Safe Bulkers, Inc. Q4 FY2025 earnings call

Supply Side Dynamics

• Dry bulk fleet is projected to grow by about 3% in 2026 deliveries, with fleet growth highest for Panamax and Supramax segments. Order book stands at about 11.4% of current fleet. Forecast for dry bulk supply to grow by 2.5% in 2026 and 3% in 2027. Asset prices elevated, recycling volumes anticipated to rise but remain low. Dual fuel order book small in dry bulk segment. Postpone of IMO fuel standard adoption. Fleet has 2 Phase 3 vessels in water, 26 vessels with augmented fuel character, 80% Japanese built, fleet age 1.5s vs global average 2.6s. 5 vessels exceed 15 years of age.

Demand Side Overview

• Global GDP growth expected around 3% in coming years. BIMCO forecasts global dry bulk demand growth of 2%-3% in 2026. Iron ore shipments expected to grow up to 1% in 2026. Coal shipments projected to decline by 1%-2% in 2026. Grains shipments estimated to grow by 5%-6% in 2026. Minor bulk growth expected at 3.5%-4.5% in 2026. Fertilizer demand continues to expand but at slower pace. China a central swing factor. Broader economy faces headwinds from weak property sector, etc. India projected to experience fastest GDP growth among major economies. Japan's government aims to advance fiscal policy for economic transition.

Quarterly Highlights

• 17th consecutive quarter of free cash flow. Returned $89 million in common dividends and $75 million in other common payments. Maintains significant fire power with cash, undrawn RCF, and borrowing capacity. Has $628 million market cap, $167 million cash, $218 million in undrawn revolving credit facilities, and $178 million contracted revenue backlog.

In the fourth quarter of 2025, Safe Bulker achieved $0.14 of adjusted earnings per share. For Capesize class vessels, 7 were chartered under period time charters with an average remaining charter duration of 1.8 years and an average daily charter hire of $24,000, topping $130 million in contracted revenue backlog from Capes alone. The company has a market cap of $628 million, with $163 million cash, $220 million in undrawn RCF, and $182 million borrowing capacity. It generated $89 million in free cash flow, paid $89 million in common dividends and $75 million in other common payments.

Fleet Renewal

• Secondhand pricing difficult due to lack of quality tonnage available. Need to look into shipyards, but most shipyards fully booked for 2028, so deliveries in 2029. ### Time Charter Market
• Market starting to improve. Right now, 12-month period charters are possible, but longer term charters (2-3 years) will come after sustained market strength. Prefer fixed rate over index-linked exposure. 1-year deals in the market approaching $18,000-$19,000 a day for Capesize vessels.

Market Volatility

• Dry bulk market witnessed increased market volatility mainly due to geopolitical reasons. ### Economic Headwinds
• Broader economy faces headwinds from weak property sector, elevated inventories in key commodities, etc. ### Trade Tensions
• Trade tensions between U.S. and China remain a key source of global economic uncertainty. ### Vessel Aging
• Increasing expectation of older vessels leading to increasing inspection of older vessels and impact on OpEx.

Q: You've made a lot of way on the fleet renewal front in recent years, putting special emphasis on Kamsarmax newbuilds. When looking at your overall fleet pro forma for the newbuild additions, the Cape side does smatter, is there any appetite for new going forward? Or is now well on secondhand pricing difficult to justify based on your expectations?

A: Secondhand prices are getting higher, but lack of quality tonnage available for sale, especially Japanese built or Chinese more than vessels. Market prospects positive, strong Q1. Only option for quality tonnage is shipyards, but most shipyards fully booked for 2028, so deliveries in 2029.

Q: Have you seen increasing appetite from charterers for 2 to 3-year contracts on Capesize maxes -- and secondly, based on current quotes, would you favor index-linked exposure or fixed coverage?

A: No interest for 2- or 3-year contracts yet as market just starting to improve. Momentum gathering pace. Right now, 12-month period charters possible. Prefer fixed rate over index-linked exposure. 1-year deals in market approaching $18,000-$19,000 a day for Capesize vessels. Scrubber not viable to fit on all Capesize vessels due to small consumption