6-K
Star Bulk Carriers Corp. (SBLK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2023
Commission File Number: 001-33869
STAR BULK CARRIERS CORP.
(Translation of registrant’s name into English)
Star Bulk Carriers Corp.
c/o Star Bulk Management Inc.
40 Agiou Konstantinou Street,
15124 Maroussi,
Athens, Greece
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 99.1 to this Form 6-K is a Management's Discussion and Analysis of Financial Condition and Results of Operations and the unaudited interim condensed consolidated financial statements of Star Bulk Carriers Corp. (the “Company”) as of and for the three months ended March 31, 2022 and 2023.
Attached as Exhibit 99.2 to this Form 6-K is a copy of the Company's press release (the “Press Release”) announcing its unaudited financial and operating results for the Company's three months ended March 31, 2023, which was issued on May 16, 2023.
The information contained in Exhibit 99.1 of this Form 6-K is hereby incorporated by reference into the registrant's Registration Statements on Form F-3 (File Nos. 333-264226, 333-232765, 333-234125 and 333-252808) and Registration Statement on Form S-8 (File No. 333-176922), in each case to the extent not superseded by information subsequently filed or furnished (to the extent we expressly state that we incorporate such furnished information by reference) by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This Form 6-K, and the documents to which the Company refers in this Form 6-K, as well as information included in oral statements or other written statements made or to be made by the Company, contain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “projects,” “likely,” “will,” “would,” “could” and similar expressions or phrases may identify forward-looking statements.
All forward-looking statements involve risks and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results.
In addition, 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; |
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| ● | the strength of world economies; |
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| ● | the stability of Europe and the Euro; |
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| ● | fluctuations in currencies, interest rates and foreign exchange rates, and the impact of the discontinuance of remaining London Interbank Offered Rate tenors for US Dollars, or LIBOR, after June 30,<br> 2023 on any of our debt referencing LIBOR in the interest rate; |
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| ● | business disruptions due to natural and other disasters or otherwise, such as the ongoing novel coronavirus (“COVID-19”) pandemic (and variants that may emerge); |
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| ● | 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; |
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| ● | changes in supply and demand in the dry bulk shipping industry, including the market for our vessels and the number of new buildings under construction; |
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| ● | 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; |
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| ● | changes in our expenses, including bunker prices, dry docking, crewing and insurance costs; |
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| ● | changes in governmental rules and regulations or actions taken by regulatory authorities; |
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| ● | potential liability from pending or future litigation and potential costs due to environmental damage and vessel collisions; |
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| ● | the impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our Environmental, Social and Governance (“ESG”)<br> practices; |
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| ● | our ability to carry out our ESG initiatives and thereby meet our ESG goals and targets including as set forth under Item 4. Information on the Company—B. Business Overview—Our ESG Performance in the<br> Company's annual report on Form 20-F for the fiscal year ended 2022; |
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| ● | new environmental regulations and restrictions, whether at a global level stipulated by the International Maritime Organization, and/or regional/national imposed by regional authorities such as the<br> European Union or individual countries; |
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| ● | potential cyber-attacks which may disrupt our business operations; |
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| ● | general domestic and international political conditions or events, including “trade wars” and the ongoing conflict between Russia and Ukraine; |
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| ● | 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; |
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| ● | our ability to successfully compete for, enter into and deliver our vessels under time charters or other employment arrangements for our existing vessels after our current charters expire and our<br> ability to earn income in the spot market; |
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| ● | potential physical disruption of shipping routes due to accidents, climate-related reasons (acute and chronic), political events, public health threats, international hostilities and instability,<br> piracy or acts by terrorists; |
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| ● | the availability of financing and refinancing; |
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| ● | the failure of our contract counterparties to meet their obligations; |
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| ● | our ability to meet requirements for additional capital and financing to grow our business; |
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| ● | the impact of our indebtedness and the compliance with the covenants included in our debt agreements; |
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| ● | vessel breakdowns and instances of off-hire; |
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| ● | potential exposure or loss from investment in derivative instruments; |
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| ● | potential conflicts of interest involving our Chief Executive Officer, his family and other members of our senior management; |
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| ● | our ability to complete acquisition transactions as and when planned and upon the expected terms; |
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| ● | the impact of port or canal congestion or disruptions; and |
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| ● | the risk factors and other factors referred to in the Company's reports filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”). |
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Consequently, all of the forward-looking statements we make in this document are qualified by the information contained or referred to herein, including, but not limited to, (i) the information contained under this heading and (ii) the information disclosed in the Company's annual report on Form 20-F for the fiscal year ended 2022, filed with the SEC on March 7, 2023.
You should carefully consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. Except as required by law, the Company undertakes no obligation to update any of these forward-looking statements, whether as a result of new information, future events, a change in the Company’s views or expectations or otherwise, except as required by applicable law. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 17, 2023
| COMPANY NAME | ||
|---|---|---|
| By: | /s/ Simos Spyrou | |
| Name: | Simos Spyrou | |
| Title: | Co-Chief Financial Officer |
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of operations of Star Bulk Carriers Corp. (“Star Bulk”) for the three-month periods ended March 31, 2022 and 2023. Unless otherwise specified herein, references to the “Company,” “we,” “us” or “our” shall include Star Bulk and its subsidiaries. You should read the following discussion and analysis together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere herein. For additional information relating to our management’s discussion and analysis of financial conditions and results of operations, please see our Annual Report on Form 20‑F for the year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 7, 2023 (the “2022 Annual Report”). Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2022 Annual Report. This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements.
Overview
We are a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Our vessels transport major bulks, which include iron ore, coal and grain, and minor bulks which include bauxite, fertilizers and steel products. We were incorporated in the Marshall Islands on December 13, 2006 and, on December 3, 2007, we commenced operations when we took delivery of our first vessel. We maintain offices in Athens, New York, Limassol, Singapore and Germany. Our common shares trade on the Nasdaq Global Select Market under the symbol “SBLK.”
Our Fleet
During the first quarter of 2023, we agreed with the war risk insurers of the vessel Star Pavlina, that the vessel became a constructive total loss on February 24, 2023, given its prolonged detainment in Ukraine following the commencement of Russia’s military action against Ukraine on February 24, 2022.
On March 24, 2023, we agreed to sell the vessels Star Borealis and Star Polaris. The Star Borealis was delivered to its new owner on May 4, 2023, while the delivery of Star Polaris is expected to occur by end of May 2023 or early June 2023.
As of May 12, 2023 and as adjusted for the delivery of Star Polaris as further discussed above, our owned fleet consisted of 125 operating vessels with an aggregate carrying capacity of approximately 13.6 million dwt, consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels.
The following tables present summary information relating to our fleet as of May 12, 2023 (as adjusted for the delivery of Star Polaris to its new owners as discussed above):
1
Operating Fleet:
| Date | |||||
|---|---|---|---|---|---|
| Wholly Owned Subsidiaries | Vessel Name | DWT | Delivered to Star Bulk | Year Built | |
| 1 | Pearl Shiptrade LLC | Gargantua (1) | 209,529 | April 2, 2015 | 2015 |
| 2 | Star Ennea LLC | Star Gina 2GR | 209,475 | February 26, 2016 | 2016 |
| 3 | Coral Cape Shipping LLC | Maharaj (1) | 209,472 | July 15, 2015 | 2015 |
| 4 | Sea Diamond Shipping LLC | Goliath (1) | 209,537 | July 15, 2015 | 2015 |
| 5 | Star Castle II LLC | Star Leo | 207,939 | May 14, 2018 | 2018 |
| 6 | ABY Eleven LLC | Star Laetitia | 207,896 | August 3, 2018 | 2017 |
| 7 | Domus Shipping LLC | Star Ariadne | 207,812 | March 28, 2017 | 2017 |
| 8 | Star Breezer LLC | Star Virgo | 207,810 | March 1, 2017 | 2017 |
| 9 | Star Seeker LLC | Star Libra | 207,765 | June 6, 2016 | 2016 |
| 10 | ABY Nine LLC | Star Sienna | 207,721 | August 3, 2018 | 2017 |
| 11 | Clearwater Shipping LLC | Star Marisa | 207,709 | March 11 2016 | 2016 |
| 12 | ABY Ten LLC | Star Karlie | 207,566 | August 3, 2018 | 2016 |
| 13 | Star Castle I LLC | Star Eleni | 207,555 | January 3, 2018 | 2018 |
| 14 | Festive Shipping LLC | Star Magnanimus | 207,526 | March 26, 2018 | 2018 |
| 15 | New Era II Shipping LLC | Debbie H | 206,861 | May 28, 2019 | 2019 |
| 16 | New Era III Shipping LLC | Star Ayesha | 206,852 | July 15, 2019 | 2019 |
| 17 | New Era I Shipping LLC | Katie K | 206,839 | April 16, 2019 | 2019 |
| 18 | Cape Ocean Maritime LLC | Leviathan | 182,511 | September 19, 2014 | 2014 |
| 19 | Cape Horizon Shipping LLC | Peloreus | 182,496 | July 22, 2014 | 2014 |
| 20 | Star Nor I LLC | Star Claudine | 181,258 | July 6, 2018 | 2011 |
| 21 | Star Nor II LLC | Star Ophelia | 180,716 | July 6, 2018 | 2010 |
| 22 | Sandra Shipco LLC | Star Pauline | 180,274 | December 29, 2014 | 2008 |
| 23 | Christine Shipco LLC | Star Martha | 180,274 | October 31, 2014 | 2010 |
| 24 | Pacific Cape Shipping LLC | Pantagruel | 180,181 | July 11, 2014 | 2004 |
| 25 | Star Nor III LLC | Star Lyra | 179,147 | July 6, 2018 | 2009 |
| 26 | Star Regg V LLC | Star Borneo | 178,978 | January 26, 2021 | 2010 |
| 27 | Star Regg VI LLC | Star Bueno | 178,978 | January 26, 2021 | 2010 |
| 28 | Star Regg IV LLC | Star Marilena | 178,978 | January 26, 2021 | 2010 |
| 29 | Star Regg I LLC | Star Marianne | 178,906 | January 14, 2019 | 2010 |
| 30 | Star Regg II LLC | Star Janni | 178,978 | January 7, 2019 | 2010 |
| 31 | Star Trident V LLC | Star Angie | 177,931 | October 29, 2014 | 2007 |
| 32 | Sky Cape Shipping LLC | Big Fish | 177,662 | July 11, 2014 | 2004 |
| 33 | Global Cape Shipping LLC | Kymopolia | 176,990 | July 11, 2014 | 2006 |
| 34 | Star Trident XXV LLC | Star Triumph | 176,343 | December 8, 2017 | 2004 |
| 35 | ABY Fourteen LLC | Star Scarlett | 175,649 | August 3, 2018 | 2014 |
| 36 | ABY Fifteen LLC | Star Audrey | 175,125 | August 3, 2018 | 2011 |
| 37 | Sea Cape Shipping LLC | Big Bang | 174,109 | July 11, 2014 | 2007 |
| 38 | ABY I LLC | Star Paola | 115,259 | August 3, 2018 | 2011 |
2
| Date | |||||
|---|---|---|---|---|---|
| Wholly Owned Subsidiaries | Vessel Name | DWT | Delivered to Star Bulk | Year Built | |
| 39 | ABM One LLC | Star Eva | 106,659 | August 3, 2018 | 2012 |
| 40 | Nautical Shipping LLC | Amami | 98,681 | July 11, 2014 | 2011 |
| 41 | Majestic Shipping LLC | Madredeus | 98,681 | July 11, 2014 | 2011 |
| 42 | Star Sirius LLC | Star Sirius | 98,681 | March 7, 2014 | 2011 |
| 43 | Star Vega LLC | Star Vega | 98,681 | February 13, 2014 | 2011 |
| 44 | ABY II LLC | Star Aphrodite | 92,006 | August 3, 2018 | 2011 |
| 45 | Augustea Bulk Carrier LLC | Star Piera | 91,951 | August 3, 2018 | 2010 |
| 46 | Augustea Bulk Carrier LLC | Star Despoina | 91,945 | August 3, 2018 | 2010 |
| 47 | Star Trident I LLC | Star Kamila | 82,769 | September 3, 2014 | 2005 |
| 48 | Star Nor IV LLC | Star Electra | 83,494 | July 6, 2018 | 2011 |
| 49 | Star Alta I LLC | Star Angelina | 82,981 | December 5, 2014 | 2006 |
| 50 | Star Alta II LLC | Star Gwyneth | 82,790 | December 5, 2014 | 2006 |
| 51 | Star Nor VI LLC | Star Luna | 82,687 | July 6, 2018 | 2008 |
| 52 | Star Nor V LLC | Star Bianca | 82,672 | July 6, 2018 | 2008 |
| 53 | Grain Shipping LLC | Pendulum | 82,619 | July 11, 2014 | 2006 |
| 54 | Star Trident XIX LLC | Star Maria | 82,598 | November 5, 2014 | 2007 |
| 55 | Star Trident XII LLC | Star Markella | 82,594 | September 29, 2014 | 2007 |
| 56 | ABY Seven LLC | Star Jeanette | 82,566 | August 3, 2018 | 2014 |
| 57 | Star Trident IX LLC | Star Danai | 82,574 | October 21, 2014 | 2006 |
| 58 | Star Sun I LLC | Star Elizabeth | 82,403 | May 25, 2021 | 2021 |
| 59 | Star Trident XI LLC | Star Georgia | 82,298 | October 14, 2014 | 2006 |
| 60 | Star Trident VIII LLC | Star Sophia | 82,269 | October 31, 2014 | 2007 |
| 61 | Star Trident XVI LLC | Star Mariella | 82,266 | September 19, 2014 | 2006 |
| 62 | Star Trident XIV LLC | Star Moira | 82,257 | November 19, 2014 | 2006 |
| 63 | Star Trident X LLC | Star Renee | 82,221 | December 18, 2014 | 2006 |
| 64 | Star Trident XIII LLC | Star Laura | 82,209 | December 8, 2014 | 2006 |
| 65 | Star Trident XV LLC | Star Jennifer | 82,209 | April 15, 2015 | 2006 |
| 66 | Star Nor VIII LLC | Star Mona | 82,188 | July 6, 2018 | 2012 |
| 67 | Star Trident II LLC | Star Nasia | 82,220 | August 29, 2014 | 2006 |
| 68 | Star Nor VII LLC | Star Astrid | 82,158 | July 6, 2018 | 2012 |
| 69 | Star Trident XVII LLC | Star Helena | 82,187 | December 29, 2014 | 2006 |
| 70 | Star Trident XVIII LLC | Star Nina | 82,224 | January 5, 2015 | 2006 |
| 71 | Waterfront Two LLC | Star Alessia | 81,944 | August 3, 2018 | 2017 |
| 72 | Star Nor IX LLC | Star Calypso | 81,918 | July 6, 2018 | 2014 |
| 73 | Star Elpis LLC | Star Suzanna | 81,711 | May 15, 2017 | 2013 |
| 74 | Star Gaia LLC | Star Charis | 81,711 | March 22, 2017 | 2013 |
| 75 | Mineral Shipping LLC | Mercurial Virgo | 81,545 | July 11, 2014 | 2013 |
| 76 | Star Nor X LLC | Stardust | 81,502 | July 6, 2018 | 2011 |
| 77 | Star Nor XI LLC | Star Sky | 81,466 | July 6, 2018 | 2010 |
| 78 | Star Zeus VI LLC | Star Lambada | 81,272 | March 16, 2021 | 2016 |
| 79 | Star Zeus I LLC | Star Capoeira | 81,253 | March 16, 2021 | 2015 |
| 80 | Star Zeus II LLC | Star Carioca | 81,262 | March 16, 2021 | 2015 |
| 81 | Star Zeus VII LLC | Star Macarena | 81,198 | March 6, 2021 | 2016 |
| 82 | ABY III LLC | Star Lydia | 81,187 | August 3, 2018 | 2013 |
| 83 | ABY IV LLC | Star Nicole | 81,120 | August 3, 2018 | 2013 |
| 84 | ABY Three LLC | Star Virginia | 81,061 | August 3, 2018 | 2015 |
3
| Date | |||||
|---|---|---|---|---|---|
| Wholly Owned Subsidiaries | Vessel Name | DWT | Delivered to Star Bulk | Year Built | |
| 85 | Star Nor XII LLC | Star Genesis | 80,705 | July 6, 2018 | 2010 |
| 86 | Star Nor XIII LLC | Star Flame | 80,448 | July 6, 2018 | 2011 |
| 87 | Star Trident III LLC | Star Iris | 76,466 | September 8, 2014 | 2004 |
| 88 | Star Trident XX LLC | Star Emily | 76,417 | September 16, 2014 | 2004 |
| 89 | Orion Maritime LLC | Idee Fixe | 63,458 | March 25, 2015 | 2015 |
| 90 | Primavera Shipping LLC | Roberta | 63,426 | March 31, 2015 | 2015 |
| 91 | Success Maritime LLC | Laura | 63,399 | April 7, 2015 | 2015 |
| 92 | Star Zeus III LLC | Star Athena | 63,371 | May 19, 2021 | 2015 |
| 93 | Ultra Shipping LLC | Kaley | 63,283 | June 26, 2015 | 2015 |
| 94 | Blooming Navigation LLC | Kennadi (1) | 63,262 | January 8, 2016 | 2016 |
| 95 | Jasmine Shipping LLC | Mackenzie (1) | 63,226 | March 2, 2016 | 2016 |
| 96 | Star Lida I Shipping LLC | Star Apus | 63,123 | July 16, 2019 | 2014 |
| 97 | Star Zeus V LLC | Star Bovarius | 61,602 | March 16, 2021 | 2015 |
| 98 | Star Zeus IV LLC | Star Subaru | 61,571 | March 16, 2021 | 2015 |
| 99 | Star Nor XV LLC | Star Wave | 61,491 | July 6, 2018 | 2017 |
| 100 | Star Challenger I LLC | Star Challenger (1) | 61,462 | December 12, 2013 | 2012 |
| 101 | Star Challenger II LLC | Star Fighter (1) | 61,455 | December 30, 2013 | 2013 |
| 102 | Aurelia Shipping LLC | Honey Badger (1) | 61,320 | February 27, 2015 | 2015 |
| 103 | Star Axe II LLC | Star Lutas (1) | 61,347 | January 6, 2016 | 2016 |
| 104 | Rainbow Maritime LLC | Wolverine (1) | 61,292 | February 27, 2015 | 2015 |
| 105 | Star Axe I LLC | Star Antares (1) | 61,258 | October 9, 2015 | 2015 |
| 106 | ABY Five Ltd | Star Monica | 60,935 | August 3, 2018 | 2015 |
| 107 | Star Asia I LLC | Star Aquarius | 60,916 | July 22, 2015 | 2015 |
| 108 | Star Asia II LLC | Star Pisces (1) | 60,916 | August 7, 2015 | 2015 |
| 109 | Star Nor XIV LLC | Star Glory | 58,680 | July 6, 2018 | 2012 |
| 110 | Star Lida XI Shipping LLC | Star Pyxis | 56,615 | August 19, 2019 | 2013 |
| 111 | Star Lida VIII Shipping LLC | Star Hydrus | 56,604 | August 8, 2019 | 2013 |
| 112 | Star Lida IX Shipping LLC | Star Cleo | 56,582 | July 15, 2019 | 2013 |
| 113 | Star Trident VII LLC | Diva | 56,582 | July 24, 2017 | 2011 |
| 114 | Star Lida VI Shipping LLC | Star Centaurus | 56,559 | September 18, 2019 | 2012 |
| 115 | Star Lida VII Shipping LLC | Star Hercules | 56,545 | July 16, 2019 | 2012 |
| 116 | Star Lida X Shipping LLC | Star Pegasus | 56,540 | July 15, 2019 | 2013 |
| 117 | Star Lida III Shipping LLC | Star Cepheus | 56,539 | July 16, 2019 | 2012 |
| 118 | Star Lida IV Shipping LLC | Star Columba | 56,530 | July 23, 2019 | 2012 |
| 119 | Star Lida V Shipping LLC | Star Dorado | 56,507 | July 16, 2019 | 2013 |
| 120 | Star Lida II Shipping LLC | Star Aquila | 56,505 | July 15, 2019 | 2012 |
| 121 | Star Regg III LLC | Star Bright | 55,569 | October 10, 2018 | 2010 |
| 122 | Glory Supra Shipping LLC | Strange Attractor | 55,742 | July 11, 2014 | 2006 |
| 123 | Star Omicron LLC | Star Omicron | 53,489 | April 17, 2008 | 2005 |
| 124 | Star Zeta LLC | Star Zeta | 52,994 | January 2, 2008 | 2003 |
| 125 | Star Theta LLC | Star Theta | 52,425 | December 6, 2007 | 2003 |
| Total dwt | 13,630,651 | ||||
| (1) | Subject to a sale and leaseback financing transaction as further described in Note 7 to our consolidated financial statements included in the 2022 Annual Report. | ||||
| --- | --- |
4
In addition, we have entered into long-term charter-in arrangements with respect to four Kamsarmax newbuildings and two Ultramax newbuildings which are expected to be delivered during 2024 with an approximate duration of seven years per vessel plus optional years. Furthermore, in November 2021 we took delivery of the Capesize vessel Star Shibumi, under a long-term charter-in contract for a period up to November 2028. Please see below a summary table of the respective contracts:
| # | Name | DWT | Built | Yard | Country | Delivery / Estimated Delivery ^(1)^ | Minimum Period |
|---|---|---|---|---|---|---|---|
| 1 | Star Shibumi | 180,000 | 2021 | JMU | Japan | November 2021 | November 2028 |
| 2 | NB Kamsarmax # 1 | 82,000 | 2024 | Tsuneishi | Japan | Q1 - 2024 | 7 years |
| 3 | NB Kamsarmax # 2 | 82,000 | 2024 | Tsuneishi | Japan | Q4 - 2024 | 7 years |
| 4 | NB Kamsarmax # 3 | 82,000 | 2024 | JMU | Japan | Q2 - 2024 | 7 years |
| 5 | NB Kamsarmax # 4 | 82,000 | 2024 | JMU | Japan | Q3 - 2024 | 7 years |
| 6 | NB Ultramax #1 | 66,000 | 2024 | Tsuneishi, Cebu | Philippines | Q1 - 2024 | 7 years |
| 7 | NB Ultramax #2 | 66,000 | 2024 | Tsuneishi, Cebu | Philippines | Q4 - 2024 | 7 years |
| 640,000 | |||||||
| (1) We have also entered into a charter-in agreement for the vessel Tai Kudos which is expected to be redelivered to its owners in October 2023. |
Liquidity and Capital Resources
Our principal sources of funds have been cash flow from operations, equity offerings, borrowings under secured credit facilities, debt securities or bareboat lease financings and proceeds from vessel sales. Our principal uses of funds have been capital expenditures to establish, grow our fleet, maintain the quality of our dry bulk carriers and comply with international shipping standards, environmental laws and regulations, fund working capital requirements, make principal and interest payments on outstanding indebtedness and make dividend payments when approved by the Board of Directors.
Our short-term liquidity requirements include paying operating costs, funding working capital requirements and the short-term equity portion of the cost of vessel acquisitions and vessel upgrades, interest and principal payments on outstanding indebtedness and maintaining cash reserves to strengthen our position against adverse fluctuations in operating cash flows. Our primary source of short-term liquidity is cash generated from operating activities, available cash balances and portions from new debt and refinancings as well as equity financings.
Our medium- and long-term liquidity requirements are funding the equity portion of our newbuilding vessel installments and secondhand vessel acquisitions, if any, funding required payments under our vessel financing and other financing agreements and paying cash dividends when declared. Sources of funding for our medium- and long-term liquidity requirements include cash flows from operations, new debt and refinancings or bareboat lease financings, sale and lease back arrangements, equity issuances and vessel sales. Please also refer to Note 12 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for further discussion on our commitments as of March 31, 2023.
As of May 12, 2023, we had total cash of $374.5 million and outstanding borrowings (including bareboat lease financing) of $1,231.9 million, pro forma for the proceeds from vessel sales, repayment of loans/leases and drawdown of new loans, as further described in Notes 8 and 15 to our unaudited interim condensed consolidated financial statements as of March 31, 2023, included herein. In addition, following a number of interest rates swaps that we have entered into, we have converted a total of $636.5 million of such debt from floating to an average fixed rate of 45 bps with average maturity of 1.0 year.
Our debt agreements contain financial covenants and undertakings requiring us to maintain various ratios. A summary of these terms is included in Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
5
We believe that our current cash balance and our operating cash flows to be generated over the short-term period will be sufficient to meet our liquidity needs for the foreseeable future (and at least through the end of the second quarter of 2024), including funding the operations of our fleet, capital expenditure requirements and any other present financial requirements, including the cost for the installation of ballast water treatment systems (“BWTS”) and Energy Saving Devices (“ESD”). In addition we may sell and issue shares under our two effective At-the-Market offering programs of up to $150.0 million at any time and from time to time. As of May 12, 2023, cumulative gross proceeds under our At-the-Market offering programs were $20.2 million. We may seek additional indebtedness to finance future vessel acquisitions in order to maintain our cash position or to refinance our existing debt on more favorable terms. Our practice has been to fund the cash portion of the acquisition of dry bulk carriers using a combination of funds from operations and bank debt or lease financing secured by mortgages or title of ownership on our dry bulk carriers held by the relevant lenders, respectively. We may also use the proceeds from potential equity or debt offerings to finance future vessel acquisitions. Our business is capital-intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer dry bulk carriers and the selective sale of older dry bulk carriers. These acquisitions will be principally subject to management’s expectation of future market conditions as well as our ability to acquire dry bulk carriers on favorable terms. However our ability to obtain bank or lease financing, to refinance our existing debt or to access the capital markets for offerings in the future, may be limited by our financial condition at the time of any such financing or offering, including the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial and equity markets and contingencies and uncertainties that are beyond our control. Our liquidity is also impacted by our dividend policy, as discussed below.
The 2019 Novel Coronavirus (“COVID-19”) pandemic resulted in a significant reduction in global economic activity and extreme volatility in the global financial market. During the second half of 2022, rates declined from highs seen earlier in the year as China’s COVID-related lockdown measures intensified. After a seasonal decline in charter rates during the first quarter of 2023, Capesize and Supramax spot earnings began to rebound in March 2023 partially driven by China’s economic reopening. There continues to be a high level of uncertainty relating to how the COVID-19 pandemic will evolve, the evolution and emergence of existing and future variants, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. As a result of the COVID-19 pandemic restrictions imposed since 2020, additional crew expenses have been incurred. An increase in the severity or duration or a resurgence of the COVID-19 pandemic and any significant disruption of wide-scale vaccine distribution could have a material adverse effect on our business, results of operations, cash flows, financial condition, the carrying value of our assets, the fair values of our vessels, and our ability to pay dividends.
Dividend Policy
Our dividend policy is described in Item 8. Financial Information-A. Consolidated statements and other financial information—Dividend Policy of our 2022 Annual Report.
As of March 31, 2023, our aggregate amount of cash on our balance sheet was $254.6 million and after giving effect to the share repurchases and the prepayments of debt in connection with the changes in our fleet as described under section “Our Fleet” above, that took place during the first quarter of 2023, the cash available for distribution under our dividend policy was $306.0 million. Taking into account the Minimum Cash Balance per Vessel, as defined in our 2022 Annual Report, on May 16, 2023, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.35 per share, payable on or about June 27, 2023 to all shareholders of record as of June 7, 2023. The ex-dividend date is expected to be June 6, 2023.
Since Star Bulk is a holding company with no material assets other than the shares of its subsidiaries through which it conducts its operations, Star Bulk’s ability to pay dividends in the future will depend on its subsidiaries’ ability to distribute funds to it. Any future dividends declared will be at the discretion and remain subject to approval of our Board of Directors each quarter after its review of our financial condition and other factors, including but not limited to our earnings, the prevailing charter market conditions, capital requirements, limitations under our debt agreements and applicable provisions of Marshall Islands law, which generally prohibits the payment of dividends other than from operating surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend. Star Bulk’s dividend policy and declaration and payment of dividends may be changed at any time and are subject to legally available funds and our Board of Directors’ determination that each declaration and payment is at the time in the best interests of Star Bulk and its shareholders after its review of our financial performance. There can be no assurance that our Board of Directors will declare or pay any dividend in the future.
6
Other Recent Developments
Please refer to Note 15 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for developments that took place after March 31, 2023.
Operating Results
Factors Affecting Our Results of Operations
We deploy our vessels on a mix of short to medium time charters or voyage charters, contracts of affreightment or in dry bulk carrier pools, according to our assessment of market conditions. We adjust the mix of these charters to take advantage of the relatively stable cash flow and high utilization rates associated with medium to long-term time charters, or to profit from attractive spot charter rates during periods of strong charter market conditions, or to maintain employment flexibility that the spot market offers during periods of weak charter market conditions. The following table reflects certain operating data of our fleet, including our ownership days and TCE rates, which we believe are important measures for analyzing trends in our results of operations, for the periods indicated:
| Three-month period ended March 31, | ||||
|---|---|---|---|---|
| (TCE rates expressed in U.S. Dollars) | 2022 | 2023 | ||
| Average number of vessels (1) | 128.0 | 127.6 | ||
| Number of vessels (2) | 128 | 127 | ||
| Average age of operational fleet (in years) (3) | 10.1 | 11.2 | ||
| Ownership days (4) | 11,520 | 11,483 | ||
| Available days (5) | 11,126 | 10,994 | ||
| Charter-in days (6) | 199 | 247 | ||
| Time Charter Equivalent Rate (TCE rate) (7) | $ | 27,405 | $ | 14,199 |
| (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<br> 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<br> 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. Available Days as presented above may not necessarily be comparable to Available<br> 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<br> 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<br> value of above/below market acquired time charter agreements, if any, as well as adjusted for the impact of realized gain/(loss) on forward freight agreements (“FFAs”) and bunker swaps) by (b) Available days for the relevant time period.<br> 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<br> charterer under a time charter contract, as well as commissions. In the calculation of TCE Revenues, we also include the realized gain/(loss) on FFAs and bunker swaps as we believe that this method better reflects the chartering result of our<br> 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,<br> 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<br> 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<br> arrangements) under which its vessels may be employed between the periods. TCE Revenues and TCE rate, as presented above, may not necessarily be comparable to those of other companies due to differences in methods of calculation. |
| --- | --- |
7
The following table reflects the calculation of our TCE rates as discussed in footnote (7) above. The table presents reconciliation of TCE Revenues to voyage revenues as reflected in the unaudited interim condensed consolidated income statements.
| Three-month period ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | |||||
| (In thousands of U.S. Dollars, except as otherwise stated) | ||||||
| Voyage revenues | $ | 360,883 | $ | 224,035 | ||
| Less: | ||||||
| Voyage expenses | (53,404 | ) | (67,492 | ) | ||
| Charter-in hire expenses | (4,012 | ) | (6,615 | ) | ||
| Realized gain/(loss) on FFAs/bunker swaps | 1,437 | 6,172 | ||||
| Time charter equivalent revenues (“TCE Revenues”) | $ | 304,904 | $ | 156,100 | ||
| Available days | 11,126 | 10,994 | ||||
| Daily time charter equivalent rate (“TCE rate”) | $ | 27,405 | $ | 14,199 |
Voyage Revenues
Voyage revenues are driven primarily by the number of vessels in our operating fleet, the duration of our charters, the number of charter-in days, the amount of daily charter hire or freight rates that our vessels earn under time and voyage charters, respectively, which, in turn, are affected by a number of factors, including our decisions relating to vessel acquisitions and disposals, the number of vessels chartered-in, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in dry dock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels, levels of supply and demand in the seaborne transportation market.
Vessels operating on time charters for a certain period of time provide more predictable cash flows over that period of time, but can yield lower profit margins than vessels operating in the spot charter market during periods characterized by favorable market conditions. Vessels operating in the spot charter market generate revenues that are less predictable, but may enable us to capture increased profit margins during periods of improvements in charter rates, although we would be exposed to the risk of declining vessel rates, which may have a materially adverse impact on our financial performance. If we employ vessels on period time charters, future spot market rates may be higher or lower than the rates at which we have employed our vessels on period time charters.
Voyage Expenses
Voyage expenses may include port and canal charges, agency fees, fuel (bunker) expenses and brokerage commissions payable to related and third parties. Voyage expenses are incurred for our owned and chartered-in vessels during voyage charters or when the vessel is unemployed. Bunker expenses, port and canal charges primarily increase in periods during which vessels are employed on voyage charters because these expenses are paid by the owners. Our voyage expenses primarily consist of bunkers cost, port expenses and commissions paid in connection with the chartering of our vessels.
Charter-in Hire Expenses
Charter-in hire expenses represent hire expenses for chartering-in third and related party vessels, either under time charters or voyage charters.
Vessel Operating Expenses
Vessel operating expenses include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes, regulatory fees, vessel scrubbers and BWTS maintenance expenses, lubricants and other miscellaneous expenses. Other factors beyond our control, some of which may affect the shipping industry in general, including for instance, developments relating to market prices for crew wages, lubricants and insurance, may also cause these expenses to increase.
8
Dry Docking Expenses
Dry docking expenses relate to regularly scheduled intermediate survey or special survey dry docking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Dry docking expenses can vary according to the age of the vessel and its condition, the location where the dry docking takes place, shipyard availability and the number of days the vessel is under dry dock. We utilize the direct expense method, under which we expense all dry docking costs as incurred.
Depreciation
We depreciate our vessels on a straight-line basis over their estimated useful lives, which is determined to be 25 years from the date of their initial delivery from the shipyard. Depreciation is calculated based on a vessel’s cost less the estimated residual value. Effective January 1, 2023, following management’s reassessment of the residual value of our vessels, we increased the estimated scrap rate per lightweight ton from $300 to $400. The current value of $400 was based on the historical average demolition prices prevailing in the market in the last 20 years. The change in this accounting estimate, which pursuant to ASC 250 “Accounting Changes and Error Corrections” was applied prospectively and did not require retrospective application, decreased the depreciation expense and increased the net income for the three-month period ended March 31, 2023 by $3.9 million or $0.04 per basic and diluted share.
General and Administrative Expenses
We incur general and administrative expenses, including our onshore personnel related expenses, directors’ and executives’ compensation, share based compensation, legal, consulting, audit and accounting expenses.
Management Fees
Management fees include fees paid to third parties as well as related parties providing certain procurement services to our fleet.
(Gain) / Loss on Forward Freight Agreements and Bunker Swaps, net
When deemed appropriate from a risk management perspective, we take positions in freight derivatives, including freight forward agreements (the “FFAs”) and freight options, with an objective to utilize those instruments as economic hedges to reduce the risk on specific vessels trading in the spot market and to take advantage of short term fluctuations in the market prices. Upon the settlement, if the contracted charter rate is less than the average of the rates, as reported by an identified index, for the specified route and time period, the seller of the FFA is required to pay the buyer the settlement sum. The settlement amount is an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period covered by the FFA. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. Our FFAs are settled on a daily basis mainly through reputable exchanges such as European Energy Exchange (“EEX”) or Singapore Exchange (“SGX”) so as to limit our exposure in over-the-counter transactions. Customary requirements for trading in FFAs include the maintenance of initial and variation margins based on expected volatility, open position and mark to market of the contracts. The fair value of the FFAs or freight options is treated as asset or liability until they are settled. Any such settlements by us or settlements to us under FFAs or freight options, if any, are recorded under (Gain)/ Loss on forward freight agreements and bunker swaps, net.
Also, when deemed appropriate from a risk management perspective, we enter into bunker swap contracts to manage our exposure to fluctuations of bunker prices associated with the consumption of bunkers by our vessels. Bunker swaps are agreements between two parties to exchange cash flows at a fixed price on bunkers, where volume, time period and price are agreed in advance. Our bunker swaps are settled on a daily basis, mainly through reputable exchanges such as Intercontinental Exchange (“ICE”) to limit our counterparty exposure in over the counter transactions. Bunker price differentials paid or received under the swap agreements are recognized under (Gain)/Loss on forward freight agreements and bunker swaps, net.
The fair value of freight derivatives and bunker swaps is determined through Level 1 inputs of the fair value hierarchy (quoted prices from the applicable exchanges such as EEX, SGX or ICE. Our FFAs and bunker swaps do not qualify for hedge accounting and therefore unrealized gains or losses are recognized under (Gain)/Loss on forward freight agreements and bunker swaps, net.
9
Loss on Write-Down of Inventory
Loss on write-down of inventory results from the valuation of the bunkers remaining onboard our vessels following the decrease of bunkers’ net realizable value compared to their historical cost as of each period end.
Interest and Finance Costs
We incur interest expense and financing costs in connection with our outstanding indebtedness under our existing loan facilities (including sale and leaseback financing transactions). We also incur financing costs in connection with establishing those facilities, which are presented as a direct deduction from the carrying amount of the relevant debt liability and amortize them to interest and financing costs over the term of the underlying obligation using the effective interest method.
Interest Income
We earn interest income on our cash deposits with our lenders and other financial institutions.
Gain / (Loss) on Interest Rate Swaps, net
We enter into interest rate swap transactions to manage interest costs and risk associated with changing interest rates with respect to our variable interest loans and credit facilities. Interest rate swaps are recorded in the balance sheet as either assets or liabilities, measured at their fair value (Level 2), with changes in such fair value recognized in earnings under Gain/(Loss) on interest rate swaps, net, unless specific hedge accounting criteria are met. When interest rate swaps are designated and qualify as cash flow hedges, the effective portion of the unrealized gains/losses from those swaps is recorded in Other Comprehensive Income / (Loss) while any ineffective portion is recorded as Gain/(loss) on interest rate swaps, net.
10
Results of Operations
The three-month period ended March 31, 2023 compared to the three-month period ended March 31, 2022
Voyage revenues net of Voyage expenses: Voyage revenues for the three months ended March 31, 2023 decreased to $224.0 million from $360.9 million in the corresponding period in 2022. Time charter equivalent revenues (“TCE Revenues”) (as defined above) were $156.1 million compared to $304.9 million for the corresponding period in 2022. As a result, the TCE rate for the first three months of 2023 was $14,199 compared to $27,405 for the corresponding period in 2022 which is indicative of the weaker market conditions prevailing during the recent quarter. Please refer to the table above for the calculation of the TCE Revenues and TCE and their reconciliation with Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Charter-in hire expenses: Charter-in hire expenses for the three months ended March 31, 2023 and 2022 were $6.6 million and $4.0 million, respectively. This increase is mainly attributable to the increase in charter-in days to 247 in the first three months of 2023 from 199 in the corresponding period in 2022.
Vessel operating expenses: For the three-months ended March 31, 2023 and 2022, vessel operating expenses were $55.8 million and $57.5 million, respectively. Vessel operating expenses for the first three months of 2023 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 $1.4 million. In addition, we incurred $0.5 million of additional operating expenses due to change of management of certain vessels from third party to in-house. Vessel operating expenses for the first three months of 2022 included COVID-19 related expenses of $2.8 million.
Dry docking expenses: Drydocking expenses for the three-months ended March 31, 2023 and 2022, were $8.0 million and $8.7 million, respectively. During the first three months of 2023, five vessels completed their periodic dry-docking surveys while during the corresponding period in 2022, eight vessels completed their periodic dry docking surveys.
Depreciation: Depreciation expense decreased to $35.1 million for the three-month period ended March 31, 2023 compared to $38.5 million for the corresponding period in 2022. The decrease is primarily driven by the change in the estimated scrap rate per light weight tonnage from $300 to $400 effective January 1, 2023, which resulted in lower depreciation expense by $3.9 million.
Impairment loss: During the three months ended March 31, 2023, an impairment loss of $7.7 million was incurred, resulting from the agreement to sell the vessels Star Borealis and Star Polaris described above as part of our fleet update under “Our Fleet” section.
Other operational gain: Other operational gain for the three months ended March 31, 2023 of $33.2 million includes: a) gain from insurance proceeds relating to Star Pavlina’s total loss discussed in our fleet update above of $28.2 million, b) daily detention compensation for Star
Pavlina pursuant to its war risk insurance policy of $2.7 million in aggregate, as well as c\) other gains from insurance claims relating to other vessels of $2.3 million in aggregate.
Management fees: Management fees decreased to $4.2 million for the three-month period ended March 31, 2023 compared to $4.8 million for the corresponding period in 2022 due to the change of management of certain vessels, from third party to in-house.
General and administrative expenses: General and administrative expenses for the three month period ended March 31, 2023 were $11.7 million compared to $8.8 million in the corresponding period in 2022, primarily due to the increase in the stock-based compensation expense to $3.4 million from $1.2 million.
(Gain)/Loss on forward freight agreements and bunker swaps, net: For
the three month period ended March 31, 2023, we incurred a net gain on FFAs and bunker swaps of $1.3 million, consisting of an unrealized loss of $4.9 million and a realized gain of $6.2 million. For the three-month
period ended March 31, 2022, we incurred a net loss on FFAs and bunker swaps of $2.6 million, consisting of an unrealized loss of $4.0 million and a realized gain of $1.4 million.
11
Loss on write-down of inventory: Our results for the three months ended March 31, 2023 include a loss on write-down of inventories of $2.2 million resulting from the valuation of the bunkers remaining on board our vessels as a result of the bunkers’ lower net realizable value compared to their historical cost.
Interest and finance costs: Interest and finance costs for the three-months ended March 31, 2023 and 2022 were $15.7 million and $12.1 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.
Interest and other income/(loss): Interest
and other income for the three-months ended March 31, 2023 amounted to $3.1 million, compared to an interest and other income, of $0.3 million in three-months ended March 31, 2022. This variation is mainly due to higher interest earned from fixed
deposits during the first quarter of 2023 and higher foreign exchange gains incurred in the same period compared to the first quarter of 2022.
Cash Flows
Net cash provided by operating activities for the three-months ended March 31, 2023 and 2022 was $83.2 million and $229.2 million, respectively. This decrease was primarily driven by the lower charter rates due to the weaker market conditions prevailing during the recent period compared to the corresponding period in 2022, and the increase in our interest payments for the reasons outlined above under “Interest and finance costs”.
Net cash used in investing activities for the three-months ended March 31, 2023 and 2022 was $5.0 million and $4.8 million, respectively. The increase was attributable to lower insurance proceeds compared to 2022, partially offset by lower cash paid in 2023 in connection with the acquisition of fixed assets and vessel upgrades.
Net cash used in financing activities for the three-months ended March 31, 2023 and 2022 was $109.9 million and $253.2 million, respectively. The decrease was primarily driven by lower dividend payments of $62.1 million in 2023 compared to $204.8 million in the corresponding period in 2022 as well as lower net debt outflows of $40.3 million in the first quarter of 2023 compared to $52.8 million in the same period in 2022.
Significant Accounting Policies and Critical Accounting Estimates
For a description of our critical accounting estimates and all of our significant accounting policies, see Note 2 to our audited financial statements and “Item 5 - Operating and Financial Review and Prospects,” included in our 2022 Annual Report. There have been no material changes from the “Critical Accounting Estimates” previously disclosed in our 2022 Annual Report, except as discussed above under our depreciation policy.
12
STAR BULK CARRIERS CORP.
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
| Unaudited Consolidated Balance Sheets as of December 31, 2022 and March 31, 2023 | F-2 |
|---|---|
| Unaudited Interim Condensed Consolidated Income Statements for the three-month periods ended March 31, 2022 and 2023 | F-3 |
| Unaudited Interim Condensed Consolidated Statements of Comprehensive Income/(Loss) for the three-month periods ended March 31, 2022 and 2023 | F-4 |
| Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity for the three-month periods ended March 31, 2022 and 2023 | F-5 |
| Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2022 and 2023 | F-6 |
| Notes to Unaudited Interim Condensed Consolidated Financial Statements | F-7 |
STAR BULK CARRIERS CORP.
Unaudited Consolidated Balance Sheets
As of December 31, 2022 and March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| March 31, 2023 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 269,754 | $ | 234,498 | ||
| Restricted cash, current (Notes 8 and 13) | 14,569 | 18,049 | |||
| Trade accounts receivable, net | 84,034 | 69,441 | |||
| Inventories (Note 4) | 67,162 | 66,447 | |||
| Due from managers | 84 | 53 | |||
| Due from related parties (Note 3) | 324 | 300 | |||
| Prepaid expenses and other receivables | 25,667 | 25,820 | |||
| Derivatives, current asset portion (Note 13) | 25,585 | 19,436 | |||
| Other current assets (Note 14) | 14,913 | 75,642 | |||
| Total Current Assets | 502,092 | 509,686 | |||
| FIXED ASSETS | |||||
| Vessels and other fixed assets, net (Note 5) | 2,881,551 | 2,818,233 | |||
| Total Fixed Assets | 2,881,551 | 2,818,233 | |||
| OTHER NON-CURRENT ASSETS | |||||
| Long term investment (Note 3) | 1,676 | 1,620 | |||
| Restricted cash, non-current (Notes 8 and 13) | 2,021 | 2,021 | |||
| Operating leases, right-of-use assets (Note 6) | 37,618 | 34,848 | |||
| Derivatives, non-current asset portion (Note 13) | 8,666 | 5,729 | |||
| TOTAL ASSETS | 3,433,624 | $ | 3,372,137 | ||
| LIABILITIES & SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Current portion of long-term bank loans (Note 8) | 166,586 | $ | 188,997 | ||
| Lease financing short term (Note 7) | 15,361 | 15,361 | |||
| Accounts payable | 32,140 | 32,650 | |||
| Due to managers | 6,344 | 12,566 | |||
| Due to related parties (Note 3) | 1,501 | 1,614 | |||
| Accrued liabilities | 33,984 | 32,759 | |||
| Derivatives, current liability portion (Note 13) | - | 3,233 | |||
| Operating lease liabilities, current (Note 6) | 9,955 | 8,537 | |||
| Deferred revenue | 16,684 | 15,099 | |||
| Total Current Liabilities | 282,555 | 310,816 | |||
| NON-CURRENT LIABILITIES | |||||
| Long-term bank loans, net of current portion and unamortized loan issuance costs of 9,013 and 8,108, as of December 31, 2022 and March 31, 2023, respectively (Note 8) | 927,995 | 870,036 | |||
| Lease financing long term, net of unamortized lease issuance costs of 2,681 and 2,503, as of December 31, 2022 and March 31, 2023, respectively (Note 7) | 175,238 | 171,576 | |||
| Operating lease liabilities, non-current (Note 6) | 27,663 | 26,311 | |||
| Other non-current liabilities | 831 | 873 | |||
| TOTAL LIABILITIES | 1,414,282 | 1,379,612 | |||
| COMMITMENTS & CONTINGENCIES (Note 12) | |||||
| SHAREHOLDERS' EQUITY | |||||
| Preferred Shares; 0.01 par value, authorized 25,000,000 shares; none issued or outstanding at December 31, 2022 and March 31, 2023, respectively (Note 9) | - | - | |||
| Common Shares, 0.01 par value, 300,000,000 shares authorized; 102,857,416 shares issued and outstanding as of December 31, 2022; 102,976,193 shares issued and outstanding as of March 31, 2023<br> (Note 9) | 1,029 | 1,030 | |||
| Additional paid in capital | 2,646,073 | 2,642,513 | |||
| Accumulated other comprehensive income/(loss) | 20,962 | 13,879 | |||
| Accumulated deficit | (648,722 | ) | (664,897 | ) | |
| Total Shareholders' Equity | 2,019,342 | 1,992,525 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 3,433,624 | $ | 3,372,137 | ||
| The accompanying notes are integral part of these consolidated financial statements |
All values are in US Dollars.
F-2
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Income Statements
For the three-month periods ended March 31, 2022 and 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | |||||
| Revenues: | ||||||
| Voyage revenues (Note 14) | $ | 360,883 | $ | 224,035 | ||
| Expenses/(Income) | ||||||
| Voyage expenses (Notes 3 ) | 53,404 | 67,492 | ||||
| Charter-in hire expenses | 4,012 | 6,615 | ||||
| Vessel operating expenses | 57,466 | 55,785 | ||||
| Dry docking expenses | 8,727 | 8,007 | ||||
| Depreciation (Note 5) | 38,461 | 35,069 | ||||
| Management fees (Notes 3) | 4,839 | 4,244 | ||||
| General and administrative expenses (Note 3) | 8,765 | 11,665 | ||||
| Impairment loss (Notes 5 and 13) | - | 7,700 | ||||
| Loss on write-down of inventory | - | 2,166 | ||||
| Other operational loss | 614 | 155 | ||||
| Other operational gain (Note 5) | (267 | ) | (33,233 | ) | ||
| Loss on bad debt | - | 300 | ||||
| (Gain)/Loss on forward freight agreements and bunker swaps, net (Note 13) | 2,623 | (1,308 | ) | |||
| Total operating expenses, net | 178,644 | 164,657 | ||||
| Operating income | 182,239 | 59,378 | ||||
| Other Income/ (Expenses): | ||||||
| Interest and finance costs (Note 8) | (12,082 | ) | (15,702 | ) | ||
| Interest income and other income/(loss) | 261 | 3,149 | ||||
| Gain/(Loss) on interest rate swaps, net (Note 13) | - | (372 | ) | |||
| Gain/(Loss) on debt extinguishment, net (Note 8) | - | (419 | ) | |||
| Total other expenses, net | (11,821 | ) | (13,344 | ) | ||
| Income before taxes and equity in income/(loss) of investee | $ | 170,418 | $ | 46,034 | ||
| Income taxes | (37 | ) | (103 | ) | ||
| Income before equity in income/(loss) of investee | 170,381 | 45,931 | ||||
| Equity in income / (loss) of investee (Note 3) | (17 | ) | (56 | ) | ||
| Net income | 170,364 | 45,875 | ||||
| Earnings per share, basic | $ | 1.67 | $ | 0.45 | ||
| Earnings per share, diluted | 1.67 | 0.44 | ||||
| Weighted average number of shares outstanding, basic (Note 10) | 101,981,583 | 102,974,041 | ||||
| Weighted average number of shares outstanding, diluted (Note 10) | 102,257,673 | 103,381,943 | ||||
| The accompanying notes are integral part of these consolidated financial statements. |
F-3
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income / \(Loss\)
For the three-month periods ended March 31, 2022 and 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Three months ended March 31, | |||||
|---|---|---|---|---|---|
| 2022 | 2023 | ||||
| Net income | $ | 170,364 | $ | 45,875 | |
| Other comprehensive income / (loss): | |||||
| Unrealized gains / losses from cash flow hedges: | |||||
| Unrealized gain / (loss) from hedging interest rate swaps recognized in Other comprehensive income/(loss) before reclassifications | 16,225 | 190 | |||
| Less: | |||||
| Reclassification adjustments of interest rate swap gain/(loss) (Note 13) | 379 | (7,273 | ) | ||
| Other comprehensive income / (loss) | 16,604 | (7,083 | ) | ||
| Total comprehensive income | $ | 186,968 | $ | 38,792 | |
| The accompanying notes are integral part of these consolidated financial statements. |
F-4
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity
For the three-month periods ended March 31, 2022 and 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Par Value | Additional Paid-in Capital | Accumulated Other Comprehensive income/(loss) | Accumulated deficit | Treasury stock | Total Shareholders' Equity | ||||||||||||||
| BALANCE, January 1, 2022 | 102,294,758 | $ | 1,023 | $ | 2,618,319 | $ | 6,933 | $ | (546,257 | ) | $ | - | $ | 2,080,018 | |||||
| Net income | - | - | - | - | 170,364 | - | 170,364 | ||||||||||||
| Other comprehensive income | - | - | - | 16,604 | - | - | 16,604 | ||||||||||||
| Issuance of vested and non-vested shares and amortization of share-based compensation | 245 | - | 1,233 | - | - | - | 1,233 | ||||||||||||
| Equity offering, net | 147,898 | 1 | 4,264 | - | - | - | 4,265 | ||||||||||||
| Dividend declared (2.00 per share) | - | - | - | - | (204,568 | ) | - | (204,568 | ) | ||||||||||
| BALANCE, March 31, 2022 | 102,442,901 | $ | 1,024 | $ | 2,623,816 | $ | 23,537 | $ | (580,461 | ) | $ | - | $ | 2,067,916 | |||||
| BALANCE, January 1, 2023 | 102,857,416 | $ | 1,029 | $ | 2,646,073 | $ | 20,962 | $ | (648,722 | ) | $ | - | $ | 2,019,342 | |||||
| Net income | - | - | - | - | 45,488 | - | 45,488 | ||||||||||||
| Other comprehensive income / (loss) | - | - | - | (7,083 | ) | - | - | (7,083 | ) | ||||||||||
| Issuance of vested and non-vested shares and amortization of share-based compensation (Note 9) | 450,000 | 4 | 3,442 | - | - | - | 3,446 | ||||||||||||
| Dividends declared (0.60 per share) (Note 9) | - | - | - | - | (62,050 | ) | - | (62,050 | ) | ||||||||||
| Repurchase and cancellation of common shares (Note 9) | (331,223 | ) | (3 | ) | (7,002 | ) | - | - | - | (7,005 | ) | ||||||||
| BALANCE, March 31, 2023 | 102,976,193 | $ | 1,030 | $ | 2,642,513 | $ | 13,879 | $ | (665,284 | ) | $ | - | $ | 1,992,138 | |||||
| The accompanying notes are integral part of these consolidated financial statements. |
All values are in US Dollars.
F-5
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the three-month periods ended March 31, 2022 and 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net income | $ | 170,364 | $ | 45,875 | ||
| Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: | ||||||
| Depreciation (Note 5) | 38,461 | 35,069 | ||||
| Amortization of debt (loans & leases) issuance costs (Note 8) | 1,339 | 1,043 | ||||
| Amortization of operating lease right-of-use assets (Note 6) | - | 2,770 | ||||
| Gain/(Loss) on debt extinguishment, net (Note 8) | - | 419 | ||||
| Impairment loss (Note 5) | - | 7,700 | ||||
| Loss on bad debt | - | 300 | ||||
| Share-based compensation (Note 11) | 1,233 | 3,446 | ||||
| Gain from insurance proceeds relating to vessel total loss (Note 5) | - | (28,163 | ) | |||
| Loss on write-down of inventory | - | 2,166 | ||||
| Change in fair value of forward freight derivatives and bunker swaps (Note 13) | 4,060 | 4,864 | ||||
| Other non-cash charges | (112 | ) | 42 | |||
| Equity in income / (loss) of investee (Note 3) | 17 | 56 | ||||
| Changes in operating assets and liabilities: | ||||||
| (Increase)/Decrease in: | ||||||
| Trade accounts receivable | (5,760 | ) | 13,579 | |||
| Inventories | (8,930 | ) | (1,585 | ) | ||
| Prepaid expenses and other receivables | (173 | ) | (8,010 | ) | ||
| Derivatives asset | (136 | ) | 372 | |||
| Due from related parties | (524 | ) | 24 | |||
| Due from managers | 9,404 | 31 | ||||
| Increase/(Decrease) in: | ||||||
| Accounts payable | 18,014 | 2,434 | ||||
| Operating lease liability (Note 6) | - | (2,770 | ) | |||
| Due to related parties | 1,297 | 113 | ||||
| Accrued liabilities | 5,151 | (1,222 | ) | |||
| Due to managers | 4,589 | 6,222 | ||||
| Deferred revenue | (9,138 | ) | (1,585 | ) | ||
| Net cash provided by / (used in) Operating Activities | 229,156 | 83,190 | ||||
| Cash Flows from Investing Activities: | ||||||
| Vessel upgrades and other fixed assets | (6,414 | ) | (5,389 | ) | ||
| Hull and machinery insurance proceeds | 1,600 | 358 | ||||
| Net cash provided by / (used in) Investing Activities | (4,814 | ) | (5,031 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from bank loans, leases and notes (Note 8) | - | 47,000 | ||||
| Loan and lease prepayments and repayments | (52,756 | ) | (87,293 | ) | ||
| Financing and debt extinguishment fees paid | - | (587 | ) | |||
| Dividends paid (Note 9) | (204,801 | ) | (62,050 | ) | ||
| Proceeds from issuance of common stock | 4,350 | - | ||||
| Repurchase of common shares (Note 9) | - | (7,005 | ) | |||
| Net cash provided by / (used in) Financing Activities | (253,207 | ) | (109,935 | ) | ||
| Net increase/(decrease) in cash and cash equivalents and restricted cash | (28,865 | ) | (31,776 | ) | ||
| Cash and cash equivalents and restricted cash at beginning of period | 473,271 | 286,344 | ||||
| Cash and cash equivalents and restricted cash at end of period | $ | 444,406 | $ | 254,568 | ||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||
| Cash paid during the period for: | ||||||
| Interest | $ | 10,386 | $ | 13,640 | ||
| Non-cash investing and financing activities: | ||||||
| Vessel upgrades | 1,619 | 50 | ||||
| Reconciliation of (a) cash and cash equivalents, and restricted cash reported within the consolidated balance sheets to (b) the total amount of such<br> items reported in the statements of cash flows: | ||||||
| Cash and cash equivalents | $ | 424,124 | $ | 234,498 | ||
| Restricted cash, current (Note 8) | 18,261 | 18,049 | ||||
| Restricted cash, non-current (Note 8) | 2,021 | 2,021 | ||||
| Cash and cash equivalents and restricted cash at end of period shown in the statement of cash flows | $ | 444,406 | $ | 254,568 | ||
| The accompanying notes are integral part of these consolidated financial statements. |
F-6
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information:
Star Bulk Carriers Corp. (“Star Bulk”) is a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Star Bulk was incorporated in the Marshall Islands on December 13, 2006 and maintains offices in Athens, New York, Limassol, Singapore and Germany. Star Bulk’s common shares trade on the NASDAQ Global Select Market under the ticker symbol “SBLK”.
The unaudited interim condensed consolidated financial statements include the accounts of Star Bulk and its wholly owned subsidiaries (collectively, the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for annual financial statements.
These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements for the year ended December 31, 2022 and, in the opinion of management, reflect all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2023.
The unaudited interim condensed consolidated financial statements presented in this report should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2022 (the “2022 Annual Report”). The balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements as of that date, but, pursuant to the requirements for interim financial information, does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2022 Annual Report.
The 2019 Novel Coronavirus (“COVID-19”) pandemic resulted in a significant reduction in global economic activity and extreme volatility in the global financial market. During the second half of 2022, rates declined from highs seen earlier in the year as China’s COVID-related lockdown measures intensified. After a seasonal decline in charter rates during the first quarter of 2023, Capesize and Supramax spot earnings began to rebound in March 2023 partially driven by China’s economic reopening. There continues to be a high level of uncertainty relating to how the COVID-19 pandemic will evolve, the evolution and emergence of existing and future variants, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. As a result of the COVID-19 pandemic restrictions imposed since 2020, additional crew expenses have been incurred. An increase in the severity or duration or a resurgence of the COVID-19 pandemic and any significant disruption of wide-scale vaccine distribution could have a material adverse effect on the Company’s future business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and the Company’s ability to pay dividends.
As of March 31, 2023, the Company owned a modern fleet of 127 dry bulk vessels consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels with a carrying capacity between 52,425 deadweight tonnage (“dwt”) and 209,529 dwt, a combined carrying capacity of 14.0 million dwt and an average age of 11.2 years.
F-7
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
2. Significant accounting policies and recent accounting pronouncements:
A summary of the Company’s significant accounting policies and recent accounting pronouncements is included in Note 2 to the Company’s consolidated financial statements included in the 2022 Annual Report. Other than the change in accounting estimate described below, there have been no changes to the Company’s significant accounting policies and recent accounting pronouncements in the three-month period ended March 31, 2023.
Vessel Depreciation:
The cost of each of the Company’s vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessel’s remaining economic useful life, after considering the estimated residual value (vessel’s residual value is equal to the product of its lightweight tonnage and estimated scrap rate per ton).
Effective as of January 1, 2023, following management’s reassessment of the residual value of the Company’s vessels, the Company increased the estimated scrap rate per lightweight ton from $0.3 to $0.4. The current value of $0.4 was based on the historical average demolition prices prevailing in the market in the last 20 years. The change in this accounting estimate, which pursuant to ASC 250 “Accounting Changes and Error Corrections” was applied prospectively and did not require retrospective application, decreased the depreciation expense and increased the net income for the three-month period ended March 31, 2023 by $3,929 or $0.04 per basic and diluted share.
3. Transactions with Related Parties:
Details of the Company’s transactions with related parties did not change in the three-month period ended March 31, 2023 and are discussed in Note 3 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
Transactions and balances with related parties are analyzed as follows:
| Balance Sheets | ||||
|---|---|---|---|---|
| December 31, 2022 | March 31, 2023 | |||
| Long term investment | ||||
| Interchart | $ | 1,349 | $ | 1,298 |
| Starocean | 202 | 197 | ||
| CCL Pool | 125 | 125 | ||
| Long term investment | $ | 1,676 | $ | 1,620 |
| Due from related parties | ||||
| Oceanbulk Maritime and its affiliates | 287 | 229 | ||
| Management and Directors Fees | - | 31 | ||
| Interchart | 3 | 3 | ||
| Starocean | 34 | 34 | ||
| Product Shipping & Trading S.A. | - | 3 | ||
| Due from related parties | $ | 324 | $ | 300 |
| Due to related parties | ||||
| Management and Directors Fees | 114 | - | ||
| Iblea Ship Management Limited | 1,387 | 1,614 | ||
| Due to related parties | $ | 1,501 | $ | 1,614 |
F-8
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
3. Transactions with Related Parties - continued:
| Income statements | ||||||
|---|---|---|---|---|---|---|
| Three months ended March 31, | ||||||
| 2022 | 2023 | |||||
| Voyage expenses: | ||||||
| Voyage expenses-Interchart | $ | (1,035 | ) | $ | (1,032 | ) |
| General and administrative expenses: | ||||||
| Consultancy fees | $ | (137 | ) | $ | (139 | ) |
| Directors compensation | (45 | ) | (46 | ) | ||
| Office rent - Combine Marine Ltd. & Alma Properties | (10 | ) | (9 | ) | ||
| General and administrative expenses - Oceanbulk Maritime and its affiliates | (52 | ) | (60 | ) | ||
| Management fees: | ||||||
| Management fees- Augustea Technoservices Ltd. and affiliates | $ | (1,122 | ) | $ | - | |
| Management fees- Iblea Ship Management Limited | (400 | ) | (829 | ) | ||
| Equity in income/(loss of investee) | ||||||
| Interchart | $ | (14 | ) | $ | (51 | ) |
| Starocean | (3 | ) | (5 | ) |
4. Inventories:
The amounts shown in the consolidated balance sheets are analyzed as follows:
| December 31, 2022 | March 31,2023 | |||
|---|---|---|---|---|
| Lubricants | $ | 15,863 | $ | 15,670 |
| Bunkers | 51,299 | 50,777 | ||
| Total | $ | 67,162 | $ | 66,447 |
F-9
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
5. Vessels and other fixed assets, net:
The amounts in the consolidated balance sheets are analyzed as follows:
| Cost | Accumulated depreciation | Net Book Value | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance, December 31, 2022 | $ | 3,843,686 | $ | (962,135 | ) | $ | 2,881,551 | ||
| - Acquisition of other fixed assets, vessel improvements and other vessel costs | 5,439 | - | 5,439 | ||||||
| - Vessel total loss | (27,570 | ) | 1,582 | (25,988 | ) | ||||
| - Impairment loss | (7,700 | ) | - | (7,700 | ) | ||||
| - Depreciation for the period | - | (35,069 | ) | (35,069 | ) | ||||
| Balance, March 31, 2023 | $ | 3,813,855 | $ | (995,622 | ) | $ | 2,818,233 |
During the three-month period ended March 31, 2023, the Company agreed with the war risk insurers of the vessel Star Pavlina, that the vessel became a constructive total loss on February 24, 2023 and as a consequence that the Company is entitled to be indemnified for the vessel’s total insurance value given its prolonged detainment in Ukraine following the commencement of Russia’s military action against Ukraine on February 24, 2022 as further disclosed in Notes 15b) and 19c) of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report. As a result, the Company recognized a gain of $28,163 which is included within “Other operational gain” in the unaudited interim condensed consolidated income statement for the three-month period ended March 31, 2023. During the three-month period ended March 31, 2023, the Company earned through its war risk insurance policy detention compensation with respect to this vessel, an amount of $2,658 which is also included within “Other operational gain” in the unaudited interim condensed consolidated income statement for the corresponding period. On April 12, 2023 and on May 4, 2023 the Company received the total insurance value of the vessel Star Pavlina.
On March 24, 2023, the Company agreed to sell to a third party the vessels Star Borealis and Star Polaris with delivery to their new owner upon completion of their then-existing employment. Star Borealis was delivered to its new owner on May 4, 2023 while the delivery of Star Polaris is expected by the end of May or early June 2023. Given their employment as of March 31, 2023, none of the above-mentioned vessels met the criteria to be classified as held for sale as of March 31, 2023. However, by reference to their agreed sale prices (Level 2), the Company recognized an impairment loss of $7,700, for the three-month period ended March 31, 2023, which is separately reflected in the unaudited interim condensed consolidated income statement for the corresponding period (Note 13).
As of March 31, 2023, 102 of the Company’s vessels, having a net carrying value of $2,314,981, serve as collateral under certain of the Company’s loan facilities and were subject to first-priority mortgages (Note 8). Title of ownership is held by the relevant lenders for another 12 vessels with a carrying value of $341,731 to secure the relevant sale and lease back financing transactions (Note 7). In addition, 18 of the Company’s vessels having a net carrying value of $356,210 are subject to second-priority mortgages and serve as collateral under certain of the Company’s loan facilities (Note 8).
Other than what is described above, there was no change to the Company’s operating fleet during the three-month period ended March 31, 2023, while during this period the Company continued the technical upgrades to its fleet, such as the installation of ballast water treatment systems (“BWTS”) and Energy Saving Devices (“ESD”).
F-10
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
6. Operating leases:
a) Time charter-in vessel agreements
The carrying value of the assets and liabilities recognized on the balance sheet as of December 31, 2022 and March 31, 2023 in connection with the time charter-in vessel arrangements with an initial term exceeding 12 months, as described in Note 6 to the Company’s consolidated financial statements included in the 2022 Annual Report, amounted to $37,191 and $34,507, respectively. The time charter-in payments required to be made after March 31, 2023, for these outstanding operating lease liabilities are as follows:
| Twelve month periods ending | Amount | ||
|---|---|---|---|
| March 31, 2024 | $ | 9,331 | |
| March 31, 2025 | 5,900 | ||
| March 31, 2026 | 6,242 | ||
| March 31, 2027 | 5,900 | ||
| March 31, 2028 | 6,259 | ||
| March 31, 2029 and thereafter | 4,205 | ||
| Total undiscounted lease payments | $ | 37,837 | |
| Discount based on incremental borrowing rate | (3,330 | ) | |
| Present value of lease liability | 34,507 |
The weighted average remaining lease term of these charter-in vessel arrangements as of March 31, 2023 is 5.26 years. The charter-in expenses for these long-term charter-in arrangements for the three-month periods ended March 31, 2022 and 2023, were $2,627 and $2,879, respectively.
b) Office rental arrangements
The carrying value of the assets and liabilities recognized on the balance sheet as of December 31, 2022 and March 31, 2023 in connection with the office rental arrangements as described in Note 6 to the Company’s consolidated financial statements included in the 2022 Annual Report, amounted to $427 and $341, respectively. The office rental payments required to be made after March 31, 2023, for these outstanding operating lease liabilities are as follows:
| Twelve month periods ending | Amount | |
|---|---|---|
| March 31, 2024 | $ | 256 |
| March 31, 2025 | 85 | |
| March 31, 2026 | - | |
| March 31, 2027 | - | |
| March 31, 2028 | - | |
| March 31, 2029 and thereafter | - | |
| Total undiscounted lease payments | $ | 341 |
| Discount based on incremental borrowing rate | - | |
| Present value of lease liability | 341 |
The weighted average remaining lease term of these office rent arrangements as of March 31, 2023 is 1.30 years. The lease expenses for these office rental arrangements for the three-month periods ended March 31, 2022 and 2023, were $120 and $125, respectively.
F-11
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
- Lease financing:
Details of the Company’s lease financings are discussed in Note 7 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
All of the Company’s lease financings bear interest at LIBOR plus a margin. The Company plans to have completed the transition of its lease financings from LIBOR to SOFR by or close to the end of June 2023. The corresponding interest expense of the Company’s bareboat lease financing activities is included within “Interest and finance costs” in the unaudited interim condensed consolidated income statements (Note 8).
Some of the Company’s lease financings contain financial and other covenants similar to those included in its credit facilities, as described in Note 8 below and in Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report, with which, as of March 31, 2023, the Company was in compliance (Note 8).
The principal payments required to be made after March 31, 2023, for the Company’s outstanding finance lease obligations recognized on the balance sheet, as of that date, are as follows:
| Twelve month periods ending | Amount | ||
|---|---|---|---|
| March 31, 2024 | $ | 15,361 | |
| March 31, 2025 | 15,361 | ||
| March 31, 2026z | 22,989 | ||
| March 31, 2027 | 13,719 | ||
| March 31, 2028 | 20,446 | ||
| March 31, 2028 and thereafter | 101,564 | ||
| Total bareboat lease minimum payments | $ | 189,440 | |
| Unamortized lease issuance costs | (2,503 | ) | |
| Total bareboat lease minimum payments, net | $ | 186,937 | |
| Lease financing short term | 15,361 | ||
| Lease financing long term, net of unamortized lease issuance costs | 171,576 |
8. Long-term bank loans:
Details of the Company’s credit facilities are discussed in Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report and supplemented by the below new activities during the three-month period ended March 31, 2023.
As further discussed in Note 19a) and Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report, on January 13, 2023, the Company drew down the amounts of $22,829 and $24,171, under the two tranches available of the “Standard Chartered $47,000 Facility”.
In addition to the scheduled repayments during the three-month period ended March 31, 2023, on March 10, 2023 the Company prepaid an amount of $18,236 corresponding to the outstanding loan amount of the vessel Star Pavlina under the ING $310,600 Facility following the developments around the said vessel discussed in Note 5 above. In addition, and in view of their agreed sale as further discussed in Note 5 above, on March 29, 2023 the Company prepaid an amount of $26,207 corresponding to the outstanding loan amount of the vessels Star
Borealis and Star Polaris under the DNB $107,500 Facility.
F-12
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
8. Long-term bank loans - continued:
In March 2023, the Company entered into a committed termsheet with Skandinaviska Enskilda Banken AB for a loan facility of up to $30,000 (the “SEB $30,000 Facility”). The facility will be used to refinance the outstanding amounts under the loan agreement and lease agreement for the vessels Star Aquarius and Star Pisces, respectively (Note 15d) and is expected to be drawn in May 2023. The SEB $30,000 Facility is expected to be drawn in two tranches, will mature 5 years after the drawdown and will be secured by first priority mortgages on the Star Aquarius and Star Pisces.
In March 2023, the Company entered into a committed termsheet with Nordea Bank Abp for a loan facility of up to $50,000 (the “Nordea $50,000 Facility”). The facility will be used to refinance the outstanding amounts under the loan agreements of the vessels Star Eleni and Star Leo and is expected to be drawn by the end of June 2023. The Nordea $50,000 Facility is expected to be drawn in two tranches, will mature 5 years after the drawdown and will be secured by first priority mortgages on the Star Eleni and Star Leo.
The Company’s credit facilities contain financial covenants and undertakings, a summary of which is included in Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
As of December 31, 2022 and March 31, 2023, the Company was required to maintain minimum liquidity, not legally restricted, of $64,000 and $63,500, respectively, which is included within “Cash and cash equivalents” in the consolidated balance sheets. In addition, as of December 31, 2022 and March 31, 2023, the Company was required to maintain a minimum liquidity, legally restricted, of $16,590 and $20,070, respectively, which is included within “Restricted cash, current and non-current” in the consolidated balance sheets. The increase in restricted cash is attributable to the increase in collateral required under certain of the Company’s financial instruments (Note 13).
As of March 31, 2023, the Company was in compliance with the applicable financial and other covenants contained in its debt agreements and lease financings described in Note 7.
The principal payments required to be made after March 31, 2023 for all of the then-outstanding bank debt, are as follows:
| Twelve month periods ending | Amount | ||
|---|---|---|---|
| March 31, 2024 | $ | 188,997 | |
| March 31, 2025 | 173,619 | ||
| March 31, 2026 | 208,771 | ||
| March 31, 2027 | 229,863 | ||
| March 31, 2028 | 218,532 | ||
| March 31, 2029 and thereafter | 47,359 | ||
| Total Long-term bank loans | $ | 1,067,141 | |
| Unamortized loan issuance costs | (8,108 | ) | |
| Total Long-term bank loans, net | $ | 1,059,033 | |
| Current portion of long-term bank loans | 188,997 | ||
| Long-term bank loans, net of current portion and unamortized loan issuance costs | 870,036 |
F-13
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
8. Long-term bank loans - continued:
All of the Company’s bank loans bear interest at LIBOR or SOFR plus a margin, except for the DSF $55,000 Facility, which is a fixed rate facility (Note 13). The Company plans to complete the transition of its debt agreements from LIBOR to SOFR by or close to the end of June 2023. In addition, following a number of interest rates swaps that it has entered into, as of March 31, 2023, the Company has converted a total of $707,708 of such debt from floating benchmark rate to an average fixed rate of 46 bps with average maturity of 1.0 year. The weighted average interest rate (including the margin) related to the Company’s existing bank loans and lease financings for the three-month periods ended March 31, 2022 and 2023 was 2.74% and 4.36%, respectively.
The amounts of “Interest and finance costs” included in the unaudited interim condensed consolidated income statements are analyzed as follows:
| Three months ended March 31, | |||||
|---|---|---|---|---|---|
| 2022 | 2023 | ||||
| Interest on financing agreements | $ | 10,046 | $ | 21,580 | |
| Reclassification adjustments of interest rate swap loss/(gain) transferred to Interest and finance costs from Other Comprehensive Income (Note 13) | 379 | (7,273 | ) | ||
| Amortization of debt (loan & lease) issuance costs | 1,339 | 1,043 | |||
| Other bank and finance charges | 318 | 352 | |||
| Interest and finance costs | $ | 12,082 | $ | 15,702 |
During the three-month period ended March 31, 2023, the Company wrote off an amount of $419 of unamortized debt issuance costs following the loan prepayments discussed in Note 8 above which are included under “Gain/(Loss) on debt extinguishment, net” in the unaudited interim condensed consolidated income statement for the corresponding period.
9. Preferred and Common Shares and Additional Paid-in Capital:
Details of the Company’s preferred shares and common shares are discussed in Note 9 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
During the three-month period ended March 31, 2023, the Company issued 450,000 common shares pursuant to its Performance Incentive Program discussed in Note 11 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
In addition, during the three-month period ended March 31, 2023, the Company repurchased 331,223 shares under the authorized share repurchase program (the “Share Repurchase Program”) in open market transactions at an average price of $21.12 per share, for an aggregate consideration of $6,995. The repurchased shares were cancelled and removed from the Company’s share capital. Commissions and share cancellation fees incurred amounted to $10.
Pursuant to its dividend policy, during the three-month period ended March 31, 2023, the Company declared and paid a cash dividend of $62,050 or $0.60 per common share.
F-14
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
10. Earnings per Share:
The computation of basic earnings per share is based on the weighted average number of common shares outstanding for the three-month periods ended March 31, 2022 and 2023. The calculation of basic earnings per share does not consider the non-vested shares as outstanding until the time-based vesting restriction has lapsed. Diluted earnings per share gives effect to stock awards and restricted stock units using the treasury stock method, unless the impact is anti-dilutive.
The Company calculates basic and diluted earnings per share as follows:
| Three months ended March 31, | ||||
|---|---|---|---|---|
| 2022 | 2023 | |||
| Income : | ||||
| Net income | $ | 170,364 | $ | 45,875 |
| Basic earnings per share: | ||||
| Weighted average common shares outstanding, basic | 101,981,583 | 102,974,041 | ||
| Basic earnings / (loss) per share | $ | 1.67 | $ | 0.45 |
| Effect of dilutive securities: | ||||
| Dillutive effect of non vested shares | 276,090 | 407,902 | ||
| Weighted average common shares outstanding, diluted | 102,257,673 | 103,381,943 | ||
| Diluted earnings per share | $ | 1.67 | $ | 0.44 |
11. Equity Incentive Plans:
Details of the Company’s equity incentive plans and share awards granted through December 31, 2022, are discussed in Note 11 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
The stock-based compensation cost for the three-month periods ended March 31, 2022 and 2023, which is included under “General and administrative expenses” in the unaudited interim condensed consolidated income statements, amounted to $1,233 and $3,446, respectively, and include an amount of $770 and $1,900, respectively, recognized in connection with the Company’s Performance Incentive Program. The respective charges were calculated based on the fuel market prices at each period end and assuming 5% of Excess Savings to be awarded by the Board of Directors.
F-15
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
11. Equity Incentive Plans - continued:
A summary of the status of the Company’s non-vested restricted shares as of March 31, 2023 and the movement during the three-month period ended March 31, 2023 is presented below.
| Number of shares | Weighted Average Grant Date Fair Value | ||||
|---|---|---|---|---|---|
| Unvested as at January 1, 2023 | 460,190 | $ | 19.38 | ||
| Granted | 450,000 | 19.23 | |||
| Vested | (450,000 | ) | 19.23 | ||
| Unvested as at March 31, 2023 | 460,190 | $ | 19.38 |
As of March 31, 2023, the estimated compensation cost relating to non-vested restricted share awards not yet recognized is $4,930 and is expected to be recognized over the weighted average period of 1.56 years. During the three-month period ended March 31, 2023 the Company paid $276 for dividends to shareholders of non-vested shares.
| 12. | Commitments and Contingencies: |
|---|---|
| a) | Commitments: |
| --- | --- |
The following tables set forth inflows and outflows related to the Company’s charter party arrangements and other commitments, as at March 31, 2023.
Charter party arrangements:
| Twelve month periods ending March 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| + inflows/ - outflows | Total | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 and thereafter | |||||||
| Future, minimum, non-cancellable charter revenue (1) | $ | 75,324 | $ | 59,832 | $ | 15,492 | $ | - | $ | - | $ | - | $ | - |
| Total | $ | 75,324 | $ | 59,832 | $ | 15,492 | $ | - | $ | - | $ | - | $ | - |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
| (1) | The amounts represent the minimum contractual charter revenues to be generated from the existing, as of March 31, 2023, non-cancellable time charter agreements, until their expiration, net of address commission, assuming no<br> off-hire days other than those related to scheduled interim and special surveys of the vessels. Future inflows also include revenues deriving from index linked charter agreements using i) the index rates at the commencement date of<br> each agreement, in compliance with ASC 842, and do not reflect relevant index charter rate information prevailing as of March 31, 2023 and ii) the remaining minimum duration of each contract. |
|---|
F-16
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| 12. | Commitments and Contingencies - continued: |
|---|---|
| b) | Commitments- continued: |
| --- | --- |
Other commitments:
| Twelve month periods ending March 31, | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| + inflows/ - outflows | Total | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 and thereafter | ||||||||||||||
| Charter-in expense newbuilding vessels (1) | $ | (212,834 | ) | $ | (2,043 | ) | $ | (22,728 | ) | $ | (30,204 | ) | $ | (30,204 | ) | $ | (30,287 | ) | $ | (97,368 | ) |
| Vessel BWTS and ESD (2) | (11,535 | ) | (11,535 | ) | - | - | - | - | - | ||||||||||||
| Total | $ | (224,369 | ) | $ | (13,578 | ) | $ | (22,728 | ) | $ | (30,204 | ) | $ | (30,204 | ) | $ | (30,287 | ) | $ | (97,368 | ) |
____________________
| (1) | The amounts represent minimum contractual charter-in commitments to be incurred with respect to four Kamsarmax newbuildings and two Ultramax newbuildings which are expected to be delivered during 2024 and the charter-in contracts<br> have a minimum duration of 84 months per vessel. |
|---|---|
| (2) | The amounts represent the Company’s commitments as of March 31, 2023, for vessel upgrades (BWTS and ESD). |
| --- | --- |
| c) | Legal proceedings |
| --- | --- |
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of, and has not accrued for, any such claims or contingent liabilities requiring disclosure in the unaudited interim condensed consolidated financial statements.
F-17
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
13. Fair value measurements and Hedging:
Fair value on a recurring basis:
Interest rate swaps
Details of the Company’s interest rate swaps are discussed in Note 18 of the Company’s consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report.
The Company’s interest rate swaps were designated and qualified as cash flow hedges, with the exception of one of them with a notional amount as of March 31, 2023 of $33,375 and maturity in August 2023 which was (i) no longer expected to be highly effective in achieving offsetting changes in future cash flows and (ii) not actually highly effective during the three-month period ended March 31, 2023 and accordingly the corresponding gains/losses from this interest rate swap during the said period amounting to $372 are separately reflected under “Gain/(Loss) on interest rate swaps, net” in the unaudited interim condensed consolidated income statement for the corresponding period. The effective portion of the unrealized gains/losses from all other swaps is recorded in Other Comprehensive Income / (Loss) and no portion of these cash flow hedges was ineffective during the three-month period ended March 31, 2023.
A gain of approximately $11,433 in connection with the interest rate swaps is expected to be reclassified into earnings during the following 12-month period when realized.
Freight Derivatives and Bunker Swaps
The results of the Company’s freight derivatives and bunker swaps for the three-month periods ended March 31, 2022 and 2023 and the valuation of their open positions as at December 31, 2022 and March 31, 2023 are presented in the tables below.
The amounts of Gain / (Loss) on interest rate swaps, freight derivatives and bunker swaps recognized in the unaudited interim condensed consolidated income statements, are analyzed as follows:
| Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2023 | |||||
| Consolidated Statement of Operations | ||||||
| Gain/(loss) on interest rate swaps, net | ||||||
| Gains/(loss) of de-designated accounting hedging relationship | $ | - | $ | (372 | ) | |
| Total Gain/(loss) on interest rate swaps, net | $ | - | $ | (372 | ) | |
| Interest and finance costs | ||||||
| Reclassification adjustments of interest rate swap loss/(gain) transferred to Interest and finance costs from Other comprehensive income/(loss) (Note 8) | (379 | ) | 7,273 | |||
| Total Gain/(loss) recognized | $ | (379 | ) | $ | 7,273 | |
| Gain/(loss) on forward freight agreements and bunker swaps, net | ||||||
| Realized gain/(loss) on forward freight agreements and freight options | 5,523 | 3,490 | ||||
| Realized gain/(loss) on bunker swaps | (4,086 | ) | 2,682 | |||
| Unrealized gain/(loss) on forward freight agreements and freight options | (4,353 | ) | (3,425 | ) | ||
| Unrealized gain/(loss) on bunker swaps | 293 | (1,439 | ) | |||
| Total Gain/(loss) recognized | $ | (2,623 | ) | $ | 1,308 |
F-18
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
13. Fair value measurements and Hedging - continued:
Fair value on a recurring basis - continued:
The following table summarizes the valuation of the Company’s financial instruments as of December 31, 2022 and March 31, 2023. The fair value of freight derivatives and bunker swaps was determined through Level 1 inputs of the fair value hierarchy (quoted prices from the applicable exchanges such as London Clearing House (LCH) or Singapore Exchange (SGX)), while the fair value of the interest rate swaps was determined through Level 2 inputs of the fair value hierarchy (such as interest rate curves).
| Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, 2022 | March 31, 2023 | ||||||||
| Balance Sheet Location | (not designated as cash flow hedges) | (designated as cash flow hedges) | (not designated as cash flow hedges) | (designated as cash flow hedges) | |||||
| ASSETS | |||||||||
| Forward freight agreements - current | Derivatives, current asset portion | $ | 191 | $ | - | $ | - | $ | - |
| Bunker swaps - current | Derivatives, current asset portion | 3,688 | - | 2,248 | - | ||||
| Total | $ | 3,879 | $ | - | $ | 2,248 | $ | - | |
| LIABILITIES | |||||||||
| Forward freight agreements - current | Derivatives, current liability portion | $ | - | $ | - | $ | 3,233 | $ | - |
| Total | $ | - | $ | - | $ | 3,233 | $ | - | |
| Significant Other Observable Inputs (Level 2) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2022 | March 31, 2023 | ||||||||
| Balance Sheet Location | (not designated as cash flow hedges) | (designated as cash flow hedges) | (not designated as cash flow hedges) | (designated as cash flow hedges) | |||||
| ASSETS | |||||||||
| Interest rate swaps - current | Derivatives, current asset portion | $ | 1,665 | $ | 20,041 | $ | 644 | $ | 16,544 |
| Interest rate swaps - non-current | Derivatives, non-current asset portion | 798 | 7,868 | - | 5,729 | ||||
| Total | $ | 2,463 | $ | 27,909 | $ | 644 | $ | 22,273 |
Certain of the Company’s financial instruments discussed above require the Company to periodically post additional collateral depending on the level of any open position under such financial instruments, which as of December 31, 2022 and March 31, 2023 amounted to $2,199 and $5,726, respectively, and are included within “Restricted cash, current” in the consolidated balance sheets (Note 8).
The carrying values of temporary cash investments, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. The fair value of long-term bank loans and financing under bareboat leases (Level 2), bearing interest at variable interest rates, approximates their recorded values as of March 31, 2023, due to the variable interest rate nature thereof. The fair value of the DSF $55,000 Facility (Note 8) as of March 31, 2023, measured through level 2 inputs (such as interest rate curves) is $44,405, which is $18 lower than the loan’s book value of $44,423.
F-19
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
13. Fair value measurements and Hedging - continued:
Fair value on a non-recurring basis:
As further disclosed in Note 5, during the three-month period ended March 31, 2023 the Company recognized an impairment loss of $7,700 relating to the agreed sale of two of its vessels. The carrying value of the respective vessels was written down to the fair value as determined by reference to their agreed sale prices (Level 2).
The following table summarizes the valuation of these assets measured at fair value on a non-recurring basis as of March 31, 2023:
| Long-lived assets held and used | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Impairment loss | ||||
|---|---|---|---|---|---|---|---|---|
| (Level 1) | (Level 2) | (Level 3) | ||||||
| Vessels, net | $ | - | $ | 65,400 | $ | - | $ | 7,700 |
| TOTAL | $ | - | $ | 65,400 | $ | - | $ | 7,700 |
14. Voyage revenues:
The following table shows the voyage revenues earned from time charters, voyage charters and pool agreements for the three-month periods ended March 31, 2022 and 2023, as presented in the consolidated income statements:
| Three months ended March 31, | ||||
|---|---|---|---|---|
| 2022 | 2023 | |||
| Time charters | $ | 198,630 | $ | 113,953 |
| Voyage charters | 158,292 | 109,818 | ||
| Pool revenues | 3,961 | 264 | ||
| $ | 360,883 | $ | 224,035 |
As of December 31, 2022 and March 31, 2023, trade accounts receivable from voyage charter agreements amounted to $24,144 and $15,562, respectively. These changes were mainly attributable to the timing of collections and lower rates prevailing at each period-end.
Further, as of March 31, 2023, capitalized contract fulfilment costs which are recorded under “Other current assets” decreased by $729 compared to December 31, 2022, from $4,366 to $3,637. The outstanding balance is mainly affected by the timing of commencement of revenue recognition.
Under ASC 606, unearned voyage charter revenue represents the consideration received for undelivered performance obligations. The Company recorded $9,215 as unearned revenue related to voyages charter agreements in progress as of December 31, 2022, which were recognized in earnings in the three-month period ended March 31, 2023 as the performance obligations were satisfied in that period. In addition, the Company recorded $7,699 as unearned revenue related to voyages charter agreements in progress as of March 31, 2023, which will be recognized in earnings as the performance obligations will be satisfied.
F-20
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2023
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
14. Voyage revenues – continued:
The amount invoiced to charterers in connection with the additional revenue for scrubber-fitted vessels under time-charter contracts was $18,804 and $19,294 for the three-month periods ended March 31, 2022 and 2023, respectively, and did not include the fuel cost savings gained from the scrubber-fitted vessels which were employed under voyage charter agreements.
Demurrage income for the three-month periods ended March 31, 2022 and 2023 amounted to $11,821 and $2,836, respectively, and is included in Voyage revenues in the unaudited interim condensed consolidated income statements.
The adjustment to Company’s revenues from the vessels operating in the CCL Pool, deriving from the allocated pool result for those vessels as determined in accordance with the agreed-upon formula, for the three-month periods ended March 31, 2022 and 2023 was $3,961 and $789, respectively, and is included within “Pool Revenues” in the table above. Pool Revenues also include other minor participation adjustments.
15. Subsequent Events:
| a) | In April 2023, the Company repurchased 200,000 common shares in open market transactions at an average price of $20.74 per share for an aggregate consideration of $4,148, pursuant to the Share<br> Repurchase Program, all of which were cancelled and removed from the Company’s share capital. |
|---|---|
| b) | The outstanding amount of the loan facilities for vessels Star Eleni and Star Leo under the DSF $55,000 Facility<br> of $42,308 was prepaid on May 2, 2023. |
| --- | --- |
| c) | On May 16, 2023 the Company’s Board of Directors declared a quarterly cash dividend of $0.35 per share payable on or about June 27, 2023 to all shareholders of<br> record as of June 7, 2023. The ex-dividend date is expected to be June 6, 2023. |
| --- | --- |
| d) | In view of their refinancing as further discussed in Note 8 above, on May 9, 2023 and on May 15, 2023 the Company prepaid the outstanding loan of Star Aquarius<br> of $12,813 and the outstanding lease amount for vessel Star Pisces of $12,281, respectively. |
| --- | --- |
| e) | Subsequent to March 31, 2023, the Company's Board of Directors adopted the 2023 Equity Incentive Plan (the “2023 Plan”) and reserved for issuance 631,500 common shares thereunder, all of which were<br> granted to certain directors, officers and employees. |
| --- | --- |
| f) | On May 16, 2023, the Company’s Board of Directors cancelled the previous share repurchase program under which $8,549 was still outstanding and<br> authorized a new share repurchase program of up to an aggregate of $50,000 (together with the previous share repurchase program “Share Repurchase Program”). The<br> timing and amount of any repurchases will be in the sole discretion of the Company’s management team, and will depend on legal requirements, market conditions, share price, alternative uses of capital and other factors. The Company is not<br> obligated under the terms of the Share Repurchase Program to repurchase any of its common shares. The Share Repurchase Program has no expiration date and may be suspended or terminated by the Company’s Board of Directors at any time<br> without prior notice. Common shares purchased as part of this program will be cancelled by the Company. |
| --- | --- |
F-21
Exhibit 99.2
STAR BULK CARRIERS CORP. REPORTS NET PROFIT OF $45.9 MILLION
FOR THE FIRST QUARTER OF 2023
DECLARES QUARTERLY DIVIDEND OF $0.35 PER SHARE
AND RENEWS SHARE REPURCHASE PROGRAM OF UP TO $50.0 MILLION
ATHENS, GREECE, May 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 first 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
| (Expressed in thousands of U.S. dollars,<br><br> <br>except for daily rates and per share data) | ||||
|---|---|---|---|---|
| First quarter 2023 | First quarter 2022 | |||
| Voyage Revenues | $ | 224,035 | $ | 360,883 |
| Net income | $ | 45,875 | $ | 170,364 |
| Adjusted Net income ^(1)^ | $ | 37,077 | $ | 175,562 |
| Net cash provided by operating activities | $ | 83,190 | $ | 229,156 |
| EBITDA ^(2)^ | $ | 94,391 | $ | 220,683 |
| Adjusted EBITDA ^(2)^ | $ | 84,802 | $ | 225,881 |
| Earnings per share diluted | $ | 0.44 | $ | 1.67 |
| Adjusted earnings per share diluted ^(1)^ | $ | 0.36 | $ | 1.72 |
| Dividend per share for the relevant period | $ | 0.35 | $ | 1.65 |
| Average Number of Vessels | 127.6 | 128.0 | ||
| TCE Revenues ^(3)^ | $ | 156,100 | $ | 304,904 |
| Daily Time Charter Equivalent Rate ("TCE") ^(3)^ | $ | 14,199 | $ | 27,405 |
| Daily OPEX per vessel ^(4)^ | $ | 4,858 | $ | 4,988 |
| Daily OPEX per vessel (excl. non recurring expenses) ^(4)^ | $ | 4,696 | $ | 4,747 |
| Daily Net Cash G&A expenses per vessel ^(5)^ | $ | 1,059 | $ | 1,065 |
_________
| (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<br> 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<br> 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,<br> 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,<br> 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<br> 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<br> 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<br> expense and other non-cash charges) 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<br> 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 was profitable for the first quarter of 2023, the seasonally weakest period of the year, reporting Net Income of $45.9 million and a TCE of $14,199. On the basis of our dividend policy, our Board of Directors has approved a dividend of $0.35 / share, representing our ninth consecutive quarterly payment. Since the beginning of 2021, the Company has returned over $1 billion to shareholders through dividends and share buybacks.
Looking at our fleet, we took advantage of the increase in vessel values and agreed to opportunistically sell two 2011 built Capesize vessels, the Star Borealis and Star Polaris. We also agreed with the war risk insurers of the Star Pavlina that the vessel became a constructive total loss, given its prolonged detainment in Ukraine following the ongoing conflict between Russia and Ukraine. Looking towards fleet renewal and increased fuel efficiency, we have secured seven long-term charter-in EEDI-Phase 3 latest generation eco vessels, built at first class shipyards, six of which are expected to be delivered during 2024.
We are also very positive as far as our cooperation with the Iron Ore Consortium on Green Corridors is concerned. Our recent study showed that ships powered by clean ammonia could carry iron ore from Australia to East Asia as soon as 2028 and could reach 5% of that market by 2030, assuming broad acceptance of ammonia as a fuel.
We are optimistic about the medium term prospects of the dry bulk market given the favorable order book and upcoming environmental regulations. We believe Star Bulk remains well positioned, with a strong balance sheet and a fully scrubber fitted fleet, to take advantage of the positive market backdrop and continue creating value for its shareholders.”
Recent Developments
Declaration of Dividend
As of March 31, 2023, our aggregate amount of cash on our balance sheet was $254.6 million and after giving effect to the share repurchases and the prepayments of debt in connection with the changes in our fleet as described below, that took place during the first quarter of 2023, the cash available for distribution under our dividend policy was $306.0 million. Taking into account the Minimum Cash Balance per Vessel, as defined in our 2022 annual report, on May 16, 2023, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.35 per share, payable on or about June 27, 2023 to all shareholders of record as of June 7, 2023. The ex-dividend date is expected to be June 6, 2023.
Share Repurchase Program and Shares Outstanding Update
In March 2023, we repurchased 331,223 common shares in open market transactions at an average price of $21.12 per share for an aggregate consideration of $7.0 million pursuant to the $50.0 million share repurchase program announced in August 2021. In addition, in April 2023, we repurchased 200,000 common shares in open market transactions at an average price of $20.74 per share for an aggregate consideration of $4.15 million, pursuant to the abovementioned share repurchase program. All of the abovementioned shares were cancelled and removed from our share capital as of the date of this release.
On May 16, 2023, our Board of Directors cancelled the previous share repurchase program under which $8.5 million was still outstanding and authorized a new share repurchase program of up to an aggregate of $50.0 million (“Share Repurchase Program”). The timing and amount of any repurchases will be in the sole discretion of our management team, and will depend on legal requirements, market conditions, share price, alternative uses of capital and other factors. Repurchases of common shares may take place in privately negotiated transactions, in open market transactions pursuant to Rule 10b-18 of the Exchange Act and/or pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. We are not obligated under the terms of the Share Repurchase Program to repurchase any of our common shares. The Share Repurchase Program has no expiration date and may be suspended or terminated by our Board of Directors at any time without prior notice. We will cancel common shares repurchased as part of this program.
As of today, we have 102,881,065 shares outstanding.
Fleet Update
During the first quarter of 2023, we agreed with the war risk insurers of the vessel Star Pavlina, that the vessel became a constructive total loss as of February 24, 2023, given its prolonged detainment in Ukraine following the commencement of Russia’s military action against Ukraine on February 24, 2022. As of the date of this release, we have collected the corresponding insurance value of this vessel.
On March 24, 2023, we agreed to sell the vessels Star Borealis and Star Polaris. The Star Borealis was delivered to its new owner with the respective sale proceeds being collected on May 4, 2023, while the delivery of Star Polaris is expected to occur by the end of May or early June 2023.
As of the date of this release, we have entered into long-term charter-in arrangements with respect to four Kamsarmax newbuildings and two Ultramax newbuildings which are expected to be delivered during 2024 with an approximate duration of seven years per vessel plus optional years. In addition, in November 2021 we took delivery of the Capesize vessel Star Shibumi, under a long-term charter-in contract for a period up to November 2028. Please see below a summary table of the respective contracts:
| # | Name | DWT | Built | Yard | Country | Delivery / Estimated Delivery ^(1)^ | Minimum Period |
|---|---|---|---|---|---|---|---|
| 1 | Star Shibumi | 180,000 | 2021 | JMU | Japan | November 2021 | November 2028 |
| 2 | NB Kamsarmax # 1 | 82,000 | 2024 | Tsuneishi | Japan | Q1 - 2024 | 7 years |
| 3 | NB Kamsarmax # 2 | 82,000 | 2024 | Tsuneishi | Japan | Q4 - 2024 | 7 years |
| 4 | NB Kamsarmax # 3 | 82,000 | 2024 | JMU | Japan | Q2 - 2024 | 7 years |
| 5 | NB Kamsarmax # 4 | 82,000 | 2024 | JMU | Japan | Q3 - 2024 | 7 years |
| 6 | NB Ultramax #1 | 66,000 | 2024 | Tsuneishi, Cebu | Philippines | Q1 - 2024 | 7 years |
| 7 | NB Ultramax #2 | 66,000 | 2024 | Tsuneishi, Cebu | Philippines | Q4 - 2024 | 7 years |
| 640,000 |
(1) As of the date of this release, we have also entered into a charter-in agreement for the vessel Tai Kudos which is expected to be redelivered to its owners in October 2023.
Financing
In March 2023, we entered into a committed termsheet with Nordea Bank Abp for a loan facility of up to $50.0 million (the “Nordea $50.0 million Facility”). The facility will be used to refinance the outstanding amounts under the loan agreements of the vessels Star Eleni and Star Leo and is expected to be drawn by the end of June 2023. The outstanding amount of the pre-existing loan facilities for the two vessels of $42.3 million was prepaid on May 2, 2023. The Nordea $50.0 million Facility is expected to be drawn in two tranches and will mature 5 years after the drawdown and will be secured by first priority mortgages on the Star Eleni and Star Leo.
In March 2023, we entered into a committed termsheet with Skandinaviska Enskilda Banken AB for a loan facility of up to $30.0 million (the “SEB $30.0 million Facility”). The facility amount will be used to replenish the cash used in May 2023 to prepay the outstanding amount of $25.1 million in aggregate under the loan agreement and lease agreement for each of the vessels Star Aquarius and Star Pisces, respectively, and is expected to be drawn in May 2023. The SEB $30.0 million Facility is expected to be drawn in two tranches and will mature 5 years after the drawdown and will be secured by first priority mortgages on the Star Aquarius and Star Pisces.
The financing arrangements discussed above contain financial and other covenants substantially similar to those covenants described in Item 5 of our 2022 annual report regarding our credit facilities.
Excess debt proceeds drawn from the new facilities described above will be used to prepay debt in other Star Bulk debt facilities.
In March 2023 we prepaid the outstanding debt under the facilities financing the vessels Star Pavlina, Star Borealis and Star
Polaris for an aggregate amount of $44.4 million.
Following the completion of the $509.9 million of new refinancings that we performed during 2022 and 2023, we have 13 unlevered vessels and we expect to save approximately $6.7 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 $636.5 million under our financing agreements with an average fixed rate of 45 bps and an average maturity of 1.0 year. As of March 31, 2023 the Mark-to-Market value of our outstanding interest rate swaps stood at $26.2 million. The above interest rate swaps are designated and qualify for hedge accounting, except for one which matures in August 2023.
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.
| For the first quarter of 2023 our TCE rate per main vessel categories was as follows: | |
|---|---|
| Capesize / Newcastlemax Vessels: | $16,807 per day. |
| Post Panamax / Kamsarmax / Panamax Vessels: | $13,904 per day. |
| Ultramax / Supramax Vessels: | $12,393 per day. |
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 103,381,943 and 102,257,673 weighted average diluted shares for the first quarter of 2023 and 2022, respectively.
First Quarter 2023 and 2022 Results
For the first quarter of 2023, we had a net income of $45.9 million, or $0.44 earnings per share, compared to a net income for the first quarter of 2022 of $170.4 million, or $1.67 earnings per share. Adjusted net income, which excludes certain non-cash items, was $37.1 million, or $0.36 earnings per share, for the first quarter of 2023, compared to an adjusted net income of $175.6 million for the first quarter of 2022, or $1.72 earnings per share.
Net cash provided by operating activities for the first quarter of 2023 was $83.2 million, compared to $229.2 million for the first quarter of 2022. Adjusted EBITDA, which excludes certain non-cash items, was $84.8 million for the first quarter of 2023, compared to $225.9 million for the first quarter of 2022.
Voyage revenues for the first quarter of 2023 decreased to $224.0 million from $360.9 million in the first quarter of 2022 and Time charter equivalent revenues (“TCE Revenues”)^1^ were $156.1 million for the first quarter of 2023, compared to $304.9 million for the first quarter of 2022. TCE rate for the first quarter of 2023 was $14,199 compared to $27,405 for the first quarter of 2022 which is indicative of the weaker market conditions prevailing during the recent quarter.
For the first quarters of 2023 and 2022, vessel operating expenses were $55.8 million and $57.5 million, respectively. Vessel operating expenses for the first quarter of 2023 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 $1.4 million. In addition, we incurred $0.5 million of additional operating expenses due to change of management of certain vessels from third party to in-house. Vessel operating expenses for the first quarter of 2022 included COVID-19 related expenses of $2.8 million. Excluding non-recurring expenses such as increased costs due to the COVID-19 pandemic and pre-delivery and pre-joining expenses due to change of management, our daily operating expenses per vessel decreased to $4,696 for the first quarter of 2023 from $4,747 for the first quarter of 2022.
Drydocking expenses for the first quarters of 2023 and 2022, were $8.0 million and $8.7 million, respectively. During the first quarter of 2023, five vessels completed their periodic dry docking surveys while during the corresponding period in 2022, eight vessels completed their periodic dry docking surveys.
General and administrative expenses for the first quarters of 2023 and 2022 were $11.7 million and $8.8 million, respectively, primarily due to the increase in the stock based compensation expense to $3.4 million from $1.2 million. Vessel management fees for the first quarter of 2023 decreased to $4.2 million from $4.8 million in the corresponding period of 2022 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 first quarters of 2023 and 2022 were $1,059 and $1,065, respectively.
Depreciation expense decreased to $35.1 million for the first quarter of 2023 compared to $38.5 million for the corresponding period in 2022. The decrease is primarily driven by the change in the estimated scrap rate per light weight tonnage from $300 to $400 effective January 1, 2023, which resulted in lower depreciation expense by $3.9 million.
During the first quarter of 2023, an impairment loss of $7.7 million was incurred, resulting from the agreement to sell the vessels Star Borealis and Star Polaris described above as part of our fleet update.
Other operational gain for the first quarter of 2023 of $33.2 million includes a) gains from insurance proceeds relating to Star Pavlina’s total loss discussed in our fleet update above of $28.2 million, b) daily detention compensation for Star Pavlina pursuant to its war risk insurance policy of $2.7 million in aggregate as well as c) other gains from insurance claims relating to other vessels of $2.3 million in aggregate.
Our results for the first quarter of 2023 include a loss on write-down of inventories of $2.2 million resulting from the valuation of the bunkers remaining on board our vessels as a result of their lower net realizable value compared to their historical cost.
Interest and finance costs for the first quarters of 2023 and 2022 were $15.7 million and $12.1 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.
Interest income and other income for the first quarter of 2023 amounted to $3.1 million, compared to an interest income and other income, of $0.3 million in the first quarter of 2022. This variation is mainly due to higher interest earned from fixed deposits during the first quarter of 2023 and higher foreign exchange gains recognized in the same period compared to the first quarter of 2022.
^1^Please see the table at the end of this release for the calculation of the TCE Revenues.
Unaudited Consolidated Income Statements
| (Expressed in thousands of U.S. dollars except for share and per share data) | First quarter 2023 | First quarter 2022 | ||||
|---|---|---|---|---|---|---|
| Revenues: | ||||||
| Voyage revenues | $ | 224,035 | $ | 360,883 | ||
| Total revenues | 224,035 | 360,883 | ||||
| Expenses: | ||||||
| Voyage expenses | (67,492 | ) | (53,404 | ) | ||
| Charter-in hire expenses | (6,615 | ) | (4,012 | ) | ||
| Vessel operating expenses | (55,785 | ) | (57,466 | ) | ||
| Dry docking expenses | (8,007 | ) | (8,727 | ) | ||
| Depreciation | (35,069 | ) | (38,461 | ) | ||
| Management fees | (4,244 | ) | (4,839 | ) | ||
| Loss on bad debt | (300 | ) | - | |||
| General and administrative expenses | (11,665 | ) | (8,765 | ) | ||
| Gain/(Loss) on forward freight agreements and bunker swaps, net | 1,308 | (2,623 | ) | |||
| Impairment loss | (7,700 | ) | - | |||
| Other operational loss | (155 | ) | (614 | ) | ||
| Other operational gain | 33,233 | 267 | ||||
| Loss on write-down of inventory | (2,166 | ) | - | |||
| Operating income | 59,378 | 182,239 | ||||
| Interest and finance costs | (15,702 | ) | (12,082 | ) | ||
| Interest income and other income/(loss) | 3,149 | 261 | ||||
| Gain/(Loss) on interest rate swaps, net | (372 | ) | - | |||
| Gain/(Loss) on debt extinguishment, net | (419 | ) | - | |||
| Total other expenses, net | (13,344 | ) | (11,821 | ) | ||
| Income before taxes and equity in income/(loss) of investee | $ | 46,034 | $ | 170,418 | ||
| Income taxes | (103 | ) | (37 | ) | ||
| Income before equity in income/(loss) of investee | 45,931 | 170,381 | ||||
| Equity in income/(loss) of investee | (56 | ) | (17 | ) | ||
| Net income | $ | 45,875 | $ | 170,364 | ||
| Earnings per share, basic | $ | 0.45 | $ | 1.67 | ||
| Earnings per share, diluted | $ | 0.44 | $ | 1.67 | ||
| Weighted average number of shares outstanding, basic | 102,974,041 | 101,981,583 | ||||
| Weighted average number of shares outstanding, diluted | 103,381,943 | 102,257,673 |
Unaudited Consolidated Condensed Balance Sheet Data
| (Expressed in thousands of U.S. dollars) | |||
|---|---|---|---|
| ASSETS | December 31, 2022 | ||
| Cash and cash equivalents and resticted cash, current | 252,547 | 284,323 | |
| Other current assets | 257,139 | 217,769 | |
| TOTAL CURRENT ASSETS | 509,686 | 502,092 | |
| Vessels and other fixed assets, net | 2,818,233 | 2,881,551 | |
| Restricted cash, non current | 2,021 | 2,021 | |
| Other non-current assets | 42,197 | 47,960 | |
| TOTAL ASSETS | 3,372,137 | $ | 3,433,624 |
| Current portion of long-term bank loans and lease financing | 204,358 | $ | 181,947 |
| Other current liabilities | 106,458 | 100,608 | |
| TOTAL CURRENT LIABILITIES | 310,816 | 282,555 | |
| Long-term bank loans and lease financing non-current (net of unamortized deferred finance fees of 10,611 and 11,694, respectively) | 1,041,612 | 1,103,233 | |
| Other non-current liabilities | 27,184 | 28,494 | |
| TOTAL LIABILITIES | 1,379,612 | $ | 1,414,282 |
| SHAREHOLDERS' EQUITY | 1,992,525 | 2,019,342 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 3,372,137 | $ | 3,433,624 |
All values are in US Dollars.
Unaudited Consolidated Condensed Cash Flow Data
| (Expressed in thousands of U.S. dollars) | Three months ended<br><br> <br>March 31, 2023 | Three months ended<br><br> <br>March 31, 2022 | ||||
|---|---|---|---|---|---|---|
| Net cash provided by / (used in) operating activities | $ | 83,190 | $ | 229,156 | ||
| Acquisition of other fixed assets | (69 | ) | (101 | ) | ||
| Capital expenditures for vessel modifications/upgrades | (5,320 | ) | (6,313 | ) | ||
| Hull and machinery insurance proceeds | 358 | 1,600 | ||||
| Net cash provided by / (used in) investing activities | (5,031 | ) | (4,814 | ) | ||
| Proceeds from vessels' new debt | 47,000 | - | ||||
| Scheduled vessels' debt repayment | (42,850 | ) | (52,756 | ) | ||
| Debt prepayment due to vessel total loss and sales | (44,443 | ) | - | |||
| Financing and debt extinguishment fees paid | (587 | ) | - | |||
| Proceeds from issuance of common stock | - | 4,350 | ||||
| Repurchase of common shares | (7,005 | ) | - | |||
| Dividend paid | (62,050 | ) | (204,801 | ) | ||
| Net cash provided by / (used in) financing activities | (109,935 | ) | (253,207 | ) |
Summary of Selected Data
| First quarter 2023 | First quarter 2022 | |||
|---|---|---|---|---|
| Average number of vessels (1) | 127.6 | 128.0 | ||
| Number of vessels (2) | 127 | 128 | ||
| Average age of operational fleet (in years) (3) | 11.2 | 10.1 | ||
| Ownership days (4) | 11,483 | 11,520 | ||
| Available days (5) | 10,994 | 11,126 | ||
| Charter-in days (6) | 247 | 199 | ||
| Daily Time Charter Equivalent Rate (7) | $ | 14,199 | $ | 27,405 |
| Daily OPEX per vessel (8) | $ | 4,858 | $ | 4,988 |
| Daily OPEX per vessel (excl. non recurring expenses) (8) | $ | 4,696 | $ | 4,747 |
| Daily Net Cash G&A expenses per vessel (9) | $ | 1,059 | $ | 1,065 |
(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, change of management and 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 the COVID-19 pandemic. Our method of computing Available Days may not necessarily be comparable to Available Days of other companies.
(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 above/below market acquired time charter agreements, if any, as well as adjusted for the impact of realized gain/(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 gain/(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 may not necessarily be comparable to those of other companies. For a detailed calculation please see Exhibit I 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 at change of management 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 Exhibit I 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.
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:
| (Expressed in thousands of U.S. dollars) | First quarter 2023 | First quarter 2022 | ||||
|---|---|---|---|---|---|---|
| Net cash provided by/(used in) operating activities | $ | 83,190 | $ | 229,156 | ||
| Net decrease / (increase) in current assets | (4,411 | ) | 6,119 | |||
| Net increase / (decrease) in operating liabilities, excluding current portion of long term debt | (6,004 | ) | (19,801 | ) | ||
| Impairment loss | (7,700 | ) | - | |||
| Gain/(Loss) on debt extinguishment, net | (419 | ) | - | |||
| Share – based compensation | (3,446 | ) | (1,233 | ) | ||
| Amortization of debt (loans and leases) issuance costs | (1,043 | ) | (1,339 | ) | ||
| Unrealized gain / (loss) on forward freight agreements and bunker swaps | (4,864 | ) | (4,060 | ) | ||
| Total other expenses, net | 13,344 | 11,821 | ||||
| Gain from insurance proceeds relating to vessel total loss | 28,163 | - | ||||
| Loss on bad debt | (300 | ) | - | |||
| Income tax | 103 | 37 | ||||
| Loss on write-down of inventory | (2,166 | ) | 0 | |||
| Equity in income/(loss) of investee | (56 | ) | (17 | ) | ||
| EBITDA | $ | 94,391 | $ | 220,683 | ||
| Equity in (income)/loss of investee | 56 | 17 | ||||
| Unrealized (gain)/loss on forward freight agreements and bunker swaps | 4,864 | 4,060 | ||||
| Loss on write-down of inventory | 2,166 | - | ||||
| Gain from insurance proceeds relating to vessel total loss | (28,163 | ) | - | |||
| Share-based compensation | 3,446 | 1,233 | ||||
| Loss on bad debt | 300 | - | ||||
| Impairment loss | 7,700 | - | ||||
| Other non-cash charges | 42 | (112 | ) | |||
| Adjusted EBITDA | $ | 84,802 | $ | 225,881 |
Net income and Adjusted Net income Reconciliation and Calculation of Adjusted Earnings Per Share
To derive Adjusted Net Income and Adjusted Earnings Per Share from Net Income, we exclude non-cash items, as provided in the table below. We believe that Adjusted Net Income and Adjusted Earnings 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 and Adjusted Earnings Per Share may not necessarily be comparable to other similarly titled captions of other companies.
| (Expressed in thousands of U.S. dollars except for share and per share data) | ||||||
|---|---|---|---|---|---|---|
| First quarter 2023 | First quarter 2022 | |||||
| Net income | $ | 45,875 | $ | 170,364 | ||
| Loss on bad debt | 300 | - | ||||
| Share – based compensation | 3,446 | 1,233 | ||||
| Other non-cash charges | 42 | (112 | ) | |||
| Unrealized (gain) / loss on forward freight agreements and bunker swaps, net | 4,864 | 4,060 | ||||
| Unrealized (gain) / loss on interest rate swaps, net | 372 | - | ||||
| Impairment loss | 7,700 | - | ||||
| Gain from insurance proceeds relating to vessel total loss | (28,163 | ) | - | |||
| Loss on write-down of inventory | 2,166 | - | ||||
| (Gain)/Loss on debt extinguishment, net (non-cash) | 419 | - | ||||
| Equity in (income)/loss of investee | 56 | 17 | ||||
| Adjusted Net income | $ | 37,077 | $ | 175,562 | ||
| Weighted average number of shares outstanding, basic | 102,974,041 | 101,981,583 | ||||
| Weighted average number of shares outstanding, diluted | 103,381,943 | 102,257,673 | ||||
| Adjusted Basic and Diluted Earnings Per Share | $ | 0.36 | $ | 1.72 |
Voyage Revenues to Daily Time Charter Equivalent (“TCE”) Reconciliation
| (In thousands of U.S. Dollars, except for TCE rates) | First quarter 2023 | First quarter 2022 | ||||
|---|---|---|---|---|---|---|
| Voyage revenues | $ | 224,035 | $ | 360,883 | ||
| Less: | ||||||
| Voyage expenses | (67,492 | ) | (53,404 | ) | ||
| Charter-in hire expenses | (6,615 | ) | (4,012 | ) | ||
| Realized gain/(loss) on FFAs/bunker swaps, net | 6,172 | 1,437 | ||||
| Time Charter equivalent revenues | $ | 156,100 | $ | 304,904 | ||
| Available days | 10,994 | 11,126 | ||||
| Daily Time Charter Equivalent Rate ("TCE") | $ | 14,199 | $ | 27,405 |
Daily Net Cash G&A expenses per vessel Reconciliation
| (In thousands of U.S. Dollars, except for daily rates) | First quarter 2023 | First quarter 2022 | ||||
|---|---|---|---|---|---|---|
| General and administrative expenses | $ | 11,665 | $ | 8,765 | ||
| Plus: | ||||||
| Management fees | 4,244 | 4,839 | ||||
| Less: | ||||||
| Share – based compensation | (3,446 | ) | (1,233 | ) | ||
| Other non-cash charges | (42 | ) | 112 | |||
| Net Cash G&A expenses | $ | 12,421 | $ | 12,483 | ||
| Ownership days | 11,483 | 11,520 | ||||
| Charter-in days | 247 | 199 | ||||
| Daily Net Cash G&A expenses per vessel | $ | 1,059 | $ | 1,065 |
Conference Call details:
Our management team will host a conference call to discuss our financial results on Wednesday, May 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 13738660. 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”. As of May 16, 2023 and as adjusted for the delivery of Star Polaris to its new owner as discussed above, Star Bulk operates a fleet of 125 vessels, with an aggregate capacity of 13.6 million dwt, consisting of 17 Newcastlemax, 20 Capesize, 2 Mini Capesize, 7 Post Panamax, 40 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 novel coronavirus (“COVID-19”) pandemic (and variants that may emerge); 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 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 (“ESG”) practices; our ability to carry out our ESG initiatives and thereby meet our ESG goals and targets; new environmental regulations and restrictions, whether at a global level stipulated by the International Maritime Organization, and/or regional/national imposed by regional authorities such as the European Union or individual countries; potential cyber-attacks which may disrupt our business operations; general domestic and international political conditions or events, including “trade wars” and the ongoing conflict 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 reasons (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 and upon the expected terms and the impact of port or canal congestion or disruptions. 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.
Contacts
| Company: | Investor Relations / Financial Media: |
|---|---|
| Simos Spyrou, Christos Begleris | Nicolas Bornozis |
| Co ‐ Chief Financial Officers | President |
| Star Bulk Carriers Corp. | Capital Link, Inc. |
| c/o Star Bulk Management Inc. | 230 Park Avenue, Suite 1536 |
| 40 Ag. Konstantinou Av. | New York, NY 10169 |
| Maroussi 15124 | Tel. (212) 661‐7566 |
| Athens, Greece | E‐mail: [email protected] |
| Email: [email protected] | www.capitallink.com |
| www.starbulk.com |