Athens, Greece - August 4, 2022
Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (Nasdaq: SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the second quarter of 2022.
Unless otherwise indicated or unless the context requires otherwise, all references in this press release to "we," "us," "our," or similar references, mean Star Bulk Carriers Corp. and, where applicable, its consolidated subsidiaries.
(2) EBITDA and Adjusted EBITDA are non-GAAP measures. Please see EXHIBIT I at the end of this release for a reconciliation of EBITDA and Adjusted EBITDA to Net Cash Provided by / (Used in) Operating Activities, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP as well as for the definition of each measure. To derive Adjusted EBITDA from EBITDA, we exclude non-cash gains / (losses).
(3) Daily Time Charter Equivalent Rate (“TCE”) and TCE Revenues are non-GAAP measures. Please see EXHIBIT I at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of each measure.
(4) Daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days (defined below). Daily OPEX per vessel (which excludes non-recurring expenses) is calculated by dividing vessel operating expenses minus any non-recurring items (such as, increased costs due to the COVID- 19 pandemic or pre-delivery expenses, if any) by Ownership days. In the future we may incur expenses that are the same as or similar to certain non- recurring expenses that were previously excluded.
(5) Daily Net Cash G&A expenses per vessel is calculated by (1) deducting the Management fee Income (if any), from, and (2) adding the Management fee expense to, the General and Administrative expenses (net of share-based compensation expense and other non-cash charges) and (3) then dividing the result by the sum of Ownership days and Charter-in days. Please see EXHIBIT I at the end of this release for a reconciliation to General and administrative expenses, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“Star Bulk continued its strong performance in 2022, reporting for the second quarter a Net Income of $200.1 million, TCE Revenues of $337.5 million and EBITDA of $251.5 million. TCE for the quarter was $30,451 / day per vessel, a 33% increase YoY and 11% QoQ. Looking to the next quarter, we have covered 61% of our available days for Q3 at a TCE of approx. $29,000/ day per vessel.
As per our established dividend policy, the Board of Directors approved a dividend of $1.65 / share. Star Bulk has distributed $6.55 / share over the last four quarters.
We are pleased to report that as of the end of June, we have earned back our $250 million scrubber investment, within a span of 2.5 years. This investment includes all related capital expenditure as well as the off hire cost to install the scrubbers. With our fleet being ~94% scrubber fitted and the current Hi5 spread at very healthy levels, these scrubbers should augment our profitability for the foreseeable future.
We have continued to optimize our debt since the beginning of the year. We have refinanced approximately $310 million, which will reduce our interest cost by $4.0 million per annum, extend maturities and leave us with twelve unencumbered vessels. In an increasing interest rate environment, through our existing swaps we have fixed our base rate at an average of 45 bps, for an outstanding notional of $783 million and an average remaining maturity of 1.7 years.
Star Bulk’s Board of Directors has established an ESG Committee, which will guide and support management on ESG-related matters. The Committee is comprised of three independent Directors and is another testament to the importance of good environmental stewardship, corporate governance and social consciousness of Star Bulk.
With a limited supply of vessels, the upcoming environmental regulations curbing vessel ordering and speeds, our competitive operating costs and our scrubber equipped fleet, we remain optimistic on the income earning prospects of our company despite a seemingly uncertain macroeconomic environment.”
Declaration of Dividend
As of June 30, 2022, we owned 128 vessels and our aggregate amount of cash on our balance sheet was $385.6 million. Taking into account the Minimum Cash Balance per Vessel, as defined in the 2021 Annual Report, of $2.10 million, or $268.8 million in the aggregate, and the refinancings in progress as described below, on August 4, 2022, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $1.65 per share, payable on or about September 8, 2022 to all shareholders of record as of August 25, 2022. The ex-dividend date is expected to be August 24, 2022.
Shares Outstanding Update
From January 1, 2022 to the date of this press release, we have issued and sold 654,690 common shares under our effective at-the-market offering programs at an average price of $30.85 per share, resulting in net proceeds of $19.8 million, $15.4 million of which we received during the second quarter of 2022.
From January 1, 2022 to the date of this press release, we repurchased 790,011 common shares in open market transactions at an average price of $25.37 per share (of which 340,000 common shares were repurchased during June of 2022 at an average price of $24.45 per share) for an aggregate consideration of $20.0 million, pursuant to the previously announced $50.0 million share repurchase program (the “Share Repurchase Program”), all of which were cancelled and removed from our share capital as of the date of this release. As of the date of this release, we have $19.7 million outstanding under the authorized Share Repurchase Program.
On June 28, 2022, we entered into an agreement with ING Bank N.V., London Branch (the “ING $310.6 million Facility”), for an additional amount of $100.0 million under the existing ING $210.6 million Facility, as defined in our Annual Report on Form 20-F in respect of the fiscal year ended December 31, 2021 (the “2021 Annual Report”), collateralized by additional nine vessels. The additional amount of $100.0 million was drawn on June 30, 2022 and used to refinance the outstanding amounts under i) the lease agreements with China Merchants Bank Leasing (“CMBL”) for seven vessels acquired in February 2021 from Eneti Inc and for the vessel Star Vega and ii) the outstanding loan amount for the vessel Madredeus under the HSBC $80.0 million Facility, as defined in the 2021 Annual Report. The additional tranche matures five years after its respective drawdown.
On July 5, 2022, we entered into a loan agreement with Citibank N.A., London Branch (the “Citi $100.0 million Facility”) for a loan of up to $100.0 million in two tranches. The first tranche of $48.3 million was drawn on July 18, 2022 and used to replenish the funds used in June for the extinguishment of the outstanding amounts under the lease agreements with CMBL for the vessels Star Sirius, Laura, Idee Fixe, Kaley and Roberta. The second tranche of $51.7 million is expected to be drawn in late August in order to refinance the aggregate outstanding amount of $42.7 million under the lease agreements with CMBL of the vessels Star Apus, Star Cleo, Star Columba, Star Dorado, Star Hydrus, Star Pegasus and Star Pyxis. Both tranches of the Citi $100.0 million Facility will mature five years from their drawdown and are secured by the 12 aforementioned vessels.
On August 3, 2022, we entered into a loan agreement with Skandinaviska Enskilda Banken AB (publ) (”SEB”) (the “SEB $42.0 million Facility”) for a loan of up to $42.0 million in three tranches, which were drawn on August 3, 2022. The first two tranches of $12.8 million and $13.5 million were used to refinance the aggregate outstanding amount of $29.3 million under the HSBC $80.0 million Facility, which is now fully repaid, and the third tranche of $15.7 million was used to refinance the outstanding amount of $13.8 million under the NTT $17.6 million Facility as defined in the 2021 Annual Report, collateralized by the vessel Star Calypso. Each tranche of the SEB $42.0 million Facility will mature five years from its drawdown and is secured by the vessels Amami, Mercurial Virgo and Star Calypso.
On August 4, 2022, we entered into a new loan agreement with ABN AMRO Bank N.V. , in order to refinance the outstanding amount of $67.9 million under the ABN $115.0 million Facility (as defined in the 2021 Annual Report), (the “ABN $67.9 million Facility”). The ABN $67.9 million Facility provides for a lower margin and an extension of the final repayment date from December 2023 to August 2027, five years after its drawdown, and is secured by the 7 vessels previously securing the ABN $115.0 million Facility.
The financing arrangements discussed here contain financial and other covenants substantially similar to those covenants described in Item 5 of the 2021 Annual Report for our credit facilities.
Following the completion of the refinancings that we have performed during the last 6 months, we will have 12 unlevered vessels, we have extended the average maturity of our outstanding facilities to 4.4 years and we expect to save approximately $4.0 million per year in interest costs from more competitive margins and savings from the transition to the Secured Overnight Financing Rate as the benchmark interest rate in our credit agreements.
As of today, following a number of interest rates swaps we have entered into, we have an outstanding total notional amount of $783.1 million under our financing agreements for which the base rate is fixed at an average of 45 bps with average maturity of 1.7 years.
Vessel Employment Overview
Time Charter Equivalent Rate (“TCE rate”) is a non-GAAP measure. Please see EXHIBIT I at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Amounts shown throughout the press release and variations in period–on–period comparisons are derived from the actual unaudited numbers in our books and records. Reference to per share figures below are based on 102,473,028 and 102,038,883 weighted average diluted shares for the second quarter of 2022 and 2021, respectively.
Second Quarter 2022 and 2021 Results
For the second quarter of 2022, we had a net income of $200.1 million, or $1.95 earnings per share, compared to a net income for the second quarter of 2021 of $124.2 million, or $1.22 earnings per share. Adjusted net income, which excludes certain non-cash items, was $204.5 million, or $2.00 earnings per share, for the second quarter of 2022, compared to an adjusted net income of $128.8 million for the second quarter of 2021, or $1.26 earnings per share.
Net cash provided by operating activities for the second quarter of 2022 was $239.9 million, compared to $140.5 million for the second quarter of 2021. Adjusted EBITDA, which excludes certain non-cash items, was $258.3 million for the second quarter of 2022, compared to $182.5 million for the second quarter of 2021.
Voyage revenues for the second quarter of 2022 increased to $417.3 million from $311.4 million in the second quarter of 2021 and Time charter equivalent revenues (“TCE Revenues”)1 were $337.5 million for the second quarter of 2022, compared to $254.9 million for the second quarter of 2021. TCE rate for the second quarter of 2022 was $30,451 compared to $22,927 for the second quarter of 2021 which is indicative of the significantly improved market conditions prevailing during the recent quarter.
For the second quarters of 2022 and 2021, vessel operating expenses were $58.4 million and $53.0 million, respectively. Vessel operating expenses for the second quarter of 2022 included additional crew expenses related to the increased number and cost of crew changes performed during the period as a result of COVID-19 related restrictions estimated to be $2.8 million. Vessel operating expenses for the second quarter of 2021 included COVID-19 related expenses of $1.7 million and pre-delivery and pre-joining expenses of $1.9 million. Excluding non-recurring expenses such as increased costs due to the COVID-19 pandemic and pre-delivery and pre-joining expenses, our daily operating expenses per vessel for the second quarters of 2022 and 2021 were $4,674 and $4,307, respectively. This increase was driven by the increase in the average number of vessels in our fleet to 128.0 in the second quarter of 2022 from 126.0 for the respective quarter of 2021 and also the higher repair and maintenance costs due to the preventive maintenance program of our fleet, ensuring quality service to our clients and minimizing off hire time.
General and administrative expenses for the second quarters of 2022 and 2021 were $17.1 million and $10.1 million, respectively, primarily due to the increase in the stock based compensation expense to $10.2 million from $2.3 million. Vessel management fees for the second quarters of 2022 and 2021 were $5.0 million and $4.9 million, respectively. Our daily net cash general and administrative expenses per vessel (including management fees and excluding share-based compensation and other non-cash charges) for the second quarters of 2022 and 2021 were $1,010 and $1,099, respectively. Interest and finance costs net of interest and other income/(loss) for the second quarters of 2022 and 2021 were $12.4 million and $15.1 million, respectively. This decrease is primarily attributable to the decline in the average interest rate on our outstanding indebtedness, mainly driven by the refinancing of certain of our debt agreements and the redemption of our outstanding 8.30% Senior Notes in July 2021, as well as the decrease in the weighted average outstanding debt balance during the corresponding periods.
(1) Please see the table at the end of this release for the calculation of the TCE Revenues
Star Bulk Carriers Corp. press release