SBLK - Star Bulk Carriers Corp. Reports Net Profit of $39.7 Million for the Fourth Quarter of 2023 and Declares Quarterly Dividend of $0.45 Per Share | Benzinga

ATHENS, Greece, Feb. 12, 2024 (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 2023. 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

(1) Adjusted Net income and Adjusted earnings per share are non-GAAP measures. Please see EXHIBIT I at the end of this release for a reconciliation to Net income and earnings per share, which are the most directly comparable financial measures 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 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) and one-time expenses.
(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. The definition of each measure is provided in footnote (7) to the Summary of Selected Data table below.
(4) Daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days (defined below). Daily OPEX per vessel (as adjusted) is calculated by dividing vessel operating expenses excluding increased costs due to the COVID-19 pandemic or pre-delivery expenses for each vessel on acquisition or change of management, if any, by Ownership days. In the future we may incur expenses that are the same as or similar to certain expenses (as described above) 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, other non-cash charges and one-time expenses and (2) then dividing the result by the sum of Ownership days and Charter-in days (defined below). 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 reported for the fourth quarter 2023 Net Income of $39.7 million, TCE Revenues of $191.9 million and EBITDA of $93.2 million.

During the quarter we completed a $380.0 million repurchase of 20 million shares from Oaktree. Consistent with our stated dividend policy, our Board of Directors has approved a dividend distribution of $0.45 / share, bringing the total distributed amount since June 2021 to $1.1 billion.

We continue to prepare for more stringent environmental regulations by investing in renewing our fleet, having increased the size of our newbuilding order from two to five latest generation, high specification Eco Kamsarmaxes delivering in 2025-2026. In addition, we have started taking delivery of our long-term Charter-in Eco tonnage, currently operating two vessels out of the six that we expect to be delivered during 2024.

Regarding our previously announced all-share merger with Eagle Bulk, we continue to work towards closing the transaction in the first half of 2024. We have received all necessary regulatory approvals. The Eagle Bulk shareholder vote will be held on April 5^th 2024. We strongly believe in the operational and financial benefits of bringing the two companies together and creating a global leader in dry bulk shipping.

Finally, Star Bulk is proud to be one of the founding members of the recently launched Maritime Emissions Reduction Center, which will be based in Athens. We are strong supporters of investing in research and development and promoting the adoption of technologies that will assist the shipping industry's energy transition. The Center will aim to engage stakeholders, attract funding and spearhead initiatives that will accelerate the pace of innovation in our industry.

Outlook for the dry bulk market remains positive due to favorable supply dynamics, geopolitically driven inefficiencies in trade and a recovery of demand supported by large global infrastructure investment needs for the world's green transition. Star Bulk expects to take advantage of the recent strength in the dry bulk market having mostly maintained its diverse scrubber fitted fleet in the spot market and thus continue to create value for its shareholders."

Recent Developments

Declaration of Dividend

On February 12, 2024, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.45 per share, payable on or about March 28, 2024 to all shareholders of record as of March 12, 2024. The ex-dividend date is expected to be March 11, 2024.

Eagle Merger Update

As previously announced, on December 11, 2023, we entered into a definitive agreement with Eagle Bulk Shipping Inc. (NYSE:EGLE) ("Eagle") (the "Eagle Merger Agreement") to combine in an all-stock merger (the "Eagle Merger"). Pursuant to the Eagle Merger Agreement, each share of common stock, par value $0.01 per share, of Eagle (the "Eagle Common Stock") issued and outstanding immediately prior to the effective time of the Eagle Merger (excluding Eagle Common Stock owned by Eagle, Star Bulk, Star Infinity Corp., a wholly owned subsidiary of Star Bulk, or any of their respective direct or indirect wholly owned subsidiaries) will be converted into the right to receive 2.6211 common shares, par value $0.01 per share, of Star Bulk (the "Star Bulk Common Stock"). The Eagle Merger is subject to approval by holders of Eagle Common Stock (the "Eagle shareholders"), receipt of applicable regulatory approvals and satisfaction of other customary closing conditions. On January 19, 2024, we filed with the United States Securities and Exchange Commission (the "SEC") a registration statement on Form F-4 (the "F-4") in preliminary form, which was amended on February 8, 2024, with respect to the shares of Star Bulk Common Stock to be issued to Eagle shareholders pursuant to the Eagle Merger Agreement. The F-4 included a proxy statement of Eagle under Section 14(a) of the Securities Exchange Act of 1934, as amended, and a notice of meeting with respect to the special meeting of Eagle shareholders (the "Eagle special meeting"), at which Eagle shareholders will be asked to consider and vote upon the Eagle Merger proposal and certain other proposals. On February 12, 2024, the F-4 was declared effective by the SEC. The board of directors of Eagle fixed the close of business on February 12 , 2024 as the record date for the determination of Eagle shareholders entitled to notice of, and to vote at, the Eagle special meeting. The Eagle special meeting will be held on April 5, 2024. The Eagle Merger is expected to close in the first half of 2024.

Fleet Update

Vessel S&P

In connection with the completion of the previously announced vessel sales, Star Athena, Star Theta and Star Jennifer were delivered to their new owners in late November 2023, while the vessel Star Glory was delivered to her new owners in early January 2024.

In addition, in December 2023, January 2024 and February 2024 we agreed to sell the vessels Star Dorado, Star Bovarius, Big Fish, Big Bang and Pantagruel. The vessel Big Fish was delivered to her new owners in January 2024 while the remaining vessels are expected to be delivered to their new owners by April 2024.

Overall, the Company, during the first half of 2024, expects to collect $112.0 million, in aggregate, from vessel sales and to make debt prepayments in connection with these sales of approximately $38.7 million and also to fully prepay the outstanding amount of the brigde loan facility under the ING $325.6 million Facility, as described below .

Newbuilding Vessels

As of the date of this release, we have exercised the two previously announced optional shipbuilding contracts with Qingdao Shipyard Co., Ltd. for the construction of two 82,000 dwt Kamsarmax newbuilding vessels. We have also entered into another firm shipbuilding contract with the same shipyard and for the same specifications, hence increasing our current firm shipbuilding contracts to five. We expect to take delivery of these vessels as follows:

• Two in September 2025,
• Two in April 2026 and
• One in July 2026.
  

Charter-In Vessels

Lastly, in January 2024, we took delivery of the newbuilding vessels Star Voyager and Stargazer, a Kamsarmax vessel built in Tsuneishi- Zhousan and an Ultramax vessel built in Tsuneishi- Cebu, respectively, each one subject to a seven-year charter-in arrangement as previously announced.

Financing

In late November 2023, we entered into a sixth amended and restated agreement relating to the existing facility agreement with ING Bank N.V., London Branch (the "ING $325.6 million Facility") for a senior secured bridge loan facility under which an amount of $62.0 million was drawn and was used to finance part of the previously announced Second Oaktree Share Repurchase. In December 2023 and February 2024, we prepaid an aggregate amount of $8.5 million, and the remaining outstanding loan amount of $53.5 million is repayable in one balloon payment due in November 2024. However, upon the completion of the aforementioned vessel sales, we expect to fully prepay the respective outstanding amount during the first half of 2024.

In November 2023, we entered into a loan agreement with the National Bank of Greece S.A for a loan amount of up to $151.1 million (the "NBG $151.1 million Facility"). The NBG $151.1 million Facility amount was drawn on November 29, 2023 and was used to refinance the outstanding loan amount of $81.1 million under the NBG $125.0 million Facility and the remaining amount was used to partially finance the Second Oaktree Share Repurchase. The NBG $151.1 million Facility is repayable in 12 consecutive quarterly installments, ranging from $5.6 million to $7.6 million, and a balloon payment of $67.9 million due in November 2026, along with the last installment.

In addition, following a number of interest rate swaps we have entered into, we have an outstanding total notional amount of $193.4 million under our financing agreements with an average fixed rate of 48 bps and an average remaining maturity of 1.3 years. As of December 31, 2023, the Mark-to-Market value of our outstanding interest rate swaps stood at $10.4 million, and our cumulative net realized gain amounted to $30.7 million.

Shares Outstanding Update

Following the completion of the previously announced First Oaktree Share Repurchase and the Second Oaktree Share Repurchase in October and December 2023, respectively, and the cancellation of the corresponding repurchased 20 million common shares, as of the date of this release, we have 84,016,892 shares outstanding.

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.

Our TCE rate per day per main vessel category was as follows:

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 87,364,379 and 102,724,888 weighted average diluted shares for the fourth quarter of 2023 and 2022, respectively.

Fourth Quarter 2023 and 2022 Results

For the fourth quarter of 2023, we had net income of $39.7 million, or $0.45 earnings per share, compared to net income for the fourth quarter of 2022 of $85.8 million, or $0.84 earnings per share. Adjusted net income, which excludes certain non-cash items and one-time expenses, was $63.5 million, or $0.73 earnings per share, for the fourth quarter of 2023, compared to an adjusted net income of $92.5 million for the fourth quarter of 2022, or $0.90 earnings per share.

Net cash provided by operating activities for the fourth quarter of 2023 was $85.8 million, compared to $116.3 million for the fourth quarter of 2022. Adjusted EBITDA, which excludes certain non-cash items and one-time expenses, was $114.0 million for the fourth quarter of 2023, compared to $134.6 million for the fourth quarter of 2022.

Voyage revenues for the fourth quarter of 2023 decreased to $263.5 million from $294.8 million in the fourth quarter of 2022 and Time charter equivalent revenues ("TCE Revenues")¹ were $191.9 million for the fourth quarter of 2023, compared to $216.4 million for the fourth quarter of 2022. TCE rate for the fourth quarter of 2023 was $18,296 per day compared to $19,590 per day for the fourth quarter of 2022 which is indicative of the weaker market conditions prevailing during the recent quarter.

For the fourth quarters of 2023 and 2022, vessel operating expenses were $54.1 million and $52.6 million, respectively. The increase is mainly due to inflationary pressure. Vessel operating expenses for the fourth quarter of 2023 also included an additional $0.15 million in pre-delivery expenses, due to change of management of certain vessels from third party to in-house. These increases were partially offset by lower crew expenses in the fourth quarter of 2023 compared to the fourth quarter of 2022, which reflected 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 and pre-delivery expenses due to change of management of $1.0 million.

Drydocking expenses for the fourth quarters of 2023 and 2022 were $11.5 million and $18.7 million, respectively. During the fourth quarter of 2023, eight vessels completed their periodic dry docking surveys while during the corresponding period in 2022, fourteen vessels completed their periodic dry docking surveys.

General and administrative expenses for the fourth quarters of 2023 and 2022 were $18.1 million and $12.5 million, respectively. The share-based compensation expense for the fourth quarter of 2023 increased to $8.2 million compared to $5.1 million for the corresponding quarter in 2022. Vessel management fees for the fourth quarter of 2023 decreased to $4.1 million from $4.4 million for the fourth quarter of 2022, due to the change of management of certain vessels, from third party to in-house, as described above. In addition, during the fourth quarter of 2023, we made a donation of $1.7 million to vulnerable groups in Greece which is included under our General and administrative expenses. Our daily net cash general and administrative expenses per vessel (including management fees and excluding share-based compensation, other non-cash charges and one-time expenses such as the donation expenses mentioned above) for the fourth quarters of 2023 and 2022 were $1,104 and $977, respectively.

Depreciation expense decreased to $33.9 million for the fourth quarter of 2023 compared to $39.7 million for the corresponding period in 2022. The decrease is due to the change in the estimated scrap rate per light weight ton from $300 to $400 effective January 1, 2023, which resulted in lower depreciation expense by $2.9 million in the fourth quarter of 2023, together with the decrease in the average number of vessels in our fleet to 118.1 from 128.0.

During the fourth quarter of 2023, we incurred a net loss on forward freight agreements ("FFAs") and bunker swaps of $7.7 million, consisting of an unrealized loss of $7.5 million and a realized loss of $0.2 million. During the fourth quarter of 2022, we incurred a net gain on FFAs and bunker swaps of $2.2 million, consisting of an unrealized gain of $2.9 million and a realized loss of $0.7 million.

Our results for the fourth quarter of 2023 include an impairment loss of $10.1 million related to the vessels Big Fish and Big Bang which were agreed to be sold or were actively marketed before year-end as also described above under "Fleet Update".

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

Our results for the fourth quarters of 2023 and 2022 include a loss on write-down of inventories of $3.8 million and $2.4 million, respectively, in connection with the valuation of the bunkers remaining on board our vessels, as a result of their lower net realizable value compared to their historical cost.

Our results for the fourth quarter of 2023 include an aggregate net gain of $10.6 million which resulted from the completion of the previously announced sale of vessels Star Zeta, Star Athena, Star Theta and Star Jennifer.

Interest and finance costs for the fourth quarters of 2023 and 2022 were $21.5 million and $14.8 million, respectively. The driving factor for this increase is the significant increase in variable interest rates, which was partially offset by the positive effect from our interest rate swaps and the decrease in our weighted average outstanding indebtedness as well as the recent refinacings of older facilities with more favorable terms. Interest income and other income/(loss) for the fourth quarters of 2023 and 2022 amounted to $5.0 million and $6.8 million, respectively. The decrease of interest income is primarily attributable to lower foreign exchange gains recognized in the current period compared to the corresponding period in 2022.

Gain/(Loss) on debt extinguishment, net for the fourth quarter of 2023 mainly included a) a loss of $0.6 million resulting from the write-off of deferred finance fees associated with debt prepaid, within the period and b) a gain of $0.7 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 debt. 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 loans and a loss of $0.6 million mainly related to the write-off of deferred finance fees associated with debt prepaid.

In addition, Gain/(Loss) on interest rate swaps, net for the fourth quarter of 2023 include a loss of $3.0 million associated with interest rate swaps that no longer meet the hedging relationship criteria.

Unaudited Consolidated Income Statements 

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