Star Bulk Carriers Corp. Reports Financial Results for the Second Quarter and First Half of 2020
Star Bulk Carriers Corp. (SBLK) reported its unaudited financial results for Q2 2020, revealing a net loss of $44.1 million, or $0.46 per share, compared to a net loss of $40.2 million in Q2 2019. Voyage revenues fell to $146.1 million from $157.8 million year-over-year. Adjusted EBITDA increased to $35.1 million from $31.2 million. Despite challenges, the company has secured financing to boost liquidity, including $155.3 million in July and anticipates further cash inflow of $75 million. The average TCE for Q2 was $9,402/day, a decline from $10,549 in Q2 2019.
- Increased Adjusted EBITDA to $35.1 million in Q2 2020 from $31.2 million in Q2 2019.
- Secured financing totaling $155.3 million in July 2020.
- Positive cash flow from operations of $23.4 million in Q2 2020.
- Net loss of $44.1 million in Q2 2020, higher than $40.2 million in Q2 2019.
- Decrease in voyage revenues to $146.1 million from $157.8 million year-over-year.
- Average TCE rate declined to $9,402/day in Q2 2020 from $10,549/day in Q2 2019.
ATHENS, Greece, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (Nasdaq: SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the second quarter and the first half of 2020.
Financial Highlights
| (Expressed in thousands of U.S. dollars, except for daily rates and per share data) | |||||||||||||
| Second quarter 2020 | Second quarter 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | ||||||||||
| Voyage Revenues | $ | 146,134 | $ | 157,792 | $ | 306,996 | $ | 324,282 | |||||
| Net income/(loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||
| Net cash provided by operating activities | $ | 23,363 | ( | ) | $ | 55,460 | $ | 7,627 | |||||
| EBITDA (1) | $ | 8,872 | $ | 11,064 | $ | 66,468 | $ | 57,488 | |||||
| Adjusted EBITDA (1) | $ | 35,063 | $ | 31,157 | $ | 67,705 | $ | 77,161 | |||||
| Adjusted Net income / (loss) (2) | ( | ) | ( | ) | ( | ) | ( | ) | |||||
| Earnings / (loss) per share basic | ( | ) | ( | ) | ( | ) | ( | ) | |||||
| Adjusted earnings / (loss) per share basic (2) | ( | ) | ( | ) | ( | ) | ( | ) | |||||
| Average Number of Vessels | 116.0 | 107.2 | 116.0 | 107.2 | |||||||||
| TCE Revenues (3) | $ | 97,140 | $ | 92,658 | $ | 197,463 | $ | 196,881 | |||||
| Daily Time Charter Equivalent Rate ("TCE") (3) | $ | 9,402 | $ | 10,549 | $ | 10,128 | $ | 10,880 | |||||
| Average daily OPEX per vessel (4) | $ | 4,027 | $ | 4,004 | $ | 4,037 | $ | 4,025 | |||||
| Average daily Net Cash G&A expenses per vessel (5) | $ | 1,048 | $ | 1,009 | $ | 1,052 | $ | 990 | |||||
(1) 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 generally accepted accounting principles in the United States (“U.S. GAAP”) as well as for the definition of each measure. To derive Adjusted EBITDA from EBITDA, we exclude non-cash gains / (losses).
(2) 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 U.S. GAAP, as well as for the definition of each measure.
(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) Average daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days.
(5) Average 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 (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 announced today its second quarter 2020 financial results, reporting TCE Revenues of
We continue taking proactive steps to strengthen our balance sheet via refinancings that improve our Company’s liquidity. Despite the challenging market conditions, there has been significant interest from our lenders to engage with Star Bulk in new transactions. To date we have completed transactions that have increased our cash balance by
We are optimistic about market fundamentals for the remainder of the year. There is a record low orderbook as a result of recent demand shocks and the uncertainty related to future decarbonization regulations. Dry bulk trade and ton-miles are expected to recover, propelled by the global infrastructure stimulus response to Covid19, which, we expect, will lead to a better balanced dry bulk market“
Recent Developments
Financing Activities
- In July 2020, we drew down
$155.3 million in aggregate under the (i) ING$70.0 million Facility, (ii) Alpha Bank$35.0 million Facility and (iii) Piraeus Bank$50.4 million Facility, and used this amount to refinance the outstanding amounts under the loan and lease agreements of 14 vessels. The above facilities refinanced facilities with aggregate outstanding amounts of$124.9 million . - In July 2020, we entered into a loan agreement with a wholly owned subsidiary of NTT Finance Corporation for an amount of
$17.6 million (the “NTT$17.6 million Facility”). The drawn amount was used to refinance the outstanding lease agreement of the M/V Star Calypso. The facility will mature 5 years from the drawdown date. The NTT$17.6 million Facility is secured by a first priority mortgage on M/V Star Calypso. The above facility refinanced another facility with an outstanding amount of$10.7 million . - In July 2020, we signed a commitment letter with CMBL to sell and leaseback the vessels M/V Laura, M/V Idee Fixe, M/V Roberta, M/V Kaley, M/V Diva, M/V Star Sirius and M/V Star Vega. We expect to receive
$89.0 million in aggregate, pursuant to the seven sale and leaseback agreements, which will refinance the outstanding amounts under the loan and lease agreements of the aforementioned vessels. The sale and leaseback agreements are expected to be concluded by the end of August and the lease terms will be for 5 years with a purchase option at the expiration of the bareboat charters term. - In July 2020, we signed a commitment letter with a Japanese financial institution to sell and leaseback the vessel M/V Star Lutas. We expect to receive
$16.0 million pursuant to the sale and leaseback agreement, which will refinance the outstanding amount under the loan agreement of the vessel. The sale and leaseback agreement is expected to be concluded by the end of September 2020 and the lease term will be for 7 years with a purchase obligation at the expiration of the bareboat charter term. - In July 2020, we signed a commitment letter with a Chinese financial institution to sell and leaseback three of our Newcastlemax vessels. We expect to receive up to
$92.6 million in aggregate, pursuant to the three sale and leaseback agreements, which will refinance the outstanding amount under the loan agreement of the three vessels. The sale and leaseback agreements are expected to be concluded in September 2020 and the lease terms will be for 10 years with a purchase obligation at the expiration of the bareboat charters term. - In July 2020, we signed a commitment letter with SPDB Financial Leasing Co. Ltd to sell and leaseback the vessels M/V Mackenzie, M/V Kennadi, M/V Honey Badger, M/V Wolverine and M/V Star Antares. We expect to receive up to
$76.5 million in aggregate, pursuant to the five sale and leaseback agreements, which will refinance the outstanding amount under the loan agreement of the five vessels. The sale and leaseback agreements are expected to be concluded in September 2020 and the lease terms will be for 8 years with a purchase obligation at the expiration of the bareboat charters term.
Should we be able to draw down the full amounts under the above-mentioned debt refinancing transactions, we expect to increase our cash balance further by an aggregate of approximately$75.0 million . - During the second quarter of 2020, we drew down a net amount of
$5.4 million under the HSBC Working Capital Facility. As of the date of this press release,$29.6 million is outstanding under this facility.
Scrubber Financing Activities
- During the second quarter of 2020 and July 2020, we drew down
$15.0 million of scrubber financing under the lease agreements with CMBL. As of today we have completed all scrubber related drawdowns and our scrubber financing balance stands at$118.6 million .
Interest rate derivative contracts
As of the date of this press release, we have agreed to fix the floating LIBOR related component of our interest cost on approximately
Hedging VLSFO-HSFO spread
As of the date of this press release, we have hedged approximately 71,000 metric tons of our estimated fuel consumption for the second half of 2020 by selling the 2020 Singapore spread between Very Low-Sulfur Fuel Oil (VLSFO) – High-Sulfur Fuel Oil (HSFO) at an average price of
Other Developments
On June 4, 2020, the Oslo BORS (“OSE”) granted our request for delisting our shares from the OSE. Our common shares were last listed on the OSE on July 31, 2020 and were delisted on August 3, 2020.
Impact of COVID-19 and our proactive measures
While it is still early to fully assess the impact of COVID-19 on our financial condition and operations and on the dry bulk industry in general, we have identified the following adverse effects of the COVID-19 pandemic on our business:
- Significant reduction in market charter rates, as a result of the decreased demand for dry bulk commodities and the uncertainty with regard to the timing of a return to more normalized global trade patterns.
- Potential adverse impact on asset values reflecting the weaker freight markets environment and lack of liquidity in the second hand market. Star Bulk is fully compliant with all its financial covenants as of end of the first half of 2020.
- Significant delays and increased cost associated with crew testing positive on COVID-19, crew rotation, supplying our vessels with spares or other supplies and overhauling or maintenance by attending engineers has been adversely affected by COVID-19 due to travel restrictions and quarantine rules.
The Company has taken proactive measures to ensure the health and wellness of crew and onshore employees while maintaining effective business continuity and the uninterrupted service to our customers.
Our business continuity plans onshore for our global offices in Athens, Limassol, Singapore, New York, Oslo and Manilla, have allowed for an efficient transition to a remote working environment. Additionally, we have also placed a temporary ban on all non-essential travel.
The actual impact of these effects and the efficacy of any measures we take in response to the challenges presented by the COVID-19 will depend on how the outbreak will develop, the duration and extent of the restrictive measures that are associated with COVID-19 and their impact on global economy and trade
Employment Overview
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 second quarter of 2020 our TCE rate was:
Capesize / Newcastlemax Vessels:
Post Panamax / Kamsarmax / Panamax Vessels:
Ultramax / Supramax Vessels:
For first half of 2020 our TCE rate was:
Capesize / Newcastlemax Vessels:
Post Panamax / Kamsarmax / Panamax Vessels:
Ultramax / Supramax Vessels:
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.
Second Quarter 2020 and 2019 Results
Voyage revenues for the second quarter of 2020 decreased to
For the second quarter of 2020, operating loss was
For the second quarter of 2020, we had a net loss of
Net loss for the second quarter of 2020, included the following significant non-cash items, in addition to the depreciation expense mentioned above:
- Stock-based compensation expense of
$2.1 million , or$0.02 per share, basic and diluted, recognized in connection with common shares granted to our directors and employees; and - Unrealized loss on forward freight agreements and bunker swaps of
$24.1 million , or$0.25 per share, basic and diluted.
Net loss for the second quarter of 2019, included the following significant non-cash items, in addition to the depreciation expense mentioned above:
- Stock-based compensation expense of
$2.6 million , or$0.03 per share, basic and diluted, recognized in connection with common shares granted to our directors and employees; - Unrealized loss on forward freight agreements and bunker swaps of
$4.1 million or$0.04 per share, basic and diluted; - Impairment loss of
$3.4 million , or$0.04 per share, basic and diluted, recognized in connection with the agreements signed to sell the vessels Star Anna and Star Gamma; - Loss on bad debt of
$1.3 million or$0.01 per basic and diluted share associated with the write‐off of disputed charterer balances; and - Net amortization of the fair value of below and above market acquired time charters of
$0.5 million , or$0.01 per share, basic and diluted, associated with time charters attached to vessels acquired. The respective net amortization was recorded as an increase to voyage revenues.
Adjusted net loss for the second quarter of 2020, which excludes certain non-cash items, was
Adjusted EBITDA for the second quarter of 2020, which excludes certain non-cash items was
For the second quarters of 2020 and 2019, vessel operating expenses were
During the second quarter of 2020, we incurred
General and administrative expenses for the second quarters of 2020 and 2019 were
For the second quarter of 2020, we incurred a net loss on forward freight agreements and bunker swaps of
Interest and finance costs net of interest and other income/(loss) for the second quarters of 2020 and 2019 were
First half 2020 and 2019 Results
Voyage revenues for the first half of 2020 decreased to
For the first half of 2020, operating loss was
For the first half of 2020 we had a net loss of
Net loss for the first half of 2020, included the following significant non-cash items, in addition to depreciation expense mentioned above:
- Stock-based compensation expense of
$1.2 million , or$0.01 per share, basic and diluted, recognized in connection with common shares granted to our directors and employees, which includes a reversal of previously recognized cost of$1.2 million following the reassessment of the probability of achieving the performance conditions for some of our awards; - Amortization of the fair value of below-market acquired time charters of
$0.7 million , or$0.01 per share, basic and diluted, associated with time charters attached to vessels acquired. The respective amortization was recorded as an increase to voyage revenues; and - Loss on debt extinguishment of
$0.5 million or$0.01 per share, basic and diluted, recognized in connection with the refinancing of one of our debt facilities.
Net loss for the first half of 2019, included the following significant non-cash items, in addition to depreciation expense mentioned above:
- Unrealized loss on forward freight agreements and bunker swaps of
$1.0 million or$0.01 per share, basic and diluted; - Stock-based compensation expense of
$2.9 million , or$0.03 per share, basic and diluted, recognized in connection with common shares granted to our directors and employees; - Impairment loss of
$3.4 million , or$0.04 per share, basic and diluted, recognized in connection with the agreement to sell the vessels Star Anna and Star Gamma; - Loss on bad debt of
$1.3 million or$0.01 per basic and diluted share associated with the write‐off of disputed charterer balances; and - Net amortization of the fair value of below and above market acquired time charters of
$1.2 million , or$0.01 per share, basic and diluted, associated with time charters attached to vessels acquired. The respective net amortization was recorded as an increase to voyage revenues.
Adjusted net loss for the first half of 2020, which excludes certain non-cash items, was
Adjusted EBITDA for the first half of 2020, which excludes certain non-cash items was
For the first half of 2020 and 2019, vessel operating expenses were
During the first half of 2020, we incurred
General and administrative expenses for the first half of 2020 were
Charter-in hire expense for the first half of 2020 and 2019 was
For the first half of 2020, we incurred a gain on forward freight agreements and bunker swaps of
Interest and finance costs net of interest and other income/ (loss) for the first half of 2020 and 2019 were
Liquidity and Capital Resources
Cash Flows
Net cash provided by operating activities for the first half of 2020 and 2019 was
Despite the decrease in Adjusted EBITDA to
Net cash used in investing activities for the first half of 2020 and 2019 was
For the first half of 2020, net cash used in investing activities consisted of
For the first half of 2019, net cash used in investing activities mainly consisted of (i)
During the first half of 2020 net cash used in financing activities was
For the first half of 2020, net cash used in financing activities mainly consisted of:
$149.1 million of proceeds from loan and lease financings including$53.8 million drawn under the HSBC Working Capital Facility;
offset by:
$93.4 million lease and debt repayments in connection with the regular amortization of outstanding vessel financings,$24.2 million repayment under the HSBC Working Capital Facility and$51.6 million early repayment due to the refinancing of certain of our finance agreements;$0.9 million of financing fees paid in connection with the new financing agreements; and$4.8 million of dividends paid in March 2020 for the fourth quarter of 2019.
For the first half of 2019, net cash provided by financing activities mainly consisted of:
$392.4 million of proceeds from financing including financing from leases;
offset by:
$366.1 million lease and debt obligations paid in aggregate in connection with: (i) the regular amortization of outstanding vessel financings and finance lease installments, and (ii) early repayment due to the refinancing of certain of our finance agreements and the sale of three of our vessels;$11.6 million used to repurchase our common shares in open market transactions;$6.2 million of financing fees paid in connection with the new financing agreements; and$1.5 million of prepayment fees paid in connection with early repaid debt.
Summary of Selected Data
| Second quarter 2020 | Second quarter 2019 | |||||
| Average number of vessels (1) | 116.0 | 107.2 | ||||
| Number of vessels (2) | 116 | 108 | ||||
| Average age of operational fleet (in years) (3) | 8.7 | 8.1 | ||||
| Ownership days (4) | 10,556 | 9,754 | ||||
| Available days (5) | 10,307 | 8,732 | ||||
| Charter-in days (6) | 360 | 1,468 | ||||
| Daily Time Charter Equivalent Rate (7) | $ | 9,402 | $ | 10,549 | ||
| Average daily OPEX per vessel (8) | $ | 4,027 | $ | 4,004 | ||
| Average daily Net Cash G&A expenses per vessel (9) | $ | 1,048 | $ | 1,009 | ||
| Six months ended June 30, 2020 | Six months ended June 30, 2019 | |||||
| Average number of vessels (1) | 116.0 | 107.2 | ||||
| Number of vessels (2) | 116 | 108 | ||||
| Average age of operational fleet (in years) (3) | 8.7 | 8.1 | ||||
| Ownership days (4) | 21,112 | 19,412 | ||||
| Available days (5) | 19,426 | 17,987 | ||||
| Charter-in days (6) | 726 | 3,208 | ||||
| Daily Time Charter Equivalent Rate (7) | $ | 10,128 | $ | 10,880 | ||
| Average daily OPEX per vessel (8) | $ | 4,037 | $ | 4,025 | ||
| Average daily Net Cash G&A expenses per vessel (9) | $ | 1,052 | $ | 990 | ||
(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 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 scrubber installation.
(6) Charter-in days are the total days that we charter-in vessels not owned by us.
(7) Fleet utilization is calculated by dividing (x) Available days plus Charter-in days by (y) Ownership days plus charter-in days for the relevant period.
(8) 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 voyage revenues (net of voyage expenses, charter-in hire expense, amortization of fair value of above/below market acquired time charter agreements and provision for onerous contracts, if any, as well as adjusted for the impact of realized gain/(loss) on forward freight agreements (“FFAs”) and bunker swaps) by 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, non-GAAP measures, provide additional meaningful information in conjunction with voyage revenues, the most directly comparable GAAP measure, because they assist Company’s management in making decisions regarding the deployment and use of its vessels and because the Company believes that they provide useful information to investors regarding the Company's 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 may not necessarily be comparable to TCE of other companies due to differences in methods of calculation. For the detailed calculation please see the table at the end of this release with the reconciliation of Voyage Revenues to TCE.
(9) Average daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days.
(10) Please see the table at the end of this release for the reconciliation to General and administrative expenses, the most directly comparable GAAP measure. We believe that Average 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.
Unaudited Consolidated Statement of Operations
| (Expressed in thousands of U.S. dollars except for share and per share data) | Second quarter 2020 | Second quarter 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | |||||||||||||
| Revenues: | |||||||||||||||||
| Voyage revenues | $ | 146,134 | $ | 157,792 | $ | 306,996 | $ | 324,282 | |||||||||
| Total revenues | 146,134 | 157,792 | 306,996 | 324,282 | |||||||||||||
| Expenses: | |||||||||||||||||
| Voyage expenses | (59,762 | ) | (46,423 | ) | (115,072 | ) | (91,329 | ) | |||||||||
| Charter-in hire expense | (5,279 | ) | (21,825 | ) | (14,053 | ) | (44,442 | ) | |||||||||
| Vessel operating expenses | (42,506 | ) | (39,056 | ) | (85,224 | ) | (78,133 | ) | |||||||||
| Dry docking expenses | (7,522 | ) | (18,987 | ) | (20,883 | ) | (28,702 | ) | |||||||||
| Depreciation | (35,321 | ) | (29,956 | ) | (69,958 | ) | (59,781 | ) | |||||||||
| Management fees | (4,596 | ) | (4,099 | ) | (9,202 | ) | (8,188 | ) | |||||||||
| Loss on bad debt | - | (1,250 | ) | - | (1,250 | ) | |||||||||||
| General and administrative expenses | (8,958 | ) | (9,829 | ) | (14,991 | ) | (17,062 | ) | |||||||||
| Gain/(Loss) on forward freight agreements and bunker swaps | (8,054 | ) | (958 | ) | 19,532 | 7,383 | |||||||||||
| Impairment loss | - | (3,411 | ) | - | (3,411 | ) | |||||||||||
| Other operational loss | (559 | ) | - | (610 | ) | - | |||||||||||
| Other operational gain | 177 | 15 | 654 | 171 | |||||||||||||
| Gain/(Loss) on sale of vessels | - | (387 | ) | - | (700 | ) | |||||||||||
| Operating income/(loss) | (26,246 | ) | (18,374 | ) | (2,811 | ) | (1,162 | ) | |||||||||
| Interest and finance costs | (17,828 | ) | (21,590 | ) | (38,381 | ) | (43,826 | ) | |||||||||
| Interest and other income/(loss) | (14 | ) | 619 | 433 | 1,096 | ||||||||||||
| Loss on debt extinguishment | (76 | ) | (796 | ) | (618 | ) | (1,619 | ) | |||||||||
| Total other expenses, net | (17,918 | ) | (21,767 | ) | (38,566 | ) | (44,349 | ) | |||||||||
| Income/(Loss) before equity in investee | (44,164 | ) | (40,141 | ) | (41,377 | ) | (45,511 | ) | |||||||||
| Equity in income/(loss) of investee | 28 | 27 | 39 | 55 | |||||||||||||
| Income/(Loss) before taxes | $ | (44,136 | ) | $ | (40,114 | ) | $ | (41,338 | ) | $ | (45,456 | ) | |||||
| Income taxes | 16 | (59 | ) | (27 | ) | (59 | ) | ||||||||||
| Net income/(loss) | $ | (44,120 | ) | $ | (40,173 | ) | $ | (41,365 | ) | $ | (45,515 | ) | |||||
| Earnings/(loss) per share, basic and diluted | $ | (0.46 | ) | $ | (0.44 | ) | $ | (0.43 | ) | $ | (0.49 | ) | |||||
| Weighted average number of shares outstanding, basic | 95,797,142 | 91,841,090 | 95,797,142 | 92,457,415 | |||||||||||||
| Weighted average number of shares outstanding, diluted | 95,797,142 | 91,841,090 | 95,797,142 | 92,457,415 | |||||||||||||
Unaudited Consolidated Condensed Balance Sheets
| (Expressed in thousands of U.S. dollars) | |||||||
| ASSETS | June 30, 2020 | December 31, 2019 | |||||
| Cash and cash equivalents and restricted cash, current | $ | 106,600 | 125,241 | ||||
| Other current assets | 116,945 | 140,801 | |||||
| TOTAL CURRENT ASSETS | 223,545 | 266,042 | |||||
| Vessels and other fixed assets, net | 2,939,957 | 2,965,527 | |||||
| Restricted cash, non current | 1,020 | 1,021 | |||||
| Other non-current assets | 2,509 | 6,081 | |||||
| TOTAL ASSETS | $ | 3,167,031 | $ | 3,238,671 | |||
| Current portion of long-term debt and lease financing | $ | 220,054 | $ | 202,495 | |||
| Other current liabilities | 104,467 | 108,436 | |||||
| TOTAL CURRENT LIABILITIES | 324,521 | 310,931 | |||||
| Long-term debt and lease financing non-current (net of unamortized deferred finance fees of | 1,292,280 | 1,330,420 | |||||
| Senior Notes (net of unamortized deferred finance fees of | 49,025 | 48,821 | |||||
| Other non-current liabilities | 7,402 | 4,459 | |||||
| TOTAL LIABILITIES | $ | 1,673,228 | $ | 1,694,631 | |||
| SHAREHOLDERS' EQUITY | 1,493,803 | 1,544,040 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 3,167,031 | $ | 3,238,671 | |||
Unaudited Cash Flow Data
| (Expressed in thousands of U.S. dollars) | Six months ended June 30, 2020 | Six months ended June 30, 2019 | |||||||||||
| Net cash provided by / (used in) operating activities | $ | 55,460 | $ | 7,627 | |||||||||
| Net cash provided by / (used in) investing activities | (48,184) | (132,093) | |||||||||||
| Net cash provided by / (used in) financing activities | (25,918) | 6,969 | |||||||||||
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 excluded non-cash gains/(losses) such as those related to sale of vessels, stock-based compensation expense, the write-off of the unamortized fair value of above/below market acquired time charters, impairment losses, the write-off of claims receivable and loss from bad debt, change in fair value of forward freight agreements and bunker swaps, provision for onerous contracts, and the equity in income/(loss) of investee, 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. In addition, together with our scrubber installation program we decided to bring forward to 2019 the majority of 2020 dry docking services thus in the Adjusted EBITDA calculation for 2019 we included only the dry docking expenses for the vessels which were due for their periodic dry dock during 2019.
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, and our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
The following table reconciles net cash provided by operating activities to EBITDA and Adjusted EBITDA:
| (Expressed in thousands of U.S. dollars) | Second quarter 2020 | Second quarter 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | ||||||||||||||
| Net cash provided by/(used in) operating activities | $ | 23,363 | $ | (4,781 | ) | $ | 55,460 | $ | 7,627 | |||||||||
| Net decrease / (increase) in current assets | (31,607 | ) | 25,195 | (32,998 | ) | 40,541 | ||||||||||||
| Net increase / (decrease) in operating liabilities, excluding current portion of long term debt | 27,337 | (17,197 | ) | 10,840 | (21,625 | ) | ||||||||||||
| Impairment loss | - | (3,411 | ) | - | (3,411 | ) | ||||||||||||
| Loss on debt extinguishment | (76 | ) | (796 | ) | (618 | ) | (1,619 | ) | ||||||||||
| Stock – based compensation | (2,118 | ) | (2,606 | ) | (1,216 | ) | (2,857 | ) | ||||||||||
| Amortization of deferred finance charges | (1,938 | ) | (1,335 | ) | (3,663 | ) | (2,575 | ) | ||||||||||
| Unrealized gain/(loss) on derivative financial instruments | - | (149 | ) | - | (149 | ) | ||||||||||||
| Unrealized gain / (loss) on forward freight agreements and bunker swaps | (24,101 | ) | (4,072 | ) | (60 | ) | (987 | ) | ||||||||||
| Total other expenses, net | 17,918 | 21,767 | 38,566 | 44,349 | ||||||||||||||
| Gain/(Loss) on hull and machinery claims | 82 | - | 91 | 30 | ||||||||||||||
| Loss on bad debt | - | (1,250 | ) | - | (1,250 | ) | ||||||||||||
| Income tax | (16 | ) | 59 | 27 | 59 | |||||||||||||
| Gain/(Loss) on sale of vessels | - | (387 | ) | - | (700 | ) | ||||||||||||
| Equity in income/(loss) of investee | 28 | 27 | 39 | 55 | ||||||||||||||
| EBITDA | $ | 8,872 | $ | 11,064 | $ | 66,468 | $ | 57,488 | ||||||||||
| Equity in (income)/loss of investee | (28 | ) | (27 | ) | (39 | ) | (55 | ) | ||||||||||
| Unrealized (gain)/loss on forward freight agreements and bunker swaps | 24,101 | 4,072 | 60 | 987 | ||||||||||||||
| (Gain)/Loss on sale of vessels | - | 387 | - | 700 | ||||||||||||||
| Accelerated dry docking expenses due in 2020 | - | 8,394 | - | 10,523 | ||||||||||||||
| Stock-based compensation | 2,118 | 2,606 | 1,216 | 2,857 | ||||||||||||||
| Loss on bad debt | - | 1,250 | - | 1,250 | ||||||||||||||
| Impairment loss | - | 3,411 | - | 3,411 | ||||||||||||||
| Adjusted EBITDA | $ | 35,063 | $ | 31,157 | $ | 67,705 | $ | 77,161 | ||||||||||
Net income/(Loss) and Adjusted Net income/(Loss) Reconciliation and calculation of Adjusted Earnings/(Loss) Per Share
To derive Adjusted Net Income and Adjusted Earnings/(Loss) Per Share from Net Income, we excluded non-cash items, as provided in the table below. We believe that Adjusted Net Income and Adjusted Earnings/(Loss) 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, gain/(loss) on derivatives, impairment losses and other items which may vary from year to year, for reasons unrelated to overall operating performance. Similarly with what was discussed above, we excluded from the Adjusted Income/(loss) and Adjusted Earnings/(loss) per share the accelerated dry docking expenses that were due in 2020. 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 GAAP measures alone. Our method of computing Adjusted Net Income and Adjusted Earnings/ (Loss) Per Share may not necessarily be comparable to other similarly titled captions of other companies due to differences in methods of calculation.
The following table reconciles Net income / (loss) to Adjusted Net income / (loss):
| (Expressed in thousands of U.S. dollars except for share and per share data) | Second quarter 2020 | Second quarter 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | |||||||||||||
| Net income / (loss) | $ | (44,120 | ) | $ | (40,173 | ) | $ | (41,365 | ) | $ | (45,515 | ) | |||||
| Amortization of fair value of above/below market acquired time charter agreements, net | (231 | ) | (545 | ) | (718 | ) | (1,186 | ) | |||||||||
| Loss on bad debt | - | 1,250 | - | 1,250 | |||||||||||||
| Stock – based compensation | 2,118 | 2,606 | 1,216 | 2,857 | |||||||||||||
| Unrealized (gain) / loss on forward freight agreements and bunker swaps | 24,101 | 4,072 | 60 | 987 | |||||||||||||
| Accelerate dry docking expenses due in 2020 | - | 8,394 | - | 10,523 | |||||||||||||
| (Gain) / loss on sale of vessels | - | 387 | - | 700 | |||||||||||||
| Impairment loss | - | 3,411 | - | 3,411 | |||||||||||||
| Loss on debt extinguishment | 29 | 105 | 541 | 105 | |||||||||||||
| Equity in income/(loss) of investee | (28 | ) | (27 | ) | (39 | ) | (55 | ) | |||||||||
| Adjusted Net income / (loss) | $ | (18,131 | ) | $ | (20,520 | ) | $ | (40,305 | ) | $ | (26,923 | ) | |||||
| Weighted average number of shares outstanding, basic | 95,797,142 | 91,841,090 | 95,797,142 | 92,457,415 | |||||||||||||
| Weighted average number of shares outstanding, diluted | 95,797,142 | 91,841,090 | 95,797,142 | 92,457,415 | |||||||||||||
| Adjusted Earnings / (Loss) Per Share, basic and diluted | $ | (0.19 | ) | $ | (0.22 | ) | $ | (0.42 | ) | $ | (0.29 | ) | |||||
Voyage Revenues to Daily Time Charter Equivalent (“TCE”) Reconciliation
| (In thousands of U.S. Dollars, except for TCE rates) | |||||||||||||||||
| Second quarter 2020 | Second quarter 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | ||||||||||||||
| Voyage revenues | $ | 146,134 | $ | 157,792 | $ | 306,996 | $ | 324,282 | |||||||||
| Less: | |||||||||||||||||
| Voyage expenses | (59,762 | ) | (46,423 | ) | (115,072 | ) | (91,329 | ) | |||||||||
| Charter-in hire expense | (5,279 | ) | (21,825 | ) | (14,053 | ) | (44,442 | ) | |||||||||
| Realized gain/(loss) on FFAs/bunker swaps | 16,047 | 3,114 | 19,592 | 8,370 | |||||||||||||
| Time Charter equivalent revenues | $ | 97,140 | $ | 92,658 | $ | 197,463 | $ | 196,881 | |||||||||
| Amortization of fair value of below/above market acquired time charter agreements, net | (231 | ) | (545 | ) | (718 | ) | (1,186 | ) | |||||||||
| Adjusted Time Charter equivalent revenues | $ | 96,909 | $ | 92,113 | $ | 196,745 | $ | 195,695 | |||||||||
| Available days | 10,307 | 8,732 | 19,426 | 17,987 | |||||||||||||
| Daily Time Charter Equivalent Rate ("TCE") | $ | 9,402 | $ | 10,549 | $ | 10,128 | $ | 10,880 | |||||||||
Average daily Net Cash G&A expenses per vessel Reconciliation
| (In thousands of U.S. Dollars, except for daily rates) | |||||||||||||||||
| Second quarter 2020 | Second quarter 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | ||||||||||||||
| General and administrative expenses | $ | 8,958 | $ | 9,829 | $ | 14,991 | $ | 17,062 | |||||||||
| Plus: | |||||||||||||||||
| Management fees | 4,596 | 4,099 | 9,202 | 8,188 | |||||||||||||
| Less: | |||||||||||||||||
| Stock – based compensation | (2,118) | (2,606) | (1,216) | (2,857) | |||||||||||||
| Net Cash G&As expenses (excluding one-time expenses) | $ | 11,436 | $ | 11,322 | $ | 22,977 | $ | 22,393 | |||||||||
| Ownership days | 10,556 | 9,754 | 21,112 | 19,412 | |||||||||||||
| Charter-in days | 360 | 1,468 | 726 | 3,208 | |||||||||||||
| Average daily Net Cash G&A expenses per vessel | $ | 1,048 | $ | 1,009 | $ | 1,052 | $ | 990 | |||||||||
Conference Call details:
Our management team will host a conference call to discuss our financial results on Thursday, August 6, 2020 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) 553-9962 (from the US), 0(808) 238-0669 (from the UK) or + (44) (0) 2071 928 592 (Standard International Dial In). Please quote "Star Bulk."
A replay of the conference call will be available until Thursday, August 13, 2020. The United States replay number is 1(866) 331-1332; from the UK 0(808) 238-0667; the standard international replay number is (+44) (0) 3333 009 785 and the access code required for the replay is: 3128607#.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet through the Star Bulk website (www.starbulk.com). 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, coal 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 and Singapore. Its common stock trades on the Nasdaq Global Select Market under the symbol “SBLK”. Star Bulk owns a fleet of 116 vessels, with an aggregate capacity of 12.9 million dwt, consisting of 17 Newcastlemax, 19 Capesize, 2 Mini Capesize, 7 Post Panamax, 35 Kamsarmax, 2 Panamax, 17 Ultramax and 17 Supramax vessels with carrying capacities between 52,425 dwt and 209,537 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.
The Company desires 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. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions 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 the Company’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Company believes 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 the Company’s control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in the Company’s 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 interest rates and foreign exchange rates; changes in demand in the dry bulk shipping industry, including the market for our vessels; changes in our operating expenses, including bunker prices, dry docking and insurance costs; changes in governmental rules and regulations or actions taken by regulatory authorities; potential liability from pending or future litigation; general domestic and international political conditions; potential disruption of shipping routes due to accidents or political events; business disruptions due to natural disasters or other disasters outside our control, such as the recent outbreak of COVID-19; the availability of financing and refinancing; 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. 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:
Simos Spyrou, Christos Begleris
Co ‐ Chief Financial Officers
Star Bulk Carriers Corp.
c/o Star Bulk Management Inc.
40 Ag. Konstantinou Av.
Maroussi 15124
Athens, Greece
Email: info@starbulk.com
www.starbulk.com
Investor Relations / Financial Media:
Nicolas Bornozis
President
Capital Link, Inc.
230 Park Avenue, Suite 1536
New York, NY 10169
Tel. (212) 661‐7566
E‐mail: starbulk@capitallink.com
www.capitallink.com
FAQ
What were the earnings results for SBLK in Q2 2020?
How did SBLK's voyage revenues change in Q2 2020?
What is the outlook for Star Bulk Carriers following their Q2 2020 results?
What financing activities has SBLK undertaken recently?
What was the average TCE rate for SBLK in Q2 2020?
