Star Bulk, a global shipping company focusing on the transportation of dry bulk cargoes, announced its unaudited financial and operating results for the first 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
(Expressed in thousands of U.S. dollars, except for daily rates and per share data)
First quarter
First quarter
2022
2021
Voyage Revenues
$
360,883
$
200,467
Net /(loss)
$
170,364
$
35,763
Adjusted Net income / (loss) (1)
$
175,562
$
35,744
Net cash provided by operating activities
$
229,156
$
79,176
EBITDA (2)
$
220,683
$
84,499
Adjusted EBITDA (2)
$
225,881
$
84,667
Earnings / (loss) per share basic and diluted
$
1.67
$
0.36
Adjusted earnings / (loss) per share basic (1)
$
1.72
$
0.36
Adjusted earnings / (loss) per share diluted (1)
$
1.72
$
0.36
Average Number of Vessels
128.0
119.3
TCE Revenues (3)
$
304,904
$
156,394
Daily Time Charter Equivalent Rate (“TCE”) (3)
$
27,405
$
15,462
Daily OPEX per vessel (4)
$
4,988
$
4,410
Daily OPEX per vessel (excl. non recurring expenses) (4)
$
4,747
$
4,251
Daily Net Cash G&A expenses per vessel (5)
$
1,065
$
1,087
(1)Adjusted Net income / (loss) and Adjusted earnings / (loss) per share basic and diluted are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Net income / (loss), which is the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States (“ U.S. GAAP”), as well as for the definition of each measure.
(2)EBITDA and Adjusted EBITDA are non-GAAP measures. Please see the table 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 the table 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 for each vessel at acquisition, 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 the table 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 reported strong results for the first quarter of 2022, withNet Income of $170.4 million, EBITDA of $220.7 million and TCE Revenues of$304.9 million. TCE for the quarter was $27,405 / day per vessel, an increase of 77% YoY. This result marks our strongest daily TCE performance for the first quarter of a year, when rates are traditionally weaker, since 2009. Looking to the next quarter, we have covered 74.3% of our available days for Q2 at a TCE of $29,759 / day per vessel.
We continue to return profits to our shareholders, with the Board of Directors approving a dividend of $1.65 per share as per the Company’s existing dividend policy. Over the last four quarters, we have distributed a dividend of $5.60 per share to our shareholders.
Dry bulk market prospects are favorable, notwithstanding the challenging global economic conditions. Main driver remainsthe limited supply growth with the historically low vessel orderbook and the upcoming environmental regulations further suppressing orders and speeds. Demand is still robust with continued strong commodity flows over longer distances due to infrastructure investments and trade dislocations.”
Recent Developments
Declaration of Dividend
As of March 31, 2022, we owned 128 vessels and our Total Cash Balance was $444.4 million. Taking into account the Minimum Cash Balance per Vessel of $2.10 million and deducting also the net proceeds of $4.3 million for the shares issued and sold under our effective at-the-market offering programs during the quarter (as described below), on May 24, 2022, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $1.65 per share, payable on or about June 16, 2022 to all shareholders of record as of June 3, 2022. The ex-dividend date is expected to be June 2, 2022.
Shares Outstanding Update
During 2022 and through the date of this release, we have issued and sold 654,690 common shares under the effective at-the-market offering programs at an average price of $30.85 per share, resulting in net proceeds of $19.8 million, of which we received $4.3 million as of March 31, 2022.
In April 2022, we repurchased 450,011 common shares in open market transactions at an average price of $26.07 per share for an aggregate consideration of $11.7 million, pursuant to the previously announced $50.0 million share repurchase program, all of which were cancelled and removed from our share capital as of the date of this release. As of today, we have $28.0 million outstanding under the authorized share repurchase program (the “Share Repurchase Program”).
Financing
On May 24, 2022, we repaid the outstanding amounts of $83.6 million under the lease agreements of the seven vessels acquired in February 2021 from Eneti Inc. We have received credit committee approval from a major European Bank for an amount of up to $100.0 million to replenish the cash used for the prepayment of the outstanding lease amounts of the aforementioned vessels and refinance two additional vessels with an outstanding debt balance of $16.1 million as of today. As a result of the new facility, we expect to save approximately $1.5 million per year in interest costs.
Vessel Employment Overview
Daily Time Charter Equivalent Rate (“TCE”) is a non-GAAP measure. Please see the table 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.
For the first quarter of 2022 our TCE rate was:
Capesize / Newcastlemax Vessels:
$26,236 per day.
Post Panamax / Kamsarmax / Panamax Vessels:
$27,994 per day.
Ultramax / Supramax Vessels:
$27,169 per day.
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 102,257,673 and 99,019,944 weighted average diluted shares for the first quarter of 2022 and 2021, respectively.
First Quarter 2022 and 2021 Results
For the first quarter of 2022, we had a net income of $170.4 million, or $1.67 earnings per share, compared to a net income for the first quarter of 2021 of $35.8 million, or $0.36 earnings per share.
Adjusted net income, which excludes certain non-cash items, was $175.6 million, or $1.72 earnings per share, for the first quarter of 2022, compared to an adjusted net income for the first quarter of 2021 of $35.7 million, or $0.36 earnings per share.
Net cash provided by operating activities for the first quarter of 2022 was $229.2 million, compared to $79.2 million for the first quarter of 2021. Adjusted EBITDA, which excludes certain non-cash items, was $225.9 million for the first quarter of 2022, compared to $84.7 million for the first quarter of 2021.
Voyage revenues for the first quarter of 2022 increased to $360.9 million from $200.5 million in the first quarter of 2021 and Time charter equivalent revenues (“TCE Revenues”)1 were $304.9 million for the first quarter of 2022, compared to $156.4 million for the first quarter of 2021. TCE rate for the first quarter of 2022 was $27,405 compared to $15,462 for the first quarter of 2021 which is indicative of the significantly improved market conditions prevailing during the recent quarter.
For the first quarters of 2022 and 2021, vessel operating expenses were $57.5 million and $47.4 million, respectively, primarily driven by the increase in the average number of vessels in our fleet to 128.0 vessels in the first quarter of 2022 from 119.3 vessels for the respective quarter of 2021. Vessel operating expenses for the first 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 restrictions estimated to be $2.8 million. Vessel operating expenses for the first quarter of 2021 included COVID-19 related expenses of $1.3 million and pre-delivery and pre-joining expenses of $0.5 million. Excluding non-recurring expenses such as the increased costs due to COVID-19 and pre-delivery and pre-joining expenses, our daily operating expenses per vessel for the first quarters of 2022 and 2021 were $4,747 and $4,251, respectively. This increase was mainly driven by 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 first quarters of 2022 and 2021 were $8.8 million and $7.3 million, respectively, primarily due to the increase in the stock based compensation expense to $1.2 million from $0.3 million and the average number of vessels in our fleet. Vessel management fees for the first quarters of 2022 and 2021 were $4.8 million and $4.7 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 first quarters of 2022 and 2021 were $1,065 and $1,087, respectively.
Interest and finance costs net of interest and other /(loss) for the first quarters of 2022 and 2021 were $11.8 million and $12.7 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.
Unaudited Consolidated Statement of Operations
(Expressed in thousands of U.S. dollars except for share and per share data)
First quarter 2022
First quarter 2021
Revenues:
Voyage revenues
$
360,883
$
200,467
Total revenues
360,883
200,467
Expenses:
Voyage expenses
(53,404
)
(40,052
)
Charter-in hire expense
(4,012
)
(2,943
)
Vessel operating expenses
(57,466
)
(47,354
)
Dry docking expenses
(8,727
)
(12,191
)
Depreciation
(38,461
)
(36,233
)
Management fees
(4,839
)
(4,667
)
General and administrative expenses
(8,765
)
(7,297
)
/(Loss) on forward freight agreements and bunker swaps
(2,623
)
(2,085
)
Other operational loss
(614
)
(1,340
)
Other operational gain
267
1,017
Gain on time charter agreement termination
–
1,102
Operating /(loss)
182,239
48,424
Interest and finance costs
(12,082
)
(14,440
)
Interest and other /(loss)
261
1,750
Loss on debt extinguishment, net
–
–
Total other expenses, net
(11,821
)
(12,690
)
/(Loss) before equity in investee
170,418
35,734
Equity in /(loss) of investee
(17
)
29
/(Loss) before taxes
$
170,401
$
35,763
Income taxes
(37
)
–
Net /(loss)
$
170,364
$
35,763
/(loss) per share, basic and diluted
$
1.67
$
0.36
Weighted average number of shares outstanding, basic
101,981,583
98,712,581
Weighted average number of shares outstanding, diluted
102,257,673
99,019,944
Unaudited Consolidated Condensed Balance Sheet Data
(Expressed in thousands of U.S. dollars)
ASSETS
March 31, 2022
December 31, 2021
Cash and cash equivalents and restricted cash, current
$
442,385
471,250
Other current assets
221,516
211,674
TOTAL CURRENT ASSETS
663,901
682,924
Vessels and other fixed assets, net
2,982,610
3,013,038
Restricted cash, non current
2,021
2,021
Other non-current assets
62,162
56,736
TOTAL ASSETS
$
3,710,694
$
3,754,719
Current portion of long-term bank loans and lease financing
$
205,830
$
207,135
Other current liabilities
105,960
83,661
TOTAL CURRENT LIABILITIES
311,790
290,796
Long-term bank loans and lease financing non-current (net of unamortized deferred finance fees of $14,841 and $16,171, respectively)
1,284,472
1,334,593
Other non-current liabilities
46,516
49,312
TOTAL LIABILITIES
$
1,642,778
$
1,674,701
SHAREHOLDERS’ EQUITY
2,067,916
2,080,018
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,710,694
$
3,754,719
Unaudited Consolidated Condensed Cash Flow Data
(Expressed in thousands of U.S. dollars)
First quarter 2022
First quarter 2021
Net cash provided by / (used in) operating activities
$
229,156
$
79,176
Acquisition of vessels and other fixed assets
(101
)
(53,436
)
Capital expenditures for vessel /upgrades
(6,313
)
(11,395
)
Insurance Proceeds
1,600
4,544
Net cash provided by / (used in) investing activities
(4,814
)
(60,287
)
Proceeds from vessels’ new debt
–
36,000
Scheduled vessels’ debt repayment
(52,756
)
(43,416
)
Financing fees
–
(1,340
)
Refund of financing premia
–
903
Shares issued
4,350
–
Dividend payments
(204,801
)
–
Net cash provided by / (used in) financing activities
(253,207
)
(7,853
)
Summary of Selected Data
First quarter 2022
First quarter 2021
Average number of vessels (1)
128.0
119.3
Number of vessels (2)
128
125
Average age of operational fleet (in years) (3)
10.1
9.3
Ownership days (4)
11,520
10,737
Available days (5)
11,126
10,115
Charter-in days (6)
199
175
Daily Time Charter Equivalent Rate (7)
$
27,405
$
15,462
Daily OPEX per vessel (8)
$
4,988
$
4,410
Daily OPEX per vessel (excl. non recurring expenses) (8)
$
4,747
$
4,251
Daily Net Cash G&A expenses per vessel (9)
$
1,065
$
1,087
(1) Average number of vessels is the number of vessels that constituted our owned fleet for the relevant period, as measured by the sum of the number of days each operating vessel was a part of our owned fleet during the period divided by the number of calendar days in that period.
(2) As of the last day of the periods reported.
(3) Average age of our operational fleet is calculated as of the end of each period.
(4) Ownership days are the total calendar days each vessel in the fleet was owned by us for the relevant period, including vessels subject to sale and leaseback transactions and finance leases.
(5) Available days for the fleet are the Ownership days after subtracting off-hire days for major repairs, dry docking or special or intermediate surveys and for vessels’ improvements and upgrades. The available days for each period presented were also decreased by off-hire days relating to disruptions in connection with crew changes as a result of COVID-19. Our method of computing AvailableDays maynot necessarily be comparable to Available Days of other companies due to differences in methods of calculation.
(6) Charter-in days are the total days that we charter-in vessels, not owned by us.
(7) Time charter equivalent rate represents the weighted average daily TCE rates of our operating fleet (including owned fleet and fleet under charter-in arrangements). TCE rate is a measure of the average daily net revenue performance of our vessels. Our method of calculating TCE rate is determined by dividing (a) TCE Revenues, which consists of voyage revenues net of voyage expenses, charter-in hire expense, amortization of fair value of /below market acquired time charter agreements, if any, as well as adjusted for the impact of realized /(loss) on forward freight agreements (“FFAs”) and bunker swaps by (b) Available days for the relevant time period. Available days do not include the Charter-in days as per the relevant definitions provided above. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. In the calculation of TCE Revenues, we also include the realized /(loss) on FFAs and bunker swaps as we believe that this method better reflects the chartering result of our fleet and is more comparable to the method used by our peers. TCE Revenues and TCE rate, which are non-GAAP measures, provide additional meaningful information in conjunction with voyage revenues, the most directly comparable GAAP measure, because they assist our management in making decisions regarding the deployment and use of our vessels and because we believe that they provide useful information to investors regarding our financial performance. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., voyage charters, time charters, bareboat charters and pool arrangements) under which its vessels may be employed between the periods. Our method of computing TCE Revenues and TCE rate maynot necessarily be comparable to those of other companies due to differences in methods of calculation. For a detailed calculation please see the table at the end of this release with the reconciliation of Voyage Revenues to TCE.
(8) Daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days. Daily OPEX per vessel (excluding non- recurring expenses) is calculated by dividing vessel operating expenses minus any non-recurring expenses or other additional expenses due to conditions outside of the Company’s control (such as pre-delivery expenses for each vessel at acquisition or increased costs due to the COVID-19 pandemic, if any) by Ownership days. We exclude non-recurring expenses that may occur occasionally from our Daily OPEX per vessel, since these generally represent items that we would not anticipate occurring as part of our normal business on a regular basis. We believe that Daily OPEX per vessel (excluding non-recurring expenses) is a useful measure for our management and investors for period to period comparison with respect to our operating cost performance since such measure eliminates the effects of non-recurring items which may vary from period to period, are not part of our daily business and derive from reasons unrelated to overall operating performance. In the future we may incur expenses that are the same as or similar to certain non-recurring expenses that were previously excluded.
(9) Please see the table at the end of this release for the reconciliation to General and administrative expenses, the most directly comparable GAAP measure. We believe that Daily Net Cash G&A expenses per vessel is a useful measure for our management and investors for period to period comparison with respect to our financial performance since such measure eliminates the effects of non-cash items which may vary from period to period, are not part of our daily business and derive from reasons unrelated to overall operating performance.
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 /or incur indebtedness.
To derive Adjusted EBITDA from EBITDA, we exclude non-cash /(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 /(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 due to differences in methods of calculation.
The following table reconciles net cash provided by operating activities to EBITDA and Adjusted EBITDA:
(Expressed in thousands of U.S. dollars)
First quarter 2022
First quarter 2021
Net cash provided by/(used in) operating activities
$
229,156
$
79,176
Net decrease / (increase) in current assets
6,119
26,623
Net increase / (decrease) in operating liabilities, excluding current portion of long term debt
(19,801
)
(30,697
)
Share – based compensation
(1,233
)
(313
)
Amortization of deferred finance charges
(1,339
)
(1,815
)
Unrealized gain / (loss) on forward freight agreements and bunker swaps
(4,060
)
(1,194
)
Total other expenses, net
11,821
12,690
Income tax
37
–
Equity in /(loss) of investee
(17
)
29
EBITDA
$
220,683
$
84,499
Equity in (income)/loss of investee
17
(29
)
Gain on time charter agreement termination
–
(1,102
)
Unrealized (gain)/loss on forward freight agreements and bunker swaps
4,060
1,194
Share-based compensation
1,233
313
Other non-cash charges
(112
)
(208
)
Adjusted EBITDA
$
225,881
$
84,667
Net /(Loss) and Adjusted Net /(Loss) Reconciliation and calculation of Adjusted /(Loss) Per Share
To derive Adjusted Net /(Loss) and Adjusted /(Loss) Per Share from Net /(Loss), we exclude non-cash items, as provided in the table below. We believe that Adjusted Net /(Loss) and Adjusted /(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 /(loss) on sale of assets, unrealized /(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 /(Loss) and Adjusted / (Loss) Per Share may not necessarily be comparable to other similarly titled captions of other companies due to differences in methods of calculation.
The following table reconciles Net income / (loss) to Adjusted Net income / (loss):
(Expressed in thousands of U.S. dollars except for share and per share data)
First quarter 2022
First quarter 2021
Net income / (loss)
$
170,364
$
35,763
Amortization of fair value of /below market acquired time charter agreements, net
–
(187
)
Share – based compensation
1,233
313
Other non-cash charges
(112
)
(208
)
Unrealized (gain) / loss on forward freight agreements and bunker swaps
4,060
1,194
Equity in /(loss) of investee
17
(29
)
Gain on time charter agreement termination
–
(1,102
)
Adjusted Net income / (loss)
$
175,562
$
35,744
Weighted average number of shares outstanding, basic
101,981,583
98,712,581
Weighted average number of shares outstanding, diluted
102,257,673
99,019,944
Adjusted Earnings / (Loss) Per Share, basic and diluted
$
1.72
$
0.36
Voyage Revenues to Daily Time Charter Equivalent (“TCE”) Reconciliation
(In thousands of U.S. Dollars, except for TCE rates)
First quarter 2022
First quarter 2021
Voyage revenues
$
360,883
$
200,467
Less:
Voyage expenses
(53,404
)
$
(40,052
)
Charter-in hire expense
(4,012
)
$
(2,943
)
Realized /(loss) on /bunker swaps
1,437
$
(891
)
Amortization of fair value of /above market acquired time charter agreements, net
–
$
(187
)
Time Charter equivalent revenues
$
304,904
$
156,394
Available days
11,126
$
10,115
Daily Time Charter Equivalent Rate (“TCE”)
$
27,405
$
15,462
Daily Net Cash G&A expenses per vessel Reconciliation
(In thousands of U.S. Dollars, except for daily rates)
First quarter 2022
First quarter 2021
General and administrative expenses
$
8,765
$
7,297
Plus:
Management fees
4,839
4,667
Less:
Share – based compensation
(1,233
)
(313
)
Other non-cash charges
112
208
Net Cash G&As expenses
$
12,483
$
11,859
Ownership days
11,520
10,737
Charter-in days
199
175
Daily Net Cash G&A expenses per vessel
$
1,065
$
1,087
