Athens, Greece - February 16, 2023
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 fourth 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 liquidity 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 certain 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) adding the Management fee expense to, the General and Administrative expenses (net of share-based compensation expense and other non-cash charges) and (2) 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 fourth quarter, Star Bulk reported Net Income of $85.8 million, TCE Revenues of $216.4 million and EBITDA of $128.5 million. TCE for the quarter was $19,590/day per vessel, substantially exceeding the fleet-weighted average Baltic indices.
Consistent with our stated dividend policy, our Board of Directors has approved a dividend distribution of $0.60 / share. For the full year 2022, Star Bulk will have made distributions of $525.7 million, or $5.10 per share to its shareholders. Since 2021 we have distributed a total of $960.7 million, or $9.35 per share in dividends.
During the last few months we completed new debt refinancings totaling ~$430 million, effectively reducing our annual interest cost by ~$5.2 million. As of today we have $722.1 million of swaps fixed at an average of 46 bps, protecting the Company from increased interest costs for an average remaining maturity of 1.1 years.
On the ESG front, Star Bulk has participated in the Carbon Disclosure Project (“CDP”) for a second year in a row, achieving a score of B and improving its performance versus last year where it had scored a B-. This rating continues to place the Company at Management Level as per the CDP scoring, indicating a maturity of “taking coordinated action on climate issues”. It also places Star Bulk above both the industry average of C and the global average of C, which indicates Awareness Level. During 2023 Star Bulk will aim to continue improving its environmental stewardship, by measuring and reporting for the first time also its Scope 3 emissions, namely the emissions which Star Bulk affects indirectly across its value chain.
Despite the current seasonal spot market weakness, the long term prospects of the dry bulk market remain encouraging given the 25-year low orderbook and the positive effect on dry bulk demand from the Chinese economy re-opening. Star Bulk is well positioned due to its scrubber fitted and diverse fleet to take advantage of a recovery in the dry bulk freight rates.
Declaration of Dividend
As of December 31, 2022, we owned 128 vessels and our aggregate amount of cash on our balance sheet was $286.3 million. Adjusted for drawdowns that took place in early January 2023, our cash balance was $331.7 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 February 16, 2023, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.60 per share, payable on or about March 14, 2023 to all shareholders of record as of February 28, 2023. The ex-dividend date is expected to be February 27, 2023.
Following the completion of the loan documentation with a wholly owned subsidiary of NTT Finance Corporation and CTBC Bank Co., Ltd, in November and December 2022 we drew down an aggregate amount of $49.0 million under the i) NTT $24.0 million Facility and ii) CTBC $25.0 million Facility, as described in our Q3 2022 Press Release. In addition, following the completion of the loan documentation with Standard Chartered Bank, in January 2023 we drew down $47.0 million under the Standard Chartered $47.0 million Facility, as described in our Q3 2022 Press Release.
In addition, in December 2022, we entered into a loan agreement with ABN AMRO Bank for a loan facility of $24.0 million (the “ABN AMRO $24.0 million Facility”). The amount was drawn in December 2022 and used to refinance the outstanding amount under the loan agreement of the Star Sienna. The ABN AMRO $24.0 million Facility matures 5 years after the drawdown and is secured by first priority mortgage on the Star Sienna.
The financing arrangements discussed above contain financial and other covenants substantially similar to those covenants described in Item 5 of our 2021 annual report regarding our credit facilities.
Following the completion of the $430.0 million of new refinancings that we performed during 2022 and January 2023, we have 13 unlevered vessels, we extended the average maturity of our outstanding facilities from 3.6 to 4.3 years and we expect to save approximately $5.2 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 $722.1 million under our financing agreements with an average fixed rate of 46 bps and an average maturity of 1.1 years. As of December 31, 2022 the Mark-to-Market value of our outstanding interest rate swaps stood at $33.4 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–over–period comparisons are derived from the actual unaudited numbers in our books and records. Reference to per share figures below are based on 102,724,888 and 102,285,188 weighted average diluted shares for the fourth quarter of 2022 and 2021, respectively.
Fourth Quarter 2022 and 2021 Results
For the fourth quarter of 2022, we had a net income of $85.8 million, or $0.84 earnings per share, compared to a net income for the fourth quarter of 2021 of $300.2 million, or $2.93 earnings per share. Adjusted net income, which excludes certain non-cash items, was $92.5 million, or $0.90 earnings per share, for the fourth quarter of 2022, compared to an adjusted net income of $302.4 million for the fourth quarter of 2021, or $2.96 earnings per share.
Net cash provided by operating activities for the fourth quarter of 2022 was $116.3 million, compared to $296.4 million for the fourth quarter of 2021. Adjusted EBITDA, which excludes certain non-cash items, was $134.6 million for the fourth quarter of 2022, compared to $355.1 million for the fourth quarter of 2021.
Voyage revenues for the fourth quarter of 2022 decreased to $294.8 million from $499.9 million in the fourth quarter of 2021 and Time charter equivalent revenues (“TCE Revenues”)1 were $216.4 million for the fourth quarter of 2022, compared to $428.0 million for the fourth quarter of 2021. TCE rate for the fourth quarter of 2022 was $19,590 compared to $37,406 for the fourth quarter of 2021 which is indicative of the weaker market conditions prevailing during the recent quarter. Our results for the fourth quarter of 2022 include a loss on write-down of inventories of $2.4 million resulting from the valuation of the bunkers remaining on board our vessels as a result of the continuing decrease of such bunkers’ net realizable value compared to their historical cost.
For the fourth quarters of 2022 and 2021, vessel operating expenses were $52.6 million and $54.2 million, respectively. Vessel operating expenses for the fourth 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 $2.2 million. In addition, we incurred $1.0 million of additional operating expenses due to change of management of certain vessels from third party to in-house. Vessel operating expenses for the fourth quarter of 2021 included COVID-19 related expenses of $2.6 million and pre-delivery and pre-joining expenses of $0.1 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 decreased to $4,205 for the fourth quarter of 2022 from $4,373 for the fourth quarter of 2021.
Drydocking expenses for the fourth quarters of 2022 and 2021, were $18.7 million and $7.0 million, respectively. During the fourth quarter of 2022 14 vessels completed their periodic dry docking surveys while during the corresponding period in 2021, 3 vessels completed their periodic dry docking surveys.
General and administrative expenses for the fourth quarters of 2022 and 2021 were $12.5 million and $9.3 million, respectively, primarily due to the increase in the stock based compensation expense to $5.1 million from $1.7 million. Vessel management fees for the fourth quarter of 2022 decreased to $4.4 million from $4.9 million in the corresponding period of 2021 due to the change of management of certain vessels, from third party to in-house as described above. 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 fourth quarters of 2022 and 2021 were $977 and $1,042, respectively.
Interest and finance costs for the fourth quarters of 2022 and 2021 were $14.8 million and $12.8 million, respectively. The driving factor for this increase is the increase in the London Interbank Offered Rate for US Dollars (“LIBOR”), which was partially offset by the decrease in our weighted average outstanding indebtedness.
Interest income and other income for the fourth quarter of 2022 amounted to $6.8 million, compared to an interest income and other loss, net of $0.3 million in the fourth quarter of 2021. This variation is mainly due to higher interest earned from fixed deposits during the fourth quarter of 2022 and foreign exchange gains incurred in the same period compared to foreign exchange losses incurred in the fourth quarter of 2021.
Gain/(Loss) on debt extinguishment, net for the fourth quarter of 2022 included an amount of $5.8 million which resulted from the write-off of the cumulative gain on the hedging instrument previously recognized in equity, following the prepayment of the corresponding loan.
(1) Please see the table at the end of this release for the calculation of the TCE Revenues.
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