Star Bulk Carriers Corp. Reports Net Profit of $35.8 Million for the First Quarter of 2021 and Declares Quarterly Dividend of $0.30 Per Share
Star Bulk Carriers Corp., 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 2021. 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.
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“Star Bulk reported a strong first quarter of 2021, earning net income of $35.8 million, on TCE Revenues of $156.4 million, with daily TCE per vessel for the fleet increasing to $15,461. The majority of the fleet remains exposed to the spot market for Q3 and following, with current forward coverage at $21,168 for 82% of available days in Q2.
The Board of Directors has amended the Company’s dividend policy to substantially increase return of capital to our shareholders. As a result, the Company will be paying a dividend for Q1 of $0.30 / share for the first quarter.
Over the past months we have continued increasing our fleet with the acquisition of twelve vessels, on average younger than our current fleet, nine of which were delivered within Q1. We expect to take delivery of the remaining three vessels during Q2.
Our outlook for the market remains positive due to the reopening of the global economy and consequent increased demand across all key dry bulk commodities. The record low orderbook coupled with upcoming environmental regulations that limit new vessel orders, also create favorable long term dynamics for our industry, which our Company is well positioned to enjoy.”
Declaration of Dividend
The Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.30 per share on May 19, 2021, payable on or about June 14th, 2021 to all shareholders of record as of May 31st, 2021 (“Record Date”). The ex-dividend date is expected to be May 30th, 2021.
Updated Dividend Policy
In November 2019, the Board established a dividend policy, which is now updated, pursuant to which the Board intends to declare a dividend in each of February, May, August and November in an amount equal to (a) Star Bulk’s Total Cash Balance minus (b) the product of (i) the Minimum Cash Balance per Vessel and (ii) the Number of Vessels.
“Total Cash Balance” means (a) the aggregate amount of cash on Star Bulk’s balance sheet as of the last day of the quarter preceding the relevant dividend declaration date minus (b) any proceeds received by Star Bulk, including its subsidiaries, from vessel sales, or additional proceeds from vessel refinancings, or securities offerings in the last 12 months that have been earmarked for share repurchases, debt prepayment, vessel acquisitions and general corporate purposes.
“Minimum Cash Balance per Vessel” means:
$1.40 million for March 31, 2021;
$1.65 million for June 30, 2021
$1.90 million for September 30, 2021
$2.10 million for December 31, 2021 and thereafter
“Number of Vessels” means the total number of vessels owned by the Company, including its subsidiaries, or that are subject to sale and leaseback transactions and finance leases, as of the last day of the quarter preceding the relevant dividend declaration date.
As of March 31, 2021, we owned 125 vessels and our Total Cash Balance was at $206.6 million. Adjusted for the Minimum Cash Balance per Vessel for March 31, 2021 of $1.40 million, resulted in total declared dividend amount of approximately $31.0 million or $0.30 per share.
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 will depend on its subsidiaries distributing their earnings and cash flow to it. Any future dividends declared will be at the discretion and remain subject to approval of our Board each quarter, after its review of our financial condition and other factors, including but not limited to our earnings, 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 the Board’s 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 will declare or pay any dividend in the future.
On May 19, 2021 we took delivery of SBI Pegasus, the seventh and final vessel, pursuant to the previously announced transaction with ENETI INC (formerly known as Scorpio Bulkers Inc.). We issued to the relevant ENETI affiliates 350,797 common shares representing the share consideration for the seventh vessel and we assumed the outstanding lease obligations associated with the vessel. Following the issuance of these shares the Company has 102,239,716 common shares issued and outstanding.
COVID-19 and Our Proactive Measures
Despite the global gradual recovery from COVID-19, we continue to take proactive measures to ensure the health and wellness of our crew and onshore employees while maintaining effective business continuity and uninterrupted service to our customers. The overall impact of COVID-19 on our business, and the efficacy of any measures we take in response to the challenges presented by the COVID-19 pandemic, will depend on how the outbreak further develops, the duration and extent of the restrictive measures that are associated with the pandemic and their impact on global economy and trade, which is still uncertain.
Daily Time Charter Equivalent Rate (“TCE”) and TCE Revenues are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of the respective measures.
*For the first quarter of 2021 our TCE rate was:
Capesize / Newcastlemax Vessels: $17,986 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $14,791 per day.
Ultramax / Supramax Vessels: $13,632 per day.
Amounts shown throughout the press release and variations in period–on–period comparisons are derived from the actual unaudited numbers in our books and records. Reference to per share figures below are based on 99,019,944 and 95,916,480 weighted average diluted shares for the first quarter of 2021 and 2020, respectively.
First Quarter 2021 and 2020 Results
For the first quarter of 2021, we had a net income of $35.8 million, or $0.36 earnings per share. Net income for the first quarter of 2020 was $2.8 million, or $0.03 earnings per share.
Adjusted net income, which excludes certain non-cash items, was $35.7 million, or $0.36 earnings per share for the first quarter of 2021, compared to an adjusted net loss for the first quarter of 2020 of $22.3 million, or $0.23 loss per share.
Net cash provided by operating activities for the first quarter of 2021 was $79.2 million, compared to net cash provided by operating activities of $32.1 million for the first quarter of 2020. Adjusted EBITDA, which excludes certain non-cash items, was $84.7 million for the first quarter of 2021, compared to adjusted EBITDA of $32.6 million for the first quarter of 2020.
Voyage revenues for the first quarter of 2021 increased to $200.5 million from $160.9 million in the first quarter of 2020. Time charter equivalent revenues (“TCE Revenues”) (please see the table at the end of this release for the calculation of the TCE Revenues) were $156.4 million for the first quarter of 2021, compared to $99.8 million for the first quarter of 2020. TCE rate for the first quarter of 2021 was $15,461 compared to $10,949 for the first quarter of 2020.
For the first quarters of 2021 and 2020, vessel operating expenses were $47.4 million and $42.7 million, respectively. Vessel operating expenses for the first quarter of 2021 included pre-delivery and pre-joining expenses of $0.5 million and additional crew expenses related to the increased number of crew changes performed during the period as a result of COVID-19 restrictions imposed during 2020 of $1.3 million. Our average daily operating expenses per vessel for the first quarters of 2021 and 2020 were $4,410 and $4,047, respectively. Excluding non-recurring expenses such as pre-delivery and pre-joining expenses and the increased costs due to the COVID-19 pandemic in 2021, our average daily operating expenses per vessel for the first quarter of 2021 were $4,251.
General and administrative expenses for the first quarters of 2021 and 2020 were $7.3 million and $6.0 million, respectively. The increase is mainly attributable to the reversal, in the first quarter of 2020, of the previously recognized stock based compensation expense of $1.2 million following the reassessment of the probability of achieving the performance conditions for some of our outstanding awards. Vessel management fees for the first quarters of 2021 and 2020 were $4.7 million and $4.6 million, respectively. Our average daily net cash general and administrative expenses per vessel (including management fees and excluding stock-based compensation and other non-cash charges) for the first quarters of 2021 and 2020 were $1,087 and $1,064, respectively.
Interest and finance costs net of interest and other income/(loss) for the first quarters of 2021 and 2020 were $12.7 million and $20.1 million, respectively. Despite the increase in the weighted average balance of our outstanding indebtedness to $1,604.5 million during the first quarter of 2021, from $1,593.2 million for the same period in 2020, the interest and finance costs net of interest and other income/ (loss) decreased due to the decrease in the average interest rate on our outstanding indebtedness, mainly driven by the refinancing of certain of our debt agreements, the interest rate swap agreements that we entered into in 2020 and 2021 and the lower LIBOR rates during the first quarter of 2021 compared to the same period in 2020.
Source: Star Bulk Carriers Corp.