Star Bulk Carriers Corp. Reports Net Profit of $85.8 Million for the Fourth Quarter of 2022 and Declares Quarterly Dividend of $0.60 Per Share

ATHENS, Greece, Feb. 16, 2023 (GLOBE NEWSWIRE) — 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.

Financial Highlights

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.

Recent Developments

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.  

Financing

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.

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¹ Please see the table at the end of this release for the calculation of the TCE Revenues.

Unaudited Consolidated Income Statements

Unaudited Consolidated Condensed Balance Sheet Data

Unaudited Consolidated Condensed Cash Flow Data

Summary of Selected Data

EXHIBIT I: Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA Reconciliation

We include EBITDA herein since it is a basis upon which we assess our liquidity position. It is also used by our lenders as a measure of our compliance with certain loan covenants and we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness.

To derive Adjusted EBITDA from EBITDA, we exclude non-cash gains/(losses) such as those related to sale of vessels, share based compensation expense, impairment loss, loss from bad debt, change in fair value of forward freight agreements and bunker swaps and the equity in income/(loss) of investee and other non-cash charges, if any, which may vary from period to period and for different companies and because these items do not reflect operational cash inflows and outflows of our fleet.

EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to cash flow from operating activities or net income, as determined by United States generally accepted accounting principles, or U.S. GAAP. Our method of computing EBITDA and Adjusted EBITDA may not necessarily be comparable to other similarly titled captions of other companies.

The following table reconciles net cash provided by operating activities to EBITDA and Adjusted EBITDA:

Net income/(Loss) and Adjusted Net income/(Loss) Reconciliation and Calculation of Adjusted Earnings/(Loss) Per Share

To derive Adjusted Net Income/(Loss) and Adjusted Earnings/(Loss) Per Share from Net Income/(Loss), we exclude non-cash items, as provided in the table below. We believe that Adjusted Net Income/(Loss) and Adjusted Earnings/(Loss) Per Share assist our management and investors by increasing the comparability of our performance from period to period since each such measure eliminates the effects of such non-cash items as gain/(loss) on sale of assets, unrealized gain/(loss) on derivatives, impairment loss and other items which may vary from year to year, for reasons unrelated to overall operating performance. In addition, we believe that the presentation of the respective measure provides investors with supplemental data relating to our results of operations, and therefore, with a more complete understanding of factors affecting our business than with GAAP measures alone. Our method of computing Adjusted Net Income/(Loss) and Adjusted Earnings/ (Loss) Per Share may not necessarily be comparable to other similarly titled captions of other companies.

The following table reconciles Net income / (loss) to Adjusted Net income / (loss):

Voyage Revenues to Daily Time Charter Equivalent (“TCE”) Reconciliation

Daily Net Cash G&A expenses per vessel Reconciliation

Conference Call details:
Our management team will host a conference call to discuss our financial results on Friday, February 17, 2023 at 11:00 a.m., Eastern Time (ET).

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1 877 405 1226 (US Toll-Free Dial In) or +1 201 689 7823 (US and Standard International Dial In), or +0 800 756 3429 (UK Toll Free Dial In). Please quote “Star Bulk Carriers” to the operator and/or conference ID 13736232. Click here for additional participant International Toll-Free access numbers.

Alternatively, participants can register for the call using the call me option for a faster connection to join the conference call. You can enter your phone number and let the system call you right away. Click here for the call me option.

Slides and audio webcast:
There will also be a live, and then archived, webcast of the conference call and accompanying slides, available through the Company’s website. To listen to the archived audio file, visit our website www.starbulk.com and click on Events & Presentations. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

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.

Forward-Looking Statements
Matters discussed in this press release may constitute forward looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “projects,” “likely,” “will,”“would,” “could,” “should,” “may,” “forecasts,” “potential,” “continue,” “possible” and similar expressions or phrases may identify forward-looking statements.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination by our management of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include general dry bulk shipping market conditions, including fluctuations in charter rates and vessel values; the strength of world economies; the stability of Europe and the Euro; fluctuations in currencies, interest rates and foreign exchange rates, and the impact of the discontinuance of the London Interbank Offered Rate for US Dollars, or LIBOR, after June 30, 2023 on any of our debt referencing LIBOR in the interest rate; business disruptions due to natural disasters or other disasters outside our control, such as the ongoing global outbreak of the novel coronavirus (“COVID-19”); the length and severity of epidemics and pandemics, including COVID-19 and its impact on the demand for seaborne transportation in the dry bulk sector; changes in supply and demand in the dry bulk shipping industry, including the market for our vessels and the number of newbuildings under construction; the potential for technological innovation in the sector in which we operate and any corresponding reduction in the value of our vessels or the charter income derived therefrom; changes in our operating expenses, including bunker prices, dry docking, crewing and insurance costs; changes in governmental rules and regulations or actions taken by regulatory authorities; potential liability from pending or future litigation and potential costs due to environmental damage and vessel collisions; the impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our Environmental, Social and Governance practices; general domestic and international political conditions or events, including “trade wars” and the recent conflicts between Russia and Ukraine; the impact on our common shares and reputation if our vessels were to call on ports located in countries that are subject to restrictions imposed by the U.S. or other governments; potential physical disruption of shipping routes due to accidents, climate-related (acute and chronic), political events, public health threats, international hostilities and instability, piracy or acts by terrorists; the availability of financing and refinancing; the failure of our contract counterparties to meet their obligations; our ability to meet requirements for additional capital and financing to grow our business; the impact of our indebtedness and the compliance with the covenants included in our debt agreements; vessel breakdowns and instances of off‐hire; potential exposure or loss from investment in derivative instruments; potential conflicts of interest involving our Chief Executive Officer, his family and other members of our senior management and our ability to complete acquisition transactions as and when planned. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof, and the Company disclaims any intention or obligation to update any forward‐looking statements as a result of developments occurring after the date of this communication.

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