Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers Conference Call on the Fourth Quarter ended December 31, 2023, Financial Results. We have with us Mr. Polys Hajioannou, Chairman and Chief Executive Officer; Dr. Loukas Barmparis, President and Mr. Konstantinos Adamopoulos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [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 February 13, 2024. The archive webcast of the conference call will soon be made available on the Safe Bulkers website, www.safebulkers.com. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter ended December 31st, 2023 earnings release, which is available on the Safe Bulkers website, again, www.safewalkers.com. I would now like to turn the conference call to one of your speakers today, President Loukas 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 2023. During the last quarter of the year, we operated in an improved charter market environment compared to the previous quarter. The company continues to maintain a strong capital structure while implementing its strategy of gradual rate renewal that leads to decreasing fleet average age. Our ongoing efforts to upgrade our existing vessels coupled with our fleet renewal will enable us to remain competitive while reducing our carbon footprint. Yesterday, just before the issuance of our earnings press release, we announced the sale of our oldest vessel, MBE Maritime. This gives me the opportunity to focus on our investment strategy, which takes into account our existing policy and prepares our company for the new, more stringent regulatory environment in relation to carbon emissions. In slide 3, we present the environmental regulations timeline. We have been trying to be ahead of the market, for example, by placing Phase 3 orders when only Phase 2 regulations kicked in, and sell older vessels, and more recently by placing orders for dual fuel vessels. You see in slide four the challenge that the dry bulk shipping industry faces as we move with steady steps towards 2030. Advanced Phase 3 energy efficiency vessels are only a few, creating operational and commercial advantages for the early movers. We move to early, and in slide 5, given our recent deliveries, we have maintained a very competitive average age, and we intend to do the same in the years to come with the remaining order book. All our actions should be built up in green fleet advantage, as presented in the top right graph of slide 6. Our fleet is comprised of…

Thank you, Lucas, and good morning to all. As a general note, during the fourth quarter of 2023, we operated in a weaker charter market environment compared to the same period in 2022 with decreased revenues due to lower charter hires, decreased earnings from Scrubber fitted vessels, decreased operating expenses and higher interest expenses due to higher interest rates. Let's focus now on our liquidity, our cash flows and our capital structure which is presented in Slide 12. We are maintaining a comfortable leverage of around 37%. Our debt of $516 million remains comparable to our fleet's scrap value of $341 million, although our fleet is only 10 years old. Our weighted average interest rates stood at 6.31% for our consolidated debt. This is inclusive of the applicable loan margin, with a portion of €100 million being fixed at a coupon of 2.95% for an unsecured five-year bond. We have paid $85 million for our capital expenditure requirements in relation to our existing order book. The remaining CapEx were $223 million. Our liquidity and capital resources stand out strong at approximately $312 million, which together with the contracted revenue of about $270 million provide flexibility to our management in capital allocation. Furthermore, we have additional borrowing capacity in relation to eight existing unencumbered vessels and six and seven new builds upon their delivery. Moving on to Slide 13, with our quarterly financial highlights for the fourth quarter of 2023 compared to the same period of 2022. Our adjusted EBITDA for the fourth quarter of 2023 stood at $50.7 million, compared to $56 million for the same period in 2022. Our adjusted earnings per share for the fourth quarter of 2023 was $0.25. This was calculated on a weighted average number of 111.6 million shares, compared to $0.29 during the same…

[Operator Instructions] Our first question comes from the line of Omar Nokta with Jefferies. Please proceed with your question.

Thank you. Hey, guys, good afternoon. Just had a couple of questions, maybe just on the last point you made right before the Q&A session. Just wanted to ask about uses of free cash in this market environment. Clearly, 4Q was a stronger period than we anticipated or at least a lot of us anticipated, 1Q is off to a solid start. There's a lot of disruption globally. And so just in general, as you think about things, how are you thinking about the uses of cash at this point? Or at least say the main use of cash? Is it to lower debt at this point? Or do you still see opportunities for further expansion beyond the current scope?

Yes, hello good morning to you. And look, the situation depends on how the market develops. At the moment, we see the market is turning quite positive for the next year or so and even more in 2025 as we see also America economy doing very well. So the use of cash will be split for new buildings with fleet renewal, we don't exclude the sale of all the ships to be replaced by more modern ships. So it's not only the new builds that they are coming. There will be modern ships added in the fleet -- will be some share buyback, I know we didn't do in the last quarter. But we didn't have the -- we didn't have enough evidence of the market would perform. Right now, we have in our evidence that the market is performing. And we will reduce also our leverage. We don't want to increase the leverage from the current percentages as the new ships are coming in. So we want to keep it around the current levels. So one third, 37%, 38%. So we will use cash for all these things. Of course, everything depends on how the market will perform. At the moment, the signs are positive. And you know all the geopolitical situations and Panama Canal is reduced drought and no camps are much. Of course, Panamics are passing now through the canal, coupled with the problem of the Red Sea. And I need to say here that Safe Bulkers was one of the first companies that declared its charterers after the first hits of the merchant vessels in beginning December, that we will stop going through the Red Sea, simply because we don't believe that our seamen are key workers, and everybody recognizes seamen as key workers, are to…

Thank you, Polys. Very, very good context on everything as you kind of related things a bit towards the COVID situation with the crew changes. I guess in this market, there's been, I guess, two ways where -- I mean, you're obviously much closer to it than we are, but there's clearly a spot contract and then there's the vessels on time charter. Is there a deviation in terms of how charters are looking at transiting to the Red Sea, at least from your lens and your ships? Are you still having vessels that are in your control operationally that are on contract or that are on time charter, are those shifts still, in some cases, being forced to go to the Red Sea by your customer?

Yes. On all our time charter ships, I'm proud to say that our charters are big names. They all cooperated despite there was some costs involved. They cooperated. We let them know early that we will not accept to go through a military area or a war zone and we even had a charter on a route from the Continental to the Paris, that halfway through the Mediterranean turn the ship around and went via the Cape Town. I'm proud to say that with all these people, we reward them with more business and more ships when we time charter for 1-year charters, we say from the start, we don't close the Red Sea, the charters are happy to accept and they find the optional rules. So we should pay respect to the people who do the job, and the people are -- they have families and they are the sea men. They are not military personnel. And even if we use armed guards on board our ships, the arm guards are good against pirates. They are not good against drones and rockets, can do nothing. So it's a very important matter. And of course, I believe it will not take long to be short. It will not be a matter of one year, more like two or three months. And the world navies are in the area. They are taking care of matters. And when the corridor is safe, we will start passing again, hopefully, in the next two or three months.

Yes, definitely. Okay. That makes sense. And then maybe just a final one for me, and it's just more of a follow-up to make sure I understood correctly. So the -- in terms of the share buyback that you haven't yet put to work, clearly, it was at a time of transition and uncertainty. But given how things are at this point, you have the conviction, at least with respect to the dry bulk market, that now is the time to buy stock.

Look, yes, we believe that at this time because now we have clear signs that the market is pushing up, yes.

Okay. Thank you. I'll turn it over.

[Operator Instructions] Our next question comes from the line of Climent Molins with Value Investor's Edge. Please proceed with your question.

Good morning. Thank you for taking my questions. You've provided ample commentary on your fleet renewal approach. But I was wondering, could you provide some insight on the reasoning for focusing on ordering midsized vessels instead of Capesizes? Is it because of pricing or because you have a relatively more positive view on Kamsarmax?

What did you say? Because the line was not good, why we invest in midsized vessels?

Yes, instead of a Capesizes.

Yes. Yes. We're not a Capesize trade. They're always -- we were filling over the year a little bit uncomfortable with the type of vessel that relies in one commodity, namely iron ore and little bit of coal. We wanted to be more versatile and be able to trade on more routes. And iron ore is pro, let's say, China -- depending on the Chinese economy. Of course, now we are -- I believe we are in the right pace also for Capesize opportunities. Of course, the competition there is huge. The order book is very low. I'm very positive for Capesize as well. But we are little bit afraid that maybe the high capital cost of ordering a Capesize in a good shipyard like Japanese shipyards. It's more than $70 million. You make all in the calculation of interest rate at 6%. And you will understand that is a big risk for a company like ours to step up any major investment in that sector. We did that in 2021, we bought four Capesize bulk carriers, which are in Kamsarmax, rates for us now in the mid-20s for three years or two years or things like that. We fitted scrubbers on them that they are adding a $1.5 million per vessel per year. So we did our small investment there. Now I don't believe we'll get opportunity in the next six months. We will try to inspect a couple of ships, but I'm hearing interest from 15, 20 buyers on every ship. I don't think we will be the winners of any of those bids but we're happy that we have invested in -- at the right time, starting in 2020 in the Kamsarmax new buildings. Japanese Kamsarmax Phase 3 new buildings. The price we start investing was around $28 million. Today, the same ships are worth over $40 million to order from those yards. So we're happy we have done we continued in the business. We know we are the total of 16 units, and we are very well placed since we have delivered nine of those already in a good market and seven more are coming, including two methanol ships. So we're in a good position overall, let's say. We're happy with our moves so far.

I also wanted to ask a bit about the 2024 outlook for coal. China recently reinstated the tariffs, and I was wondering whether you expect this to have an impact on the overall market.

Could you repeat the question because they are sitting in the absence of the line.

Yes. The question is about China's tariffs on coal, which were recently reinstituted and whether you expect that to have an impact on the overall market?

Yes. Chinese coal imports were at the highest in the last -- in 2023. It's a vital commodity for the Chinese. We know that at a certain point, they will consider the environmental consequences and they will step back. But it's not -- the Chinese, I think, consume around four billion tonnes of coal a year. So the imported quantity of around 10% of that amount is not that big. And I don't think they will escalate from coal in the next, let's say, five to 10 years. Later on, of course, we may see reduction of coal into China, and we will see increase in coal into other areas like India, Malaysia, Vietnam, South East Asia countries. So I think coal will always be there. And I think if there is a cleaner coal from other areas or technologies to make it more friendly to the environment. But I don't think coal will be reducing a lot in the years to come.

Thanks for the call, sir. That's all from me. I'll pass it over. Thank you for taking my questions and congratulations for the quarter.

Thank you. We have reached the end of the question-and-answer session. Therefore, I'll turn the call back over to Mr. Polys Hajioannou for closing remarks.

So thank you very much for attending our presentation and we're looking forward to discussing again on the financial results of our next quarter. Thank you all and have a nice day.

And this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.