Home / Shipping News / Hellenic Shipping News / Star Bulk Carriers Corp. reports net profit of $74.9 million for the first quarter of 2024, and declares quarterly dividend of $0.75 per share

Star Bulk Carriers Corp. reports net profit of $74.9 million for the first quarter of 2024, and declares quarterly dividend of $0.75 per share

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 2024. 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:

“During Q1 2024, Star Bulk successfully leveraged a counter seasonally strong dry bulk market and generated a Net Income of $74.9 million with a TCE per vessel per day of $19,627. We are declaring a dividend of $0.75 per share, representing the thirteenth consecutive dividend payment. Since June 2021, we will have paid dividends totaling $11.52 per share to each shareholder.

On April 9th we completed the merger with Eagle Bulk Shipping Inc., a milestone transaction for both companies. Having embarked on the work of integrating the best of both organizations, we aim to take advantage of our combined scale, technical and commercial knowledge and talented staff to better serve our customers and strengthen our financial position. With a scrubber fitted fleet of 161 vessels on a fully delivered basis, we aspire to continue to provide safe and efficient transportation solutions to our clients and strong financial returns to our shareholders.

We continue modernizing our fleet, by taking delivery during the quarter of three latest generation EEDI-Phase 3 long-term charter-in vessels, built at first class shipyards. At the same time, we have taken advantage of elevated asset values to continue selling primarily older and less fuel efficient vessels, including seven vessels which we are delivering during Q2 2024. These vessels average ~13.5 years of age, and will generate total gross proceeds of $129.6 million before repayment of associated debt.

We are optimistic about the medium term prospects of the dry bulk market given the favorable order book and upcoming , more stringent environmental regulations. Star Bulk remains well positioned, with a strong balance sheet and an efficient ship management platform, to take advantage of the positive market backdrop and continue creating value for its shareholders.”

Recent Developments

Declaration of Dividend

On May 22, 2024, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.75 per share, payable on or about June 20, 2024 to all shareholders of record as of June 6, 2024. The ex-dividend date is expected to be June 5, 2024.

Eagle Merger Update

As previously announced, on December 11, 2023, we entered into a definitive agreement with Eagle Bulk Shipping Inc. (NYSE: EGLE) (“Eagle”) (the “Eagle Merger Agreement”) to combine in an all-stock merger (the “Eagle Merger”). The Eagle Merger was completed on April 9, 2024, following Eagle shareholders’ approval and receipt of applicable regulatory approvals and satisfaction of customary closing conditions. Each Eagle shareholder received 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned. Eagle common stock has ceased trading and is no longer listed on the New York Stock Exchange. Cash received following the Eagle Merger amounted to $104.3 million.

Eagle’s 5.00% Convertible Senior Notes

From and after the effective time of the Eagle Merger (the “Effective Time”), the right to convert each $1,000 principal amount of Eagle’s 5.00% Convertible Senior Notes due 2024 (the “Convertible Notes”) into shares of Eagle common stock was changed into a right to convert such principal amount of Convertible Notes into the kind and amount of shares of Star Bulk common stock that a holder of a number of shares of Eagle common stock equal to the conversion rate immediately prior to the Effective Time would have been entitled to receive at the Effective Time. Accordingly, from and after the Effective Time, each $1,000 principal amount of Convertible Notes will be convertible at a conversion rate equal to 83.6702 shares of Star Bulk common stock (subject to further adjustments for, among other things, cash dividends).

In addition, following the consummation of the Eagle Merger, we unconditionally guaranteed Eagle’s obligations under its Convertible Notes with respect to, among other things, the due and punctual payment of, and interest on each Convertible Note and the payment or delivery of amounts due in respect of Eagle’s conversion obligation. The Convertible Notes mature on August 1, 2024.

Following the closing of the Eagle Merger, Star Bulk is the largest U.S. listed dry bulk shipping company with a global market presence and combined fleet of 161 owned vessels on a fully delivered basis, 97% of which are fitted with scrubbers, ranging from Newcastlemax/Capesize to Ultramax/Supramax vessels.

Fleet Update

Vessel S&P

In connection with the previously announced vessel sales, Pantagruel, Star Bovarius and Big Bang were delivered to their new owners during the first quarter of 2024 while Star Dorado was delivered to her new owners in late April 2024.

In addition, in February, March and April 2024, we agreed to sell vessels Star Audrey, Star Pyxis, Star Paola and Crowned Eagle. Moreover, Eagle had agreed to sell the vessels Crested Eagle and Stellar Eagle prior to the closing of the Eagle Merger. In April 2024, two of these vessels were delivered to their new owners while the remaining four vessels are expected to be delivered to their new owners by June 2024.

Overall, during the second quarter of 2024, the Company has already collected $53.9 million and expects to collect an additional amount of $75.7 million with respect to the sale of 7 vessels. Debt prepaymets already made in connection with these sales during the second quarter of 2024 amounted to $11.2 million and an additional amount of $11.4 million will be prepaid until the end of the second quarter of 2024.

Charter-In Vessels

In January and March 2024, we took delivery of the newbuilding vessel Stargazer, an Ultramax vessel built in Tsuneishi Cebu, as well as Star Voyager and Star Explorer, two newbuilding Kamsarmax vessels built in Tsuneishi Zhousan and JMU, respectively, all subject to seven-year charter-in agreements.

Since February 2023, we have sold 23 vessels, and one vessel became a constructive total loss, resulting in total proceeds of $478.8 million, the majority of which has been used to finance the purchase of 20.0 million shares from Oaktree at an average share price of $19.00 per share.

Shares Outstanding Update

Following the completion of the Eagle Merger, as of the date of this release, we have 113,810,792 shares outstanding.

The Convertible Notes mature on August 1, 2024 and currently have a conversion ratio of 83.6702 shares of Star Bulk common stock per $1,000 principal amount of Convertible Notes (subject to further adjustments for, among other things, cash dividends). Based on the current conversion ratio, we expect to issue a net amount of 4,462,534 new shares of Star Bulk common stock upon maturity and conversion of the Convertible Notes. On a fully diluted basis we expect to have 118,544,612 common shares outstanding.

Financing

During April 2024, we entered into four new loan facilities that provide for an aggregate loan amount of $388.1 million to refinance outstanding Eagle indebtedness resulting in additional liquidity of $12.6 million as described below:

•On April 10, 2024, we entered into a loan agreement with ABN AMRO Bank N.V. (the “ABN AMRO Loan”) for a loan amount of up to $94.1 million, secured by first priority mortgages on 12 Eagle vessels. The full amount of the loan was drawn on April 12, 2024.
•On April 10, 2024, we entered into a loan agreement with DNB Bank ASA (the “DNB Loan”) for a loan amount of up to
$100.0 million, secured by first priority mortgages on 13 Eagle vessels. The full amount of the loan was drawn on April 12, 2024.
•On April 10, 2024, we entered into a loan agreement with ING Bank N.V., London Branch (the “ING Loan”) for a loan amount of up to $94.0 million, secured by first priority mortgages on 12 Eagle vessels. The full amount of the loan was drawn on April 12, 2024.
•On April 22, 2024, we entered into a loan agreement with E.SUN Commercial Bank Ltd. (the “E.SUN Loan”) for a loan amount of up to $100.0 million, secured by first priority mortgages on 13 Eagle vessels. The full amount of the loan was drawn on April 23, 2024.
The final maturities of the abovementioned loans range from 5 years to 7 years.
In addition, following a number of interest rate swaps we have entered into, we have an outstanding total notional amount of $126.3 million under our financing agreements with an average fixed rate of 61 bps and an average remaining maturity of 1.4 years. As of March 31, 2024, the Mark-to-Market value of our outstanding interest rate swaps stood at $8.5 million, and our cumulative net realized gain amounted to $33.8 million.

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 2024 our TCE rate for the following main vessel categories was as follows:

Newcastlemax / Capesize Vessels: $27,357 per day. Post Panamax / Kamsarmax / Panamax Vessels: $15,134 per day. Ultramax / Supramax Vessels: $17,655 per day.

First Quarter 2024 and 2023 Results

For the first quarter of 2024, we had a net income of $74.9 million, or $0.89 earnings per share, compared to a net income for the first quarter of 2023 of $45.9 million, or $0.44 earnings per share. Adjusted net income, which excludes certain non- cash items, was $73.2 million, or $0.87 earnings per share, for the first quarter of 2024, compared to an adjusted net income of $37.1 million for the first quarter of 2023, or $0.36 earnings per share.

Net cash provided by operating activities for the first quarter of 2024 was $114.3 million, compared to $83.2 million for the first quarter of 2023. Adjusted EBITDA, which excludes certain non-cash items, was $123.0 million for the first quarter of 2024, compared to $84.8 million for the first quarter of 2023.

Voyage revenues for the first quarter of 2024 increased to $259.4 million from $224.0 million in the first quarter of 2023 and Time charter equivalent revenues (“TCE Revenues”)1 increased to $195.7 million for the first quarter of 2024, compared to $156.1 million for the first quarter of 2023, despite the decrease in the average number in our fleet during the relevant periods. TCE rate for the first quarter of 2024 was $19,627 compared to $14,199 for the first quarter of 2023 which is indicative of the stronger market conditions prevailing during the recent quarter.

Vessel operating expenses for the first quarters of 2024 and 2023 amounted to $51.2 million and $55.8 million, respectively. The decrease in our operating expenses was primarily driven by the decrease in average number of vessels in our fleet to
113.3 from 127.6.

Drydocking expenses for the first quarters of 2024 and 2023 were $10.0 million and $8.0 million, respectively. In each of the first quarters of 2024 and 2023, five vessels completed their periodic dry docking surveys, but the vessels that completed their dry docking surveys in the first quarter of 2024 were of greater deadweight ton (“dwt”) scale which resulted in increased drydocking expenses.

General and administrative expenses for the first quarters of 2024 and 2023 were $10.7 million and $11.7 million, respectively, primarily due to the decrease in the stock based compensation expense to $2.2 million from $3.4 million. Vessel management fees for the first quarter of 2024 and 2023 were $4.4 million and $4.2 million, respectively. Our daily net cash general and administrative expenses per vessel (including management fees and excluding share-based compensation and other non-cash charges) for the first quarters of 2024 and 2023 were $1,223 and $1,059, respectively. The increase in our daily G&A expenses per vessel was primarily driven by the decrease in average number of vessels in our fleet, something that we expect will gradually be offset after the full integration of the Eagle fleet.

Depreciation expense decreased to $32.0 million for the first quarter of 2024 compared to $35.1 million for the corresponding period in 2023. The fluctuation is primarily driven by the decrease in the average number of vessels in our fleet to 113.3 from 127.6.

During the first quarter of 2023, an impairment loss of $7.7 million was incurred, in connection with the sale of two vessels. During the first quarter of 2024, no impairment loss was incurred.

Other operational gain for the first quarter of 2024 decreased to $1.6 million from $33.2 million in the first quarter of 2023. In the first quarter of 2023, other gains from insurance claims relating to various vessels also included an aggregate gain of $30.9 million from insurance proceeds and daily detention compensation relating to Star Pavlina that became a constructive total loss due to its prolonged detainment in Ukraine following the ongoing conflict between Russia and Ukraine.

Our results for the first quarter of 2023 included 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. No such loss was incurred in the first quarter of 2024.

During the first quarter of 2024, we incurred a loss on forward freight agreements (“FFAs”) and bunker swaps of $5.9 million, consisting of an unrealized loss of $3.2 million and a realized loss of $2.7 million. During the first quarter of 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.

Our results for the first quarter of 2024 include an aggregate net gain of $8.8 million which resulted from the completion of the previously announced sales of vessels Star Glory, Pantagruel, Big Bang and Star Bovarius.

Interest and finance costs for the first quarters of 2024 and 2023 were $20.5 million and $15.7 million, respectively. The driving factor for this increase is the significant increase in variable interest rates prevailing during the corresponding periods which was partially offset by the decrease in our weighted average outstanding indebtness and the positive effect from our interest rate swaps.

EXHIBIT I: Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA Reconciliation

We include EBITDA (earnings before interest, taxes, depreciation and amortization) 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, unrealized gain/(loss) on derivatives and the equity in income/(loss) of investee and other non-cash charges, if any, which may vary from period to period and for different companies and because these items do not reflect operational cash inflows and outflows of our fleet.

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

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

Net income 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.

Full Report

Source: Star Bulk

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