Athens, Greece - November 16, 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 third 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:
During the third quarter, Star Bulk reported Net Income of $109.7 million, TCE Revenues of $266.7 million and EBITDA of $163.8 million. TCE for the quarter was $24,365 / day per vessel, exceeding the fleet-weighted average Baltic indices by over 50%. Looking to Q4, we have covered ~66% of our available days at a TCE of $22,772 / day per vessel. Our Board of Directors has approved a dividend distribution of $1.20 / share, consistent with our stated capital allocation strategy. This dividend will be the seventh consecutive quarterly distribution and the ninth since we established our policy. Since the beginning of 2021 and including the abovementioned dividend, we will have distributed approximately $900 million to our shareholders.
We continue to optimize our capital structure, having agreed three additional refinancings totaling $96.0 million. Since the beginning of the year we have agreed refinancings of $402.6 million, reducing our annual interest cost by $4.9 million. From a risk management perspective, we have $754.7 million of swaps fixed at an average of 46 bps, protecting the Company from increased interest costs for an average remaining maturity of 1.4 years.
With continued elevated high sulfur/low sulfur fuel price spreads, our investment in scrubbers has contributed meaningfully to profitability for the quarter, strengthening our earnings and providing downside protection during seasonal downturns. With the dry bulk orderbook at an all-time low and with new environmental regulations coming into force and expectations of a gradual reopening of the Chinese economy, we remain optimistic about the long term prospects of the dry bulk market despite global macro uncertainties.
Declaration of Dividend
As of September 30, 2022, we owned 128 vessels and our aggregate amount of cash on our balance sheet was $392.7 million. Taking into account the Minimum Cash Balance per Vessel, as defined in our 2021 annual report, of $2.10 million, or $268.8 million in the aggregate, on November 16, 2022, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $1.20 per share, payable on or about December 12, 2022 to all shareholders of record as of November 30, 2022. The ex-dividend date is expected to be November 29, 2022.
Vessels in Ukraine Update
Following the recent multilateral agreement among Russia, Ukraine, Turkey and the United Nations to resume grain exports from the Black Sea regions, we succeeded in safely navigating the Star Helena and the Star Laura out of Ukraine , and the vessels are now normally trading. The Star Pavlina, however, remains in Ukraine safely manned with Ukrainian crew and efforts continue to have the vessel safely sail out of the region. In addition to standard industry vessel risk insurance, war risk insurance is in place for the remaining vessel and the applicable war risk insurers have confirmed that they hold the vessel covered at its current position in Ukraine, which includes Hull and Machinery and Increased Value insurance, Detention and Diversion Cover and War Loss of Hire for 180 days. We continue to closely monitor the situation to ensure that the interests of all stakeholders are safeguarded.
In September 2022, we entered into a committed term-sheet with a wholly owned subsidiary of NTT Finance Corporation for a loan facility of $24.0 million (the "NTT $24.0 million Facility"). The facility will be used to refinance the outstanding loan amount of the Star Virgo and is expected to be drawn by end of November 2022, when the outstanding amount of the existing loan facility will be repaid. The NTT $24.0 million Facility will mature 5 years after the drawdown and will be secured by first priority mortgage on the Star Virgo.
In September 2022, we entered into a committed term-sheet with CTBC Bank Co., Ltd for a loan facility of up to $25.0 million (the "CTBC $25.0 million Facility"). The facility will finance the Star Libra and is expected to be drawn by the end of November 2022 and will mature 5 years after the drawdown. The outstanding lease amount of the aforementioned vessel was repaid in full in late October 2022 with cash. The CTBC $25.0 million Facility will be secured by first priority mortgage on the Star Libra.
In September 2022, we entered into a committed term-sheet with Standard Chartered Bank for a loan facility of up to $47.0 million (the "Standard Chartered $47.0 million Facility"). The facility will be available in two tranches and will be used to refinance the outstanding amounts under the loan agreements of each of the Star Marisa and the Star Laetitia. The two tranches are expected to be drawn by the end of the fourth quarter of 2022 and will mature 5 years after the drawdown. The Standard Chartered $47.0 million Facility will be secured by first priority mortgages on the two vessels. 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 $402.6 million refinancings that we have performed during 2022, we will have 13 unlevered vessels, we have extended the average maturity of our outstanding facilities from 3.6 to 4.5 years and we expect to save approximately $4.9 million per year in interest costs from more competitive margins.
As of today, following a number of interest rates swaps we have entered into, we have an outstanding total notional amount of $754.7 million under our financing agreements with average fixed rate of 46 bps and with average maturity of 1.4 years. As of October 31, 2022 the Mark-to-Market of our outstanding interest rate swaps stood at $37.2 million. The above interest rate swaps are designated and qualify for hedge accounting.
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 102,541,314 and 102,525,065 weighted average diluted shares for the third quarter of 2022 and 2021, respectively.
Third Quarter 2022 and 2021 Results
For the third quarter of 2022, we had a net income of $109.7 million, or $1.07 earnings per share, compared to a net income for the third quarter of 2021 of $220.4 million, or $2.15 earnings per share.
Adjusted net income, which excludes certain non-cash items, was $136.3 million, or $1.33 earnings per share, for the third quarter of 2022, compared to an adjusted net income of $224.7 million for the third quarter of 2021, or $2.19 earnings per share.
Net cash provided by operating activities for the third quarter of 2022 was $184.5 million, compared to $251.0 million for the third quarter of 2021. Adjusted EBITDA, which excludes certain non-cash items, was $189.9 million for the third quarter of 2022, compared to $277.8 million for the third quarter of 2021.
Voyage revenues for the third quarter of 2022 decreased to $364.1 million from $415.7 million in the third quarter of 2021 and Time charter equivalent revenues ("TCE Revenues")1 were $266.7 million for the third quarter of 2022, compared to $349.3 million for the third quarter of 2021. TCE rate for the third quarter of 2022 was $24,365 compared to $30,626 for the third quarter of 2021 which is indicative of the weaker market conditions prevailing during the recent quarter. Our results for the third quarter of 2022 include a loss on write-down of inventories of $14.9 million resulting from the valuation of the bunkers remaining on board our vessels following the substantial decrease of bunkers’ net realizable value compared to their historical cost.
For the third quarters of 2022 and 2021, vessel operating expenses were $60.1 million and $54.1 million, respectively. Vessel operating expenses for the third 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 $1.9 million. In addition, during the third quarter of 2022 we incurred $2.1 million of additional operating expenses due to change of management of certain vessels from third party to in-house. Vessel operating expenses for the third quarter of 2021 included COVID-19 related expenses of $2.8 million and pre-delivery and pre-joining expenses of $0.6 million. Excluding non-recurring expenses such as increased costs due to the COVID-19 pandemic, exceptional operating expenses due to change of management and pre-delivery and pre-joining expenses, our daily operating expenses per vessel for the third quarters of 2022 and 2021 were $4,769 and $4,304, respectively. This increase was driven by the higher repair and maintenance costs incurred due to the preventive maintenance program of our fleet, ensuring quality service to our clients and minimizing off hire time, as well as inflationary pressure on the cost of materials and services worldwide.
Drydocking expenses for the third quarter of 2022 and 2021, were $9.8 million and $5.1 million, respectively.During the third quarter of 2022 8 vessels, mainly Newcatlemaxes and Capesizes, completed their periodic dry docking surveys while during the corresponding period in 2021, 6 vessels, mainly Supramaxes, completed their periodic dry docking surveys. General and administrative expenses for the third quarters of 2022 and 2021 were $18.4 million and $12.8 million, respectively, primarily due to the increase in the stock based compensation expense to $11.9 million from $6.1 million. Vessel management fees for the third quarters of 2022 and 2021 were $4.9 million. 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 third quarters of 2022 and 2021 were $950 and $987, respectively.
Interest and finance costs for the third quarters of 2022 and 2021 were $13.4 million and $13.8 million, respectively. The driving factor for this variation is the decrease of the weighted average outstanding indebtedness, which was partly offset by the increase in Libor rates.
We incurred interest and other income of $0.2 million in the third quarter of 2022 and interest and other loss of $1.0 million in the third quarter of 2021. This variation is mainly due to higher interest earned from fixed deposits during the third quarter of 2022 compared to that earned in the corresponding period in 2021, counterbalanced by the higher exchange losses in the third quarter of 2022.
About Star Bulk
Star Bulk is a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Star Bulk’s vessels transport major bulks, which include iron ore, minerals and grain, and minor bulks, which include bauxite, fertilizers and steel products. Star Bulk was incorporated in the Marshall Islands on December 13, 2006 and maintains executive offices in Athens, New York, Limassol, Singapore and Germany. Its common stock trades on the Nasdaq Global Select Market under the symbol "SBLK". Star Bulk operates a fleet of 128 vessels, with an aggregate capacity of 14.1 million dwt, consisting of 17 Newcastlemax, 22 Capesize, 2 Mini Capesize, 7 Post Panamax, 41 Kamsarmax, 2 Panamax, 20 Ultramax and 17 Supramax vessels with carrying capacities between 52,425 dwt and 209,529 dwt.
Star Bulk Carriers Corp. press release