Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the Second Quarter 2020 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, Ioannis Foteinos. [Operator Instructions] 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 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 the 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 that 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 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 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. And I now 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 second quarter of 2020. I would like to start by thanking our seafarers for their commitment and dedication throughout this critical period. The difficulties for crude changes continue. And I would like to say that in many places, the situation is very unfair for people who have stayed on board for extended periods, supporting the operation of supply chain. Our results for the second quarter were negatively impacted by the reduction in charter rates due to COVID-19 outbreak. A number of charter contracts that had expired in the previous period has been replaced by contracts with lower charter hires. Despite that, there is a small increase in our aggregate revenue due to scrubber benefit and due to addition of the new vessel. However, further expenses that are deducted from the revenue, in order to calculate the TCE was substantially increased due to vessel reposition, higher cost of bulkers and consumption cost for scrubbers. Our decision in this uncertain environment is to maintain strong liquidity, which was $111.3 million as of July 31, 2020. This can be a push on this situation with coronavirus is developed negatively or a strong crew that we will allow us to do opportunistic moves for when the situation improves. Moving to Slide 3, we were able to develop six five-year charter contracts and two contracts of average duration of nine and twelve months, which represents a substantial change in our chartering policy. Together with the three Capes, we will have fixed about one fourth of our fleet in medium to long period time charters. The anticipated total revenue on the basis of FFA is about $115.7 million, and the important detail is…

Thank you. Good morning everyone. Let me continue with our liquidity on Slide 14, which, as of the end of July 2020, total was $111.3 million, consisting of $89.9 million in cash and bank time deposits and $19.4 million in restricted cash and $2 million available under unsecured revolving credit facility. We have refinanced a large portion of our debt. And in Slide 15, we present our repayment schedule as of June 30, 2020. In close cooperation with our lenders, we'll push back loan payments to 2022 and 2023, which were originally scheduled for this year and 2021, expanding the operating tenure, creating a smoother repayment scheduled for 2020 and 2021 and maintaining the same covenants of our debt while increasing our flexibility during this difficult period. Moving on to Slide 16, we present our quarterly daily OpEx, which stood at $4,729, with our quarterly daily G&A which stood at $1,374. The aggregate number for both OpEx and G&A for second quarter of 2020 was $6,103, demonstrating our focus on lean operations. We believe that this figure for both OpEx and G&A when comparing apples-to-apples is one of the industry's lowest. Given the fact that we include in our OpEx all our drydocking expenses and in our G&A are Directors' compensation and all expenses related to our administration. We move on to Slide 17. We present our quarterly TCE, which stood at $8,094, clearly affected by COVID-19, versus our quarterly OpEx, which stood at $4,709. Let move to Slide 18 with our quarterly financial highlights for the second quarter of 2020 compared to the same period of 2019. Net revenues increased by 5% to $49.3 million from $45.5 million, despite the relatively weak charter market due to COVID-19 restrictions, mainly due to the additional revenues and by our scrub and…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We will take our first question from the line of Chris Wetherbee of Citi. Please go ahead. Your line is now open.

Hi. This is James on for Chris. Thank you for taking my question. So just starting off on the rate side, it does seem like, as you guys have mentioned, that there's kind of recent increase in some of the shorter-term rates that you guys have been able to obtain in the spot market. So I'm just wondering how sustainable you think the increase is? And if you have any sense of what positive and negative factors will be there that are going to impact rates for later 2020 and 2021?

Yes. Hello. Good morning. Yes, the rates, as we speak, in the last months have been increasing sizably and right now, the spot market is performing at around $12,500 a day. Since we have the majority of our ships in the spot market, we are able to capture this increase very, very quickly. So we are in a very good position to enjoy this improvement of the market, which, as we said in previous calls, we were expecting it to start after China announced a big stimulus plan and is happening now with very strong, more grain export in South America the last 3 months and now with a very strong grain export from U.S. Gulf and from U.S. West Coast.

Got it. And do you think that this increase in rates will kind of lead to stable increase in vessel values? I know that they've also recovered it bit recently, but obviously, that remained at fairly low levels.

Yes. We think that the vessel value always are affected by increased freight rates. And we think that this will be the case again. I think that there is good support from banks over the last year or so. And they are there to finance projects. It's more technical problems that – technicalities that they are involved with the acquisition of vessels at the moment. You know the difficulty to contact inspections on behalf of the owners, prepurchase inspections because of restrictions on boat in vessels. This is the only negative thing. Otherwise, I thought – I think that as the freight market is improving, I think that prices will start very soon to improve as well.

All right. And one other question I had was I know you guys have discussed the increase in voyage expenses, those that are taking place. But they also did step up from the first quarter and the second quarter as well, and I know a lot of that is due to additional expenses and also fuel-related costs. But I'm just wondering if you provide some sense of where you expect the voyage expense to go for the remainder of the year? Should we expect it to kind of be at the first half average around $17 million? Or should it be coming down?

Look, voyage expenses have increased in the past for 3 reasons, mainly. First of all was the valuation of the fuel that we have on board, which price was pushed dramatically, it was quite lower in the previous months due to the fuel oil war. The second was repositioning of vessels, as we said. And the third was the – right now, the fuel that is used for scrubbers is included in the – in this voyage expenses – is recorded in the voyage expenses part. And so that's why we will maintain somehow higher voyage expenses in the future. The one part, which is due to the prices, the oil prices, I believe that it will not go up so much in the future. The second part which is basically the repositioning will be lower, will certainly be lower. The last part, which is due to the recognition of fuel scrubbers in the voyage expenses will remain.

Got it. Thank you. And just finally, I know you guys have $100 million of debt maturing in the remainder of 2020 and through 2021. I was just wondering if you could touch on how you plan to refinance these payments.

Could you please repeat the question a little bit slower because you have some noise.

Apologies about that. So I'm just referring to Slide 15, where it shows your debt repayment profile. And it looks like you guys have $100 million of debt maturing in the remainder of 2020 and 2021. And I was just wondering what your plans are to refinance these payments.

These are not mature. These are scheduled installments. We don't have any debt maturing in this year or next year.

But there are in 2022 and 2023.

Yes. The first maturity, I believe, is in 2023.

All right, well thank you for the clarification. I appreciate you answered all my questions.

Your next question comes from the line Randy Giveans of Jefferies. Please go ahead and ask your questions loud and clearly.

Hello, gentlemen. It’s Randy Giveans from Jefferies. How are you?

Hi.

Hi.

You booked these 6 long-term charters in the second quarter. So is that more of the same? Are you going to look to lock in additional longer-term charters? Or now that spot market has improved, focusing more on the short-term charters in spot going forward? And what was the rationale for these 5-year charters in the last a couple of months?

Look, the rationale of the 5-year charter was that we get a good premium in the first 2 years above the current spot market at the time we did the fixtures. So this is a very good cash flow injection during an uncertain time with the – until we get over this pandemic of COVID-19 of COVID-20 or whatever that will be. The policy now that the market is improving is to look in into some more period charters when we get the opportunity. Of course, they cannot all be 5-year charters or the same structure; could be 1- or 2-year charters. As we approach or exceed breakeven levels, it makes sense to charter at the shorter levels. It wouldn't make sense a year ago or 6 months ago to charter 1 or 2 years period at $8,000, $9,000 or $10,000 a day. Now that we can secure numbers around $13,000 a day, it makes sense for the company to try and with appropriate charterers to secure some period charters. So we have many ships in the spot market, and we can play a more balanced, take a more balanced approach.

Okay. And then following the swaps, which were very attractive 3 to 5 years. What is your weighted average interest rate in terms of the premium or the margin as well as what you're swapping it at?

The average of the swaps that we've done so far is a little bit below 0.5%. So we fixed around at 35% of our loan book.

Yes. And then the margin?

We don't disclose the [indiscernible]

We'll give you the number.

We'll give you the number, yes.

But it's not in the report. But it's about 2%, a little bit higher of 2%, about 2.10%, the average.

All right. Okay. So all in interest expense, sounds like it's below 3%.

Yes.

Yes, yes. it's a very comfortable level pace, which we can make our forward planning.

Yes, absolutely. All right, and then a final question. Now that you have kind of the revised the swaps and what have you, whether your kind of first use of cash? Are you looking at about preferred repurchases? Those are yielding 11%, 12%, what have you now. So is that an option? Do you have some authorization there? What is your appetite for the preferred repurchases?

Look, the most important thing, I think to keep a strong cash position in the balance sheet because there's a lot of uncertainty as yet. We are optimistic about the market and the stimulus pack, but there's no guarantees. We have already second phase from this coronavirus disease, but we don't know what – how it would be developed in the winter months, if there are more lockdowns or partial lockdowns or other things. So we intend to keep a strong cash position. And if possible, use part of it to deleverage and prepay earlier some installments of the loans. We want to focus right now on handling the situation with COVID-19 and COVID-20 with the least possible damage to company's operations. Right now, we face a very big challenge all companies are facing. And I think this also may help the freight market. We are facing a lot of delays in various parts of the world with growing matters, with changes of crew, with the testing of the crew, with delays in ports to bear before they test the crew. Also, with the limitation of the ports around the world where we can make crew changes because of strict regulations and the nonavailability of flight, international flights. I'm very disappointed to say that the owners are not having the support of charterers when it comes down to social responsibility into the well-being of seafarers. We have to face all the cost ourselves, which, I mean, it's a lease. But here, we have lack of cooperation by many charterers, including major ones, when there is a need to make a small deviation from the intensive route in order to disembark our crew and put on board a fresh crew. Even big names, big charterers, that they should have supported such…

Got it. Okay. And how much is outstanding on these preferreds right now? Is it still the $137 million?

Look, the preferred is a part of our capital structure, and we will continue to maintain it for the foreseeable future. Simply because we feel that having one of the best operating expense in the market. One, a very comfortable management fee. And also and the preferred dividends, we are quite competitive. I think that they need right now is liquidity and as Mr. Hajioannou said that before. There are two points here. The one is liquidity mix in this low part of the market, which can be used as a cushion if the market – if there's a second wave since, or asset tool, if there is an improvement in the market. And the second point is deleveraging. Because as we always say, that we intend in the next three years to five years to bring to the net debt of the company close to the still value. So basically, we have a specific guide of our deleveraging policy, and we also maintain our liquidity. I think this is a recipe for a good company for the following years. It is more important to bring the debt down to the scrap value of the vessel than to repay early the preferred, which is equity, perpetual equity, and can be replaced at any time in the future when freight rates really overperform the current situation. So I think this time will be in the next few years, we will get the opportunity as the world trade increases and as the world freight fleet is not increasing, we'll get the opportunity of better markets to start reducing that preferred. But for the time being, there is no plan to reduce the preferred.

I'm just asking the outstanding amount on the preferred.

It is $137 million.

Got it. That links it. Well that’s it from me. Thanks again guys.

Thank you.

Thank you. There are no further questions at this time. So I now hand back to the speakers for closing. I now hand to the speakers to close off the call. Do you have any closing remarks?

Thank you very much for attending this call during the summer months of August. And stay safe for all of you. And we hope that – and we believe that we will see better markets in the second half of 2020. Thank you to all.

That does conclude our conference call. Thank you all for participation, and you may now all disconnect.