Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the fourth quarter 2019 financial results. Today, we have with us from Safe Bulkers, Chairman and Chief Executive Officer, Mr. Polys Hajioannou; President, Dr. Loukas Barmparis; Chief Financial Officer, Mr. Konstantinos Adamopoulos; and Chief Operating Officer, Mr. Ioannis Foteinos. [Operator Instructions] I must advise you that this conference is being recorded today. Before we begin, please note that this presentation contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange 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, changes in the demand for drybulk vessels, competitive factors in the markets 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 containing 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. And now I pass the floor to Dr. Barmparis. Please go ahead, sir.

Good morning. I'm Loukas Barmparis, President of Safe Bulkers. Welcome to our conference call and webcast to discuss the financial results for the fourth quarter of 2019. We had a profitable quarter despite the downtime of several vessels due to scrubber retrofitting. Bulk installed scrubbers are in operation, providing operational flexibility and commercial benefits. We have postponed the installation of scrubbers on the last 5 vessels from Q1 2020, and now we have to postpone again for the second quarter of 2020 due to coronavirus outbreak. The key note of this presentation is our liquidity, which, following the refinancing which was completed by the year-end, is in excess of $170 million. We remarkably have done numerous dry dockings last year, we have already paid 75% of our environmental investments, while our debt-to-asset ratio is comfortably at 60%. Let's move into analyzing the market conditions. On Slide 4, we present the outlook of the market in terms of freight rates of Capes and Kamsarmaxes as compared with 2019. The effect of seasonality is apparent, and like every year, the first quarter is underperforming. This has been intensified by the outbreak of coronavirus, which greatly affected China, the most significant drybulk player. However, the commencement of the grain season, in combination with the successful conclusion of Phase 1 U.S.-China agreement, is giving a sign of improvement in the medium-sized vessels and in particular in Kamsarmax-sized. Turning to Slide 5, we present the forecasted shipments from Brazil for the second to fourth quarter. Recently announced by a major Brazilian iron ore producer, the forecast for production is expected to reach 340 million to 355 million tonnes. Taking into account a very slow Q1 activity, if targets are to be met, Brazil iron ore shipments could surge during Q2 to Q4. In this case,…

Thank you, Loukas, and good morning, everyone. In Slide 12, we present our liquidity, which is as of February 21, 2020, stood at $174.4 million, consisting of $113.8 million in cash and bank time deposits; $14.2 million in restricted cash; $20 million available under the unsecured revolving credit facility; and $26.4 million secured under the commitment from a bank for the delivery -- for the post-delivery financing of our newbuild Post-Panamax class vessel. During the fourth quarter of 2019, we have refinanced a large portion of our debt, and in Slide 13, represented on the blue columns are the payment schedule on a pro forma basis, taking into account the sale and leaseback transactions which were concluded in January versus a repayment schedule as of December 31, 2019, in the red columns. As a result of the refinancings, we'll have an additional liquidity of $53.1 million. Moving on to Slide 14, we present our quarterly TCE, which stood at $13,707. The aggregate figure for both OpEx and G&A for the last quarter of the previous year was $6,517 as a result of dry-docking expense related to 5 fully completed and 1 partially completed dry docking, of increased spares and repairs and maintenance, again to be completed in some forthcoming dry dockings, and of increased administration expenses. Moving on to Slide 15, we present some financial data on a quarterly basis. Our quarterly revenues, our adjusted EBITDA and our operating cash flow have been improving our overall financial strength. In Slide 16, we present our daily free cash flow waterfall for the fourth quarter of 2019. We have made about $13,700 per day and spent less than $10,000 per day per vessel for all our daily outflows, including operating, G&A, interest, preferred dividend and principal repayments, leaving about $3,700 per day…

[Operator Instructions] And the first question comes from the line of Randy Giveans.

So looking at your scrubbers and especially Slide 8. So first, kind of why did you defer those 5 remaining scrubber retrofits from the first quarter to the second quarter? Were the yards accommodating to your request for the switch? Or did the yards maybe require that delay for the remaining installations for coronavirus or what have you? And then looking at those recent 5 fixtures on Slide 8 with the fuel spread of around $200 a tonne, what does that translate to into a premium on your Kamsarmaxes or Post-Panamaxes?

Okay. The initial push and the initial change of the program for scrubbers was due to Chinese New Year. So instead of having vessels towards the end of December and during January, we decided to push the vessels after the Chinese New Year, these 5 vessels. Now the end result is that we -- the -- all Chinese shipyards have issued a force majeure and were not able to cope with their production schedule. So there was no reason whatsoever to go there and wait. And we took a reasonable decision to postpone in cooperation with the relevant [indiscernible] for the second quarter of 2020. I think the situation in China right now is evolving well. The -- it seems that coronavirus is controlled there. And I think that the installation of -- our installation of scrubbers will be able to resume by this March. In terms of the benefit, Konstantinos.

The benefit is $200 roughly, it's ships that they are building around 30 tonnes a day. They're Post-Panamaxes mainly, which makes $6,000 a day by [ part of -- 2/3 subsea, which equates to ] around 65%. It's making an increased revenue by roughly $4,000 a day.

$4,000 a day. Okay. Perfect. And then the second question, obviously, in the last 4 to 5 months or so, you issued those 4 million shares, and you also repurchased almost 2 million shares. So kind of why was that? And were you required to issue those shares as part of the Post-Panamax purchase? Or could you have used cash back in November? And then now that your cash balance is extremely stable, scrubber CapEx winding down, are additional share repurchases the #1 use of cash going forward or maybe buying back the preferreds?

Okay. We have always the option either to use cash or to issue shares for each installment. So for the previous...

For the newbuilding.

For the newbuilding, yes, for the newbuilding. So in this installment that we paid in November, we issued shares and, of course, because we believe that based on the net asset value of its shares, [ relative ] value is low, we have in place a buyback program. And so we started to buy back a number of shares. And of course, at a better rates, at lower rates from what -- from the price that we have issued them. In the installment that we gave recently, the price of stock was so low that we decided to pay through cash. At the same time, we have an active program of buying back shares when market price goes below certain levels because we strongly believe in the company and the fundamentals of the company. I remind that we have not diluted shareholders. Basically, our total number of shares remains at above 100 million. And the company is well placed with all this liquidity that we have created to take advantage of the market. We have a low -- relatively low ratio of debt to assets, about 60%. And we're really comfortable that we are well placed in this environment. The buyback program continues from time to time.

There are currently no further questions on the lines. [Operator Instructions] You have a further question from the line of Randy Giveans at Jefferies.

If it's just me, I have a few more questions. I just don't want to monopolize the call earlier. So looking at your fleet, you have those 6 Panamaxes over 15 years of age, appear to be earning a discount, obviously, to the modern Panamaxes. Are you looking to sell those vessels, maybe renew your fleet with more modern secondhands? And if so, which kind of asset class would you focus that growth on, the Capes, Kamsars, Post-Panamaxes?

Yes. Look, indeed some of the fleet, around 6 vessels, they are approaching -- they are over 15 years old. But those ships, you have to keep in mind, they are built in Japanese yards by ourselves, and we trade them for 15 consecutive years. So I'm expecting the ships to last much, much longer than the average ship in other countries that have changed, possibly, 2 or 3 owners during its lifetime. So there is no under any pressure to sell anything in the present environment. Also, some of them, they are fixed at very good rates. We still have -- in the maxes, for example, running at almost $13,000 a day on a time charter fixed this time last year. So we are not in a hurry to do anything on the selling side. If in the future, there will be opportunity to sell, we would consider. But we are working the ships, and that's why you see OpEx going up as if we will keep them for 25 years. And these ships can definitely last 25 years. Now on the buying side, we are investing countercyclically. And we are approaching, again, this point that it would be worth making an investment on assets. Of course, on the other hand, the stock price is much cheaper than the assets at the moment. So we will invest the money as well, a part of this money, in our stock. So if we go for assets, we believe we should go for bigger ships, not smaller, so should be Kamsarmaxes or Post-Panamaxes or Capes. But the market will dictate this, which -- on which vessel size would be more candidates and at what condition. We'll consider that the current 5-year-old vessels will be under further pressure in the nearby horizon and will give good buying opportunities. And of course, the company increases liquidity before the end of the year, which was a good move, to be able also to see on possible acquisitions.

In fact, we always think about the secondhands.

What was that last statement, sorry?

Yes. Loukas is very in favor of secondhands. He doesn't want to add to the supply of newbuildings.

Yes. I would agree with that. Good. And I guess, lastly, so third quarter time charter equivalent rate, $13,300; fourth quarter, a little bit higher, $13,700. Can you give some kind of guidance? I know you have many charters, obviously. But for the first quarter, are we thinking $12,000, $11,000, $10,000 for the full quarter average or at least maybe quarter-to-date?

Yes. Usually, I mean, you see the good quarter was the third quarter, but the bigger number is in the fourth quarter, always, you have to go a quarter back and see the numbers from last quarter to estimate what would be the next -- the quarter that we will be reporting. So since the market dropped a bit in the fourth quarter, especially in November, December, in the second part of the fourth quarter, it's expected that the low -- that the number of Q1 will be lower than the $13,700. Now I cannot tell you accurately how much it will be. The next results will show. And the Q2, of course, would be a lot affected by the Q1 drop of the market as per every year, when you have the Chinese New Year, plus the extra problems of an extended Chinese New Year because what is this, coronavirus and -- has caused this an extended Chinese New Year. So instead of usual 2, 3 -- 2 to 4 weeks of quiet market, it has extended to a possible 6 to 8 weeks. So this would have to take into effect and I think will show you in the Q2. By that time, of course, that we will reach the time of issuing the results of Q2, we expect market to be a lot higher than what it is today because also Chinese, they will come back in the market. They are issuing money for stimulus programs. And the trade will pick up substantially. And at the same time, there will be a delay of the newbuilding deliveries of this year, slowing down in the coming 3 to 6 months simply because the yards -- they have no personnel in the shipyards, and the local manufacturers have closed…

There are currently no further questions on the lines. Please continue. There are no further questions on the lines. Please continue.

Okay. So thank you very much for attending this -- our year-end and fourth quarter results, and we're looking forward to discuss again with you in the next quarter. Thank you very much, and have a nice day.

That does conclude the conference for today. Thank you for participating. You may all disconnect.