulkers has become the first receiving company with common stock traded on both NYSE and Euronext Athens. The Euronext platform provides access to European capital markets, including Oslo, Milan, Paris, Brussels, Amsterdam, Dublin, Lisbon, and Athens. By listing our common stock on the main market of the regulated securities method of regulatory Euronext Athens, we aim to broaden and diversify our shareholders' base, expand the pool of institutional and retail investors with European markets, reinforce our long-term strategy, positioning and governance profile, and offer to all European investors direct access to a premium municipal governed blue-chip maritime company. Moving to slide 9 for an overview of our quarterly highlights, we need to point out that we have declared our 18th consecutive quarterly dividend and increased it to $0.06 per share, representing the expected 3.7% dividend yield at current share levels. At the same time, our free cash flow continues to finance our viability program. We maintain our equity and capital exposures of about 3,374,000,000 and comparable leverage of 34%.

We had 74.4 million of net revenues, and we do have an active 10 million share repurchase program. Since January, we placed orders for five Kamsarmax Phase 3 new builds and one Cape size new build, and we sold out all the spot Panamaxes and all the Kamsarmaxes, as well as one of our Cape size class vessels. Lastly, we issued our 2025 ESG report reflecting the company's continued commitment to proactively managing environmental risks and supporting the communities in which we operate.

Meeting stakeholders' expectations in Slide 10, we present our returns to shareholders of 95 million paid in common dividends and 78 million paid in common share repurchases since 2022, reflecting our consistency in generating sustainable returns across market fluctuations. Because of our track record, hands-on management, and our resilient business model. Concluding the company update in slide 11, we present our fundamentals. Safe Bulkers is a dry bulk company with 657 million market cap, 45 vessels on the water having 300 million scrap value.

We maintain significant firepower with 167 million cash, 208 million in undrawn RCFs, and 240 million borrowing capacity. Against our significant order book of 11 new builds mainly in Japanese shipyards, we focus on our majority Japanese-built fleet advantage on fleet energy efficiency and lower CO2 taxation reflected in our CII rating of zero vessels on the bottom rating of E category. We maintain a young, technologically advanced fleet, strong balance sheet, comfortable leverage, and low net debt per vessel of $8.1 million for a 10.5 years old model fleet.

We have built a resilient business model with cash flow visibility of $161 million in revenue, backlog health expansion for a sizable fleet that achieves scale and a healthy 3.7% annualized dividend yield position to leverage on its fuel efficiency. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly finance overview.

Konstantinos Adamopoulos, CFO

Thank you, Lucas, and good morning to everyone. During the first quarter of 2026, we operated in an improved cycle market environment compared to the same period in 2025, with increased revenues due to higher charter hires and slightly increased earnings from scrapper fitted vessels. Moving on to Slide 13 with our quarterly financial highlights for the first quarter of 2026 and compared to the same period of 2025. Our adjusted EBITDA for the first quarter of 2026 stood at 40.7 million compared to 29.4 million for the same period in 2025.

Our adjusted EPS for the first quarter of 2026 was $0.18, calculated on a weighted average number of 100.2 million shares compared to $0.05 during the same period in 2025, calculated on a weighted average number of 105.1 million shares on the top graph. During the first quarter of 2026, we operated 45 vessels on average, earning an average TCE of $17,095 compared to the operation of 46 vessels earning an average TCE of $14,655 during the same period last year.

Our daily vessel OPEX decreased by 9% to $5,223 for the first quarter 2026 compared to $5,765 daily. Vested operating expenses excluding drydocking and pre-delivery expenses also decreased by 7% to $5,147 for the first quarter of 2026 compared to $5,546 for the same period in 2025. Moving to Slide 14 with a quick overview of our quarterly operational highlights for the first quarter of 2026 compared to the same period of 2025. Now let's continue to Slide 15 where we present our balance sheet analysis, noting that assets are presented in their book value, strong liquidity, and ample cash reserves provide significant financial flexibility to navigate market volatility. The company maintains a healthy balance sheet supported by a robust equity base and conservative leverage levels. Our capital structure positions the company for sustainable long-term growth and resilience. Let's now focus on our liquidity, our cash flows, and our capital structure as they are presented in slide 15. We maintain a comfortable leverage of 84%. Our debt remains comparable to our fleet's scrap value, although our fleet is just 10.5 years old on average.

Our weighted average interest rate stood at 5.15% for our consolidated debt, with a portion of 100 million euros being fixed at 2.95% coupon in an unsecured five-year bond. We have paid a considerable part of our capex in relation to our outstanding order book. Our liquidity and capital resources stand strong at approximately 374 million, which together with a contracted revenue of about 164 million gives a total of $538 million, and this is more than double our outstanding CAPEX.

This provides flexibility to our management in capital allocation. Furthermore, we have additional borrowing capacity in relation to one existing unencumbered vessel and 10 new builds upon their delivery. We ensure that our capital expenditure is adequately covered by our contracted future revenues and fortifying our balance sheet towards a trajectory of sustainable growth. Concluding our presentation in slide 17, we present our daily free cash flow for the first three months of 2026, illustrating the company's ability to generate free cash flows highlighting disciplined cost control and efficient vessel operations.

We would like to highlight that based on our financial performance, the company's Board of Directors declared an increased 6 cent dividend per common share. The company is maintaining a healthy cash position of about $167 million as of June 12 and another $208 million in undrawn located facilities, a combined liquidity and capital resources of $375 million and a contracted revenue of $161 million. This underscores our capacity to support debt service, reinvestment, and shareholder returns at the same time, which enable us to expand the fleet, build a resilient company, and create long-term prosperity for our shareholders.

Thank you for your attention, and we're now ready for the Q and A session.

OPERATOR

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Elias Papakaizo with Pariah Securities. Please proceed.

Elias Papakaizo, Pariah Securities

Hi everyone, and congrats on a great quarter. I wanted to ask you about your fixed charter coverage. Are you close to where you would like to be for the remainder of 2026, or should we expect any further increases or changes in charter coverage?

Lucas Barbaris, President

Yes. Look, the chartering of the vessels is done in a way that accommodates market conditions. So we have been experiencing a very strong quarter. As we talk in the second quarter, the number of spot vessels have been increasing. To take advantage of the current squeeze in future quarters, especially towards the last quarter of 2026, the company will be looking to lock in on longer-term contracts, usually on our type of vessels. Those are around 12 months on the Kamsarmaxes and around 24 or 36 months on the Cape sizes.

So for the time being, we try to enjoy the positive spot market.

Elias Papakaizo, Pariah Securities

Absolutely. My next question is about the LNG facility disruptions in Qatar. Back in March, Iranian attacks knocked out 17% of Qatar's LNG export capacity for over two years. As a result, we would expect to see some solid support to steam coal trade in both 2026 and 2027. Is this fair to assume?

Lucas Barbaris, President

I think it's fair to assume. We already see, especially from Australia and Indonesia, the amount of cargo we have seen in the last two to three months has been substantial. And this is helping the market in the Pacific reach levels on the BKI average of around 20 to $22,000 a day. Of course, there will be volatility on those numbers, but there is a lot of coal cargo in the Far East for the reason you mentioned. Now, if this state of Hormuz opens after a few weeks or a couple of months, things get normalized.

Still, we expect that LNG will start coming out, but in a smaller quantity than the one before the war. So some of that capacity will be lost for a number of quarters or for a couple of years. So we expect that coal will be in demand in the subsequent couple of years.

Elias Papakaizo, Pariah Securities

Great. And one last question. If everything, I mean we should see substantial benefit from reconstruction activity in Iran. It's probably too early to tell, but if you could make a comment about it, it would be really helpful.

Lucas Barbaris, President

Yes, I think this will be particularly positive for handy size and Supramax vessels, Ultramax vessels. It's not so much affecting the Kamsarmax or Panamax vessels. But of course, when you see Supramax levels at a healthy level, Supramax and Ultramax is one type of cargo that is sitting part of the cargoes of Kamsarmax when the market is not good. So when they have their own extra demand, this will be keeping them busy on that front. Also, we expect the rush of a lot of fertilizer cargoes out of the Persian Gulf that have been stuck there for the last three or four months.

This will help also the Kamsarmax market as well as the Ultramax market. So if we see the smaller ships improving and getting more cargo, this can only be good. Also for the Kamsarmax. If you see right now, they are all earning about the same around $20,000 a day comfortably on the spot market. Maybe the modern Ultramax are earning around $25,000 a day and the modern Handys are earning around $18,000 a day. So these are very healthy levels, and we expect that any sort of reconstruction in Iran will boost that trade.

Of course, it remains to be seen the details of the agreement risk between the United States and Iran, how much of the sanctions will be removed, and how much of foreign flag vessels will be allowed to get involved in this trade with Iran. But I think that maybe this would be part of the agreement that has been reached, but we don't know the exact details of it.

Elias Papakaizo, Pariah Securities

Great, thanks a lot.

OPERATOR

As a reminder, press star one on your telephone keypad if you would like to ask a question. We will pause for a brief moment to see if there's any final questions. There are no further questions at this time. I would like to hand the conference back over for closing remarks.

Lucas Barbaris, President

Thank you very much for attending our presentation for the first quarter 2026 results, and we're looking forward to discussing it with you next quarter. Have a nice day. Bye.

OPERATOR

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.