Star Bulk Carriers : Earnings - Finnancial Documents

STAR BULK CARRIERS CORP. REPORTS NET PROFIT OF $220.4 MILLION

FOR THE THIRD QUARTER OF 2021

AND DECLARES QUARTERLY DIVIDEND OF $1.25 PER SHARE

ATHENS, GREECE, November 16, 2021 - 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 third 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.

Financial Highlights

(Expressed in thousands of U.S. dollars,	Third quarter	Third quarter	Nine months ended	Nine months ended
except for daily rates and per share data)
2021	2020	September 30, 2021	September 30, 2020
Voyage Revenues	$415,688	$200,222	$927,566	$507,218
Net income/(loss)	$220,407	$23,251	$380,379	($18,114)
Adjusted Net income / (loss) (1)	$224,671	$27,484	$389,314	($12,756)
Net cash provided by operating activities	$251,032	$57,019	$470,699	$112,479
EBITDA (2)	$274,652	$79,175	$538,923	$145,644
Adjusted EBITDA (2)	$277,824	$79,849	$545,094	$147,619
Earnings / (loss) per share basic	$2.16	$0.24	$3.77	($0.19)
Earnings / (loss) per share diluted	$2.15	$0.24	$3.76	($0.19)
Adjusted earnings / (loss) per share basic (1)	$2.20	$0.29	$3.86	($0.13)
Adjusted earnings / (loss) per share diluted (1)	$2.19	$0.29	$3.85	($0.13)
Average Number of Vessels	128.0	116.0	124.5	116.0
TCE Revenues (3)	$349,289	$137,575	$760,612	$334,320
Daily Time Charter Equivalent Rate ("TCE") (3)	$30,626	$13,084	$23,304	$11,166
Daily OPEX per vessel (4)	$4,596	$4,425	$4,545	$4,167
Daily OPEX per vessel (excl. non recurring expenses) (4)	$4,304	$4,244	$4,288	$4,106
Daily Net Cash G&A expenses per vessel (5)	$987	$972	$1,053	$1,023

1. Adjusted Net income / (loss) and Adjusted earnings / (loss) per share basic and diluted are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Net income / (loss), which is the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States (" U.S. GAAP"), as well as for the definition of each measure.
2. EBITDA and Adjusted EBITDA are non-GAAP measures. Please see the table at the end of this release for a reconciliation of EBITDA and Adjusted EBITDA to Net Cash Provided by / (Used in) Operating Activities, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP as well as for the definition of each measure. To derive Adjusted EBITDA from EBITDA, we exclude non-cash gains / (losses).
3. Daily Time Charter Equivalent Rate ("TCE") and TCE Revenues are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of each measure.
4. Daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days. Daily OPEX per vessel (which excludes non-recurring expenses) is calculated by dividing vessel operating expenses minus any non-recurring items (such as, increased costs due to the COVID-19 pandemic or pre-delivery expenses for each vessel at acquisition, if any) by Ownership days. In the future we may incur expenses that are the same as or similar to certain non-recurring expenses that were previously excluded.
5. Daily Net Cash G&A expenses per vessel is calculated by (1) deducting the Management fee Income (if any), from, and (2) adding the Management fee expense to, the General and Administrative expenses (net of stock-based compensation expense and other non-cash charges) and (3) then dividing the result by the sum of Ownership days and Charter-in days. Please see the table at the end of this release for a reconciliation to General and administrative expenses, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Petros Pappas, Chief Executive Officer of Star Bulk, commented:

"Star Bulk reported a record third quarter, with Net Income of $220.4 million, TCE Revenues of $349.3 million and an improved daily TCE for the fleet of $30,626.

"We continue to generate very healthy operating cashflow, enabling us to strengthen our liquidity position and return cash to our shareholders. As a result of the existing dividend policy, the Company will be paying a dividend of $1.25 / share for the quarter.

"On the sustainability front, we recently published our third annual Environmental, Social, and Governance (ESG) Report which discloses our ESG strategy and performance following rigorous global standards, strengthening our commitment to lead the way in sustainable dry bulk shipping.

"Despite the short term volatility, our overall outlook for the dry bulk market remains constructive. Strong global growth and increased infrastructure spending has led to a healthy rise in demand for commodities which combined with a historically low orderbook, create favorable long term dynamics for our industry."

Recent Developments

Declaration of Dividend

As of September 30, 2021, we owned 128 vessels and our Total Cash Balance was $371.7 million. Taking into account the Minimum Cash Balance per Vessel as of September 30, 2021 of $1.90 million, on November 16, 2021, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $1.25 per share payable on or about December 22, 2021 to all shareholders of record as of December 10, 2021. The ex-dividend date is expected to be December 9, 2021.

Financings

During the last three months we have drawn all new senior debt facilities provided by ING Bank N.V., ABN AMRO Bank N.V, DNB Bank ASA and Crédit Agricole Corporate and Investment Bank which refinanced other senior debt facilities as described in our Q2 2021 Press Release. The total proceeds that have been drawn are $306.65 million, $147.50 million of which were drawn up to September 30, 2021 and the remaining $159.15 million were drawn during the period from September 30, 2021 and the date of this release.

Hedging VLSFO - HSFO spread

In November 2021, we hedged 75,000 metric tons of our estimated fuel consumption for the first quarter of 2022 by selling the Singapore spread between Very Low-Sulfur Fuel Oil (VLSFO) and High-Sulfur Fuel Oil (HSFO) at an average price of $134.8 per ton.

ESG Report

In November 2021, we released our third annual Environmental, Social and Governance (ESG) Report which records our ongoing efforts to further strengthen the Company's environmental stewardship, social contribution and corporate governance, and provides a transparent account of our ESG strategy and performance. The ESG Report was developed in accordance with the Global Reporting Initiative (GRI) Standards (Core Option), the Sustainability Accounting Standards Board (SASB) for Marine Transportation, and the Nasdaq ESG Reporting Guide. Additionally, the GRI and SASB disclosures of the report have been assured by EY's Climate Change and Sustainability Services. The ESG Report has been published on the Company's website (www.starbulk.com). The content on our website is not incorporated by reference into this release.

Shares Outstanding Update

During October 2021, we repurchased 466,268 of our common shares in open market transactions at an average price of $22.01 per share for aggregate consideration of $10.3 million, pursuant to the previously announced $50.0 million share repurchase program, all of which were canceled and removed from our share capital as of the date of this release.

Following the cancellation of the repurchased shares, our outstanding number of shares is 102,130,024.

As of November 16, 2021, we have not sold any common shares under either of our effective at-the-market programs.

Vessel Employment Overview

For the third quarter of 2021 our TCE rate was:

Capesize / Newcastlemax Vessels: $32,258 per day.

Post Panamax / Kamsarmax / Panamax Vessels: $30,763 per day.

Ultramax / Supramax Vessels: $28,277 per day.

For the first nine months of 2021 our TCE rate was:

Capesize / Newcastlemax Vessels: $27,080 per day.

Post Panamax / Kamsarmax / Panamax Vessels: $22,442 per day.

Ultramax / Supramax Vessels: $20,072 per day.

Amounts shown throughout the press release and variations in period-on-period comparisons are derived from the actual unaudited numbers in our books and records. Reference to per share figures below are based on 102,525,065 and 96,370,925 weighted average diluted shares for the third quarter of 2021 and 2020, respectively.

Third Quarter 2021 and 2020 Results

For the third quarter of 2021, we had a net income of $220.4 million, or $2.15 earnings per share, compared to a net income for the third quarter of 2020 of $23.3 million, or $0.24 earnings per share.

Adjusted net income, which excludes certain non-cash items, was $224.7 million, or $2.19 earnings per share, for the third quarter of 2021, compared to an adjusted net income for the third quarter of 2020 of $27.5 million, or $0.29 earnings per share.

Net cash provided by operating activities for the third quarter of 2021 was $251.0 million, compared to $57.0 million for the third quarter of 2020. Adjusted EBITDA, which excludes certain non-cash items, was $277.8 million for the third quarter of 2021, compared to $79.8 million for the third quarter of 2020.

Voyage revenues for the third quarter of 2021 increased to $415.7 million from $200.2 million in the third quarter of 2020 which is indicative of the improved market conditions prevailing during the current period. Time charter equivalent revenues ("TCE Revenues")1 were $349.3 million for the third quarter of 2021, compared to $137.6 million for the third quarter of 2020. TCE rate for the third quarter of 2021 was $30,626 compared to $13,084 for the third quarter of 2020.

For the third quarters of 2021 and 2020, vessel operating expenses were $54.1 million and $47.2 million, respectively. Vessel operating expenses for the third quarter of 2021 included pre-delivery and pre-joining expenses of $0.6 million and additional crew expenses related to the increased number and cost of crew changes performed during the period as a result of COVID-19 restrictions estimated to be $2.8 million. Vessel operating expenses for the third quarter of 2020 included COVID-19 related expenses of $1.9 million. Our daily operating expenses per vessel for the third quarters of 2021 and 2020 were $4,596 and $4,425, respectively. Excluding non-recurring expenses such as pre-delivery and pre-joining expenses and the increased costs due to COVID-19, our daily operating expenses per vessel for the third quarters of 2021 and 2020 were $4,304 and $4,244, respectively.

General and administrative expenses for the third quarters of 2021 and 2020 were $12.8 million and $9.3 million, respectively and was mainly increased due to the increase of stock based compensation expense to $6.1 million in the third quarter of 2021 from $3.1 million in the third quarter of 2020. Vessel management fees for the third quarters of 2021 and 2020 were $4.9 million and $4.6 million, respectively. Our daily net cash general and administrative expenses per vessel (including management fees and excluding stock-based compensation and other non-cash charges) for the third quarters of 2021 and 2020 were $987 and $972, respectively.

Interest and finance costs net of interest and other income/(loss) for the third quarters of 2021 and 2020 were $14.8 million and $16.2 million, respectively. This decrease is primarily attributable to the decline in the average interest rate on our outstanding indebtedness, mainly driven by the refinancing of certain of our debt agreements, the interest rate swap agreements that we entered into in 2020 and 2021 and the lower LIBOR rates during the third quarter of 2021 compared to the same period in 2020.

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