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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2021
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.
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
On November 16, 2020, Star Bulk Carriers Corp. (the “Company”) issued a press release (the “Press Release”) announcing its unaudited financial and operating
results for the third quarter and the nine months ended September 30, 2020. A copy of the Press Release is attached hereto as Exhibit 99.1.
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,” “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; |
| • |
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; |
| • |
our ability to complete acquisition transactions as and when planned; and |
| • |
the risk factors and other factors referred to in the Company’s reports filed with or furnished to the SEC. |
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 2019, filed with the SEC on March 27, 2020, as amended on April 2, 2020.
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.
Our significant business risks are described in Item 3.d. in our Annual Report on Form 20F, as filed with the SEC on March 27, 2020, as amended on April 2, 2020.
You should be aware that these risk factors and other information may not describe every risk facing the Company. In addition to the risks disclosed in that filing, following are additional updates to our risk factor disclosures with respect to our
business.
The Covid-19 pandemic has impacted the dry bulk shipping industry and could have a material adverse
impact on our business and operations.
Since the beginning of the calendar year 2020, the outbreak of the Covid-19 pandemic has resulted in the implementation of numerous actions
by governments and governmental agencies in an attempt to mitigate the spread of the virus, including travel bans, quarantines, and other emergency public health measures, and a number of countries implemented lockdown measures. Depending on the
course of the Covid-19 pandemic, such measures could be newly imposed or reimposed in certain countries. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. If
the Covid-19 pandemic continues on a prolonged basis or becomes more severe, the adverse impact on the global economy and the rate environment for dry bulk and other cargo vessels may deteriorate further and our operations and cash flows may be
negatively impacted. Relatively weak global economic conditions during periods of volatility have and may continue to have a number of adverse consequences for dry bulk and other shipping sectors, including, among other things:
| • |
low charter rates, particularly for vessels employed on short-term time charters or in the spot market; |
| • |
decreases in the market value of dry bulk vessels and limited second-hand market for the sale of vessels; |
| • |
limited financing for vessels; |
| • |
loan covenant defaults; and |
| • |
declaration of bankruptcy by certain vessel operators, vessel owners, shipyards and charterers. |
The Covid-19 pandemic and measures to contain its spread have negatively impacted regional and global economies and trade patterns in
markets in which we operate, the way we operate our business, and the businesses of our charterers and suppliers. These negative impacts could continue or worsen, even after the pandemic itself diminishes or ends. Companies, including us, have also
taken precautions, such as requiring employees to work remotely and imposing travel restrictions, while some other businesses have been required to close entirely.
Moreover, we face significant risks to our personnel and operations due to the Covid-19 pandemic. Our crews face risk of exposure to
Covid-19 as a result of travel to ports in which cases of Covid-19 have been reported. Our shore-based personnel likewise face risk of such exposure, as we maintain offices in areas that have been impacted by the spread of Covid-19.
Measures against Covid-19 in a number of countries have restricted crew rotations on our vessels, which may continue or become more severe.
As a result, in 2020, we have experienced and may continue to experience disruptions to our normal vessel operations caused by increased deviation time associated with positioning our vessels to countries in which we can undertake a crew rotation
in compliance with such measures. Delays in crew rotations have led to issues with crew fatigue and may continue to do so, which may result in delays or other operational issues. We have had and expect to continue to have increased expenses due to
incremental fuel consumption and days in which our vessels are unable to earn revenue in order to deviate to certain ports on which we would ordinarily not call during a typical voyage. We may also incur additional expenses associated with testing,
personal protective equipment, quarantines, and travel expenses such as airfare costs in order to perform crew rotations in the current environment. In 2020, delays in crew rotations have also caused us to incur additional costs related to crew
bonuses paid to retain the existing crew members on board and may continue to do so.
Finally, Covid-19 and measures against it have led to a highly difficult environment in which to dispose of vessels given difficulty to
physically inspect vessels.
In addition, organizations across industries, including ours, are rightly focusing on their employees’ well-being, whilst making sure that
their operations continue undisrupted and at the same time, adapting to the new ways of operating. As such employees are encouraged or even required to operate remotely which significantly increases the risk of cyber security attacks.
There continues to be a high level of uncertainty relating to how the pandemic will evolve, including 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.. The continuation of the Covid-19 pandemic, the
development of mutations or new strains of the Covid-19 virus and one or more of the events described above could have a material adverse effect on our business, results of operations, cash flows and financial condition.
We rely on our information systems to conduct our business, and failure to protect
these systems against security breaches could adversely affect our business and results of operations, including on our vessels. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be
harmed.
We rely on our computer systems and network infrastructure across our operations, including on our vessels. The safety and security of our
vessels and efficient operation of our business, including processing, transmitting and storing electronic and financial information, are dependent on computer hardware and software systems, which are increasingly vulnerable to security breaches
and other disruptions. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business and results of operations.
Our vessels rely on information systems for a significant part of their operations, including navigation, provision of services, propulsion,
machinery management, power control, communications and cargo management. We have in place safety and security measures on our vessels and onshore operations to secure our vessels against cyber-security attacks and any disruption to their
information systems. However, these measures and technology may not adequately prevent security breaches despite our continuous efforts to upgrade and address the latest known threats. A disruption to the information system of any of our vessels
could lead to, among other things, wrong routing, collision, grounding and propulsion failure.
Beyond our vessels, we rely on industry accepted security measures and technology to securely maintain confidential and proprietary
information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. The technology and other controls and processes designed to secure our confidential and proprietary information,
detect and remedy any unauthorized access to that information were designed to obtain reasonable, but not absolute, assurance that such information is secure and that any unauthorized access is identified and addressed appropriately. Such controls
may in the future fail to prevent or detect, unauthorized access to our confidential and proprietary information. In addition, the foregoing events could result in violations of applicable privacy and other laws. If confidential information is
inappropriately accessed and used by a third party or an employee for illegal purposes, we may be responsible to the affected individuals for any losses they may have incurred as a result of misappropriation. In such an instance, we may also be
subject to regulatory action, investigation or liable to a governmental authority for fines or penalties associated with a lapse in the integrity and security of our information systems.
Our operations, including our vessels, and business administration could be targeted by individuals or groups seeking to sabotage or disrupt
such systems and networks, or to steal data, and these systems may be damaged, shutdown or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or viruses, other
cyber-security incidents or otherwise). For example, the information systems of our vessels may be subject to threats from hostile cyber or physical attacks, phishing attacks, human errors of omission or commission, structural failures of resources
we control, including hardware and software, and accidents and other failures beyond our control. The threats to our information systems are constantly evolving, and have become increasingly complex and sophisticated. Furthermore, such threats
change frequently and are often not recognized or detected until after they have been launched, and therefore, we may be unable to anticipate these threats and may not become aware in a timely manner of such a security breach, which could
exacerbate any damage we experience.
We may be required to expend significant capital and other resources to protect against and remedy any potential or existing security
breaches and their consequences. A cyber-attack could result in significant expenses to investigate and repair security breaches or system damages and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and
diminished customer confidence. In addition, our remediation efforts may not be successful and we may not have adequate insurance to cover these losses.
The unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our
business and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
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.
|
COMPANY NAME |
|||
|
By: |
/s/ Simos Spyrou |
||
|
Name: |
Simos Spyrou |
||
|
Title: |
Co-Chief Financial Officer |
||
|
Exhibit Number |
Description |
|
|
Press Release dated November 16, 2020 |
STAR BULK CARRIERS CORP. REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2020
ATHENS, GREECE, November 16, 2020 – 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 and the nine months ended September 30, 2020.
Financial Highlights
| (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 |
| (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 |
| (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 |
| (4) |
Average daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days. Average daily OPEX per vessel (excl. non recurring |
| (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 |
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“Star Bulk returned to profitability during the third quarter of 2020, reporting Net income of $23.3 million, Adjusted Net Income of $27.3 million, TCE Revenues of $137.8 million and Adjusted
EBITDA of $79.7 million. We were able to take advantage of the recovering dry bulk market, increasing our TCE to $13,083/ day per vessel for the third quarter of 2020. Average Opex per vessel excluding non-recurring expenses and Net Cash G&A
expenses per vessel were at $4,244/day and $985/day respectively.
Over the last few months, we have continued to strengthen our liquidity, having agreed 9 refinancings, increasing our cash by a total of $113.2 million and improving the average margin and
repayment profile. Despite turbulent financial markets, we received a lot of support from our existing lenders and forged relationships with new financiers to expand our lending group. Our pro-forma current liquidity, including the available
revolving credit facility, has reached $225 million.
It continues to be challenging to get crew on and off our vessels due to restrictions designed to slow the spread of COVID-19. The whole shipping industry, including us, continues to experience
vessel itinerary disruptions as well as higher operating costs due to these restrictions.
Our outlook for the market continues to be constructive, despite the uncertainty stemming from the COVID-19 pandemic. Supply is at historical lows due to the recent demand shocks and ambiguity
around the future of vessel propulsion technology, while demand for dry bulk is healthy as ton miles are growing, driven by global infrastructure stimulus projects.”
Recent Developments
Financing Activities:
In August and September 2020, we drew down $268.4 million in aggregate under sale and leaseback agreements with i) China Merchants Bank Leasing (“CMBL”) for
the vessels M/V Laura, M/V Idee Fixe, M/V Roberta, M/V Kaley, M/V Star Sirius and M/V Star Vega, ii) Shinken Bussan Co., Ltd. for the vessel M/V Star Lutas, iii) SPDB Financial Leasing Co.,
Ltd. for the vessels M/V Mackenzie, M/V Kennadi, M/V Honey Badger, M/V Wolverine
and M/V Star Antares and iv) ICBC Financial Leasing Co., Ltd. for the vessels M/V Gargantua, M/V Goliath and M/V Maharaj. The amount drawn was used in part to refinance the $191.9 million outstanding under the loan and lease agreements secured by the above-mentioned vessels.
As of the date of this press release, after the completion of the above mentioned refinancings and along with the amounts drawn in July 2020, and after
deducting relevant finance fees we increased our cash by approximately $106.5 million.
In addition, in September 2020, we received a commitment from China Export-Import Bank for a loan amount of up to $57.7 million (the “CEXIM Bank $57.7 million
Facility”). The facility is expected to be used to refinance the outstanding amounts under a loan facility and lease agreements secured by the vessels M/V Star Wave, M/V
Star Gina 2GR, M/V Star Charis and M/V Star Suzanna. We expect to draw down this facility by the end of November 2020. The facility will mature eight years
after the drawdown and will be secured by first priority mortgages on the four aforementioned vessels. The facility is subject to customary conditions precedent and the execution of definitive documentation.
We expect to further strengthen our cash balance with net proceeds after finance fees of approximately $6.7 million by the end of November 2020 with the finalization of i) the
CEXIM Bank $57.7 million Facility and ii) the agreement with CMBL to sell and leaseback the vessel M/V Diva.
As of the date of this press release, the outstanding balance under the $30.0 million revolving facility with HSBC France (the “HSBC Working Capital Facility”) is $24.2 million,
while another $5.8 million remains available under this facility.
As of the date of this press release, we have hedged approximately 8,000 metric tons of our estimated fuel consumption for November and December 2020 by selling the 2020 Singapore
spread between Very Low-Sulfur Fuel Oil (VLSFO) – High-Sulfur Fuel Oil (HSFO) at an average price of $266 per ton.
Impact of COVID-19 and Our Proactive Measures
While it is still too early to fully assess the overall impact that COVID-19 will have on our financial condition and operations and on the dry bulk
industry in general, to date 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 the end of the nine
months ended September 30, 2020.
• Significant delays and increased operational costs associated with crew rotation and related logistical complications, supplying our vessels with spares or other supplies, and the reduced availability of attending engineers for
overhauling or maintenance due to travel restrictions and quarantine rules.
We have taken proactive measures to ensure the health and wellness of our 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 by our employees.
The actual impact of these and other effects 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.
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 third quarter of 2020 our TCE rate was:
Capesize / Newcastlemax Vessels: $17,942 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $11,354 per day.
Ultramax / Supramax Vessels: $10,306 per day.
For nine month period ended September 30, 2020 our TCE rate was:
Capesize / Newcastlemax Vessels: $15,327 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $9,867 per day.
Ultramax / Supramax Vessels: $8,501 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 96,370,925 and 94,276,144 weighted average diluted shares for the third quarter of 2020 and 2019, respectively.
For the third quarter of 2020, we had a net income of $23.3 million, or $0.24 earnings per share. Net income for the third quarter of 2019
was $5.8 million, or $0.06 earnings per share.
Adjusted net income for the third quarter of 2020, which excludes certain non-cash items, was $27.3 million, or $0.28 earnings per share, compared to an
adjusted net income for the third quarter of 2019 of $17.3 million, or $0.18 earnings per share.
Net cash provided by operating activities for the third quarter of 2020 was $57.0 million, compared to net cash provided by operating activities of $27.7
million for the third quarter of 2019. Adjusted EBITDA for the third quarter of 2020, which excludes certain non-cash items was $79.7 million, compared to adjusted EBITDA for the third quarter of 2019 of $72.2 million.
Voyage revenues for the third quarter of 2020 decreased to $200.2 million from $248.4 million in the third quarter of 2019. Adjusted time
charter equivalent revenues (“Adjusted TCE Revenues”) (please see the table at the end of this release for the calculation of the Adjusted TCE Revenues) were $137.6 million for the third quarter of 2020, compared to $131.0 million for the third
quarter of 2019. The negative impact of the COVID-19 pandemic led to an overall weak dry bulk market environment. As a result, TCE rate for the third quarter of 2020 was $13,083 compared to $14,688 for the third quarter of 2019.
For the third quarters of 2020 and 2019, vessel operating expenses were $47.2 million and $39.7 million, respectively. Vessel operating expenses for the third
quarter of 2020 included additional crew expenses related to the increased number of crew changes performed during the period as a result of COVID-19 restrictions imposed in the beginning of 2020 of $1.9 million. Vessel operating expenses for the
third quarter of 2019 included pre-delivery and pre-joining expenses of $0.3 million. Our average daily operating expenses per vessel for the third quarters of 2020 and 2019 were $4,425 and $3,719, respectively. Excluding non-recurring expenses such
the increased costs due to the COVID-19 pandemic in 2020 or the pre-delivery expenses in 2019, our average daily operating expenses per vessel for the third quarters of 2020 and 2019 were $4,244 and $3,693, respectively.
General and administrative expenses for the third quarters of 2020 and 2019 were $9.3 million and $9.7 million, respectively. The decrease is mainly
attributable to the decrease in stock based compensation expense to $3.1 million in the third quarter of 2020 from $3.5 million in the third quarter of 2019. Vessel management fees for the third quarters of 2020 and 2019 were both $4.6 million. Our
average daily net cash general and administrative expenses per vessel (including management fees and excluding stock-based compensation) for the third quarters of 2020 and 2019 were $985 and $828, respectively.
Interest and finance costs net of interest and other income/(loss) for the third quarters of 2020 and 2019 were $16.2 million and $22.5 million, respectively.
Despite the increase in the weighted average balance of our outstanding indebtedness of $1,601.1 million during the third quarter of 2020, compared to $1,572.5 million for the same period in 2019, 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 during the second and third quarters of 2020 and the lower LIBOR rates during the third quarter of 2020.
Unaudited Consolidated Statement of Operations
Unaudited Consolidated Condensed Balance Sheets
|
(Expressed in thousands of U.S. dollars) |
||||||||
|
ASSETS |
September 30, 2020 |
December 31, 2019 |
||||||
|
Cash and cash equivalents and resticted cash, current |
$ |
219,124 |
125,241 |
|||||
|
Other current assets |
123,744 |
140,801 |
||||||
|
TOTAL CURRENT ASSETS |
342,868 |
266,042 |
||||||
|
Vessels and other fixed assets, net |
2,910,837 |
2,965,527 |
||||||
|
Restricted cash, non current |
3,021 |
1,021 |
||||||
|
Other non-current assets |
2,404 |
6,081 |
||||||
|
TOTAL ASSETS |
$ |
3,259,130 |
$ |
3,238,671 |
||||
|
Current portion of long-term debt and lease financing |
$ |
220,172 |
$ |
202,495 |
||||
|
Other current liabilities |
99,748 |
108,436 |
||||||
|
TOTAL CURRENT LIABILITIES |
319,920 |
310,931 |
||||||
|
Long-term debt and lease financing non-current (net of unamortized deferred finance fees of $21,079 and $19,034, respectively) |
1,363,141 |
1,330,420 |
||||||
|
Senior Notes (net of unamortized deferred finance fees of $871 and $1,179, respectively) |
49,129 |
48,821 |
||||||
|
Other non-current liabilities |
6,750 |
4,459 |
||||||
|
TOTAL LIABILITIES |
$ |
1,738,940 |
$ |
1,694,631 |
||||
|
SHAREHOLDERS’ EQUITY |
1,520,190 |
1,544,040 |
||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
3,259,130 |
$ |
3,238,671 |
||||
Unaudited Cash Flow Data
|
Nine months ended September 30, 2020 |
Nine months ended September 30, 2019 |
|||||||
|
Net cash provided by / (used in) operating activities |
$ |
112,479 |
$ |
35,286 |
||||
|
Vessel acquisitions and Advances for vessels under construction |
– |
(203,473 |
) |
|||||
|
Capital expenditures for vessel modifications/upgrades |
(62,213 |
) |
(100,842 |
) |
||||
|
Proceeds from sale of vessels |
– |
44,188 |
||||||
|
Insurance Proceeds |
3,992 |
6,727 |
||||||
|
Net cash provided by / (used in) investing activities |
(58,221 |
) |
(253,400 |
) |
||||
|
Proceeds from vessels’ new debt |
539,464 |
620,423 |
||||||
|
Working capital facility |
29,766 |
– |
||||||
|
Ordinary vessels’ debt repayment |
(137,298 |
) |
(114,703 |
) |
||||
|
Debt prepayment due to sale or refinancing |
(379,489 |
) |
(353,913 |
) |
||||
|
Financing fees |
(6,014 |
) |
(9,925 |
) |
||||
|
Repurchase of common shares |
– |
(20,523 |
) |
|||||
|
Dividend payments |
(4,804 |
) |
– |
|||||
|
Net cash provided by / (used in) financing activities |
41,625 |
121,359 |
||||||
Summary of Selected Data
|
Third quarter 2020 |
Third quarter 2019 |
Nine months ended September 30, 2020 |
Nine months ended September 30, 2019 |
|||||||||||||
|
Average number of vessels (1) |
116.0 |
116.1 |
116.0 |
110.2 |
||||||||||||
|
Number of vessels (2) |
116 |
118 |
116 |
118 |
||||||||||||
|
Average age of operational fleet (in years) (3) |
9.0 |
8.2 |
9.0 |
8.2 |
||||||||||||
|
Ownership days (4) |
10,672 |
10,685 |
31,784 |
30,096 |
||||||||||||
|
Available days (5) |
10,515 |
8,919 |
29,941 |
26,905 |
||||||||||||
|
Charter-in days (6) |
349 |
2,372 |
1,075 |
5,581 |
||||||||||||
|
Daily Time Charter Equivalent Rate (7) |
$ |
13,083 |
$ |
14,688 |
$ |
11,166 |
$ |
12,143 |
||||||||
|
Average daily OPEX per vessel (8) |
$ |
4,425 |
$ |
3,719 |
$ |
4,167 |
$ |
3,917 |
||||||||
|
Average daily OPEX per vessel (excl. non recurring expenses) (8) |
$ |
4,244 |
$ |
3,693 |
$ |
4,106 |
$ |
3,876 |
||||||||
|
Average daily Net Cash G&A expenses per vessel (9) |
$ |
985 |
$ |
828 |
$ |
1,030 |
$ |
931 |
||||||||
(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) 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 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 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.
(8) Average daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days. Average daily OPEX per vessel (excluding non-
recurring expenses) is calculated by dividing vessel operating expenses minus any non-recurring expenses (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 as or similar to some of the adjustments. Vessel operating expenses for the three and nine month period ended September 30, 2020 included additional crew expenses related to the increased number of crew changes performed during the
period as a result of COVID-19 restrictions imposed in the beginning of 2020 of $1.9 million in both periods while vessel operating expenses for the three and nine month period ended September 30, 2019 included pre-delivery and pre-joining expenses
of $0.3 million and $1.2 million, respectively.
(9) 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.
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. 2020 Adjusted EBITDA does not include the drydocking expenses for the vessels which were due for their periodic dry dock in 2020 but this was performed in 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) |
Third quarter 2020 |
Third quarter 2019 |
Nine months ended September 30, 2020 |
Nine months ended September 30, 2019 |
||||||||||||
|
Net cash provided by/(used in) operating activities |
$ |
57,019 |
$ |
27,659 |
$ |
112,479 |
$ |
35,286 |
||||||||
|
Net decrease / (increase) in current assets |
10,769 |
15,479 |
(22,229 |
) |
56,020 |
|||||||||||
|
Net increase / (decrease) in operating liabilities, excluding current portion of long term debt |
(4,063 |
) |
(539 |
) |
6,777 |
(22,164 |
) |
|||||||||
|
Impairment loss |
– |
– |
– |
(3,411 |
) |
|||||||||||
|
Loss on debt extinguishment |
(3,797 |
) |
(330 |
) |
(4,415 |
) |
(1,949 |
) |
||||||||
|
Stock – based compensation |
(3,062 |
) |
(3,513 |
) |
(4,278 |
) |
(6,370 |
) |
||||||||
|
Amortization of deferred finance charges |
(2,090 |
) |
(1,448 |
) |
(5,753 |
) |
(4,023 |
) |
||||||||
|
Unrealized gain/(loss) on derivative financial instruments |
– |
149 |
– |
– |
||||||||||||
|
Unrealized gain / (loss) on forward freight agreements and bunker swaps |
2,539 |
408 |
2,479 |
(579 |
) |
|||||||||||
|
Total other expenses, net |
19,973 |
22,831 |
58,539 |
67,180 |
||||||||||||
|
Gain/(Loss) on hull and machinery claims |
1,879 |
(135 |
) |
1,971 |
(105 |
) |
||||||||||
|
Loss on bad debt |
– |
– |
– |
(1,250 |
) |
|||||||||||
|
Income tax |
14 |
11 |
41 |
70 |
||||||||||||
|
Gain/(Loss) on sale of vessels |
– |
(70 |
) |
– |
(770 |
) |
||||||||||
|
Equity in income/(loss) of investee |
(6 |
) |
33 |
33 |
88 |
|||||||||||
|
EBITDA |
$ |
79,175 |
$ |
60,535 |
$ |
145,644 |
$ |
118,023 |
||||||||
|
Equity in (income)/loss of investee |
6 |
(33 |
) |
(33 |
) |
(88 |
) |
|||||||||
|
Unrealized (gain)/loss on forward freight agreements and bunker swaps |
(2,539 |
) |
(408 |
) |
(2,479 |
) |
579 |
|||||||||
|
(Gain)/Loss on sale of vessels |
– |
70 |
– |
770 |
||||||||||||
|
Accelerated dry docking expenses due in 2020 |
– |
8,522 |
– |
19,045 |
||||||||||||
|
Stock-based compensation |
3,062 |
3,513 |
4,278 |
6,370 |
||||||||||||
|
Loss on bad debt |
– |
– |
– |
1,250 |
||||||||||||
|
Impairment loss |
– |
– |
– |
3,411 |
||||||||||||
|
Adjusted EBITDA |
$ |
79,704 |
$ |
72,199 |
$ |
147,410 |
$ |
149,360 |
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, unrealized 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 with 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):
Voyage Revenues to Daily Time Charter Equivalent (“TCE”) Reconciliation
|
Third quarter 2020 |
Third quarter 2019 |
Nine months ended September 30, 2020 |
Nine months ended September 30, 2019 |
|||||||||||||
|
Voyage revenues |
$ |
200,222 |
$ |
248,444 |
$ |
507,218 |
$ |
572,726 |
||||||||
|
Less: |
||||||||||||||||
|
Voyage expenses |
(43,637 |
) |
(67,575 |
) |
(158,709 |
) |
(158,904 |
) |
||||||||
|
Charter-in hire expense |
(13,165 |
) |
(48,545 |
) |
(27,218 |
) |
(92,987 |
) |
||||||||
|
Realized gain/(loss) on FFAs/bunker swaps |
(5,612 |
) |
(995 |
) |
13,980 |
7,375 |
||||||||||
|
Time Charter equivalent revenues |
$ |
137,808 |
$ |
131,329 |
$ |
335,271 |
$ |
328,210 |
||||||||
|
Amortization of fair value of below/above market acquired time charter agreements, net |
(233 |
) |
(328 |
) |
(951 |
) |
(1,514 |
) |
||||||||
|
Adjusted Time Charter equivalent revenues |
$ |
137,575 |
$ |
131,001 |
$ |
334,320 |
$ |
326,696 |
||||||||
|
Available days |
10,515 |
8,919 |
29,941 |
26,905 |
||||||||||||
|
Daily Time Charter Equivalent Rate (“TCE”) |
$ |
13,083 |
$ |
14,688 |
$ |
11,166 |
$ |
12,143 |
||||||||
Average daily Net Cash G&A expenses per vessel Reconciliation
|
Third quarter 2020 |
Third quarter 2019 |
Nine months ended September 30, 2020 |
Nine months ended September 30, 2019 |
|||||||||||||
|
General and administrative expenses |
$ |
9,321 |
$ |
9,706 |
$ |
24,312 |
$ |
26,768 |
||||||||
|
Plus: |
||||||||||||||||
|
Management fees |
4,601 |
4,613 |
13,803 |
12,801 |
||||||||||||
|
Less: |
||||||||||||||||
|
Stock – based compensation |
(3,062 |
) |
(3,513 |
) |
(4,278 |
) |
(6,370 |
) |
||||||||
|
Net Cash G&As expenses |
$ |
10,860 |
$ |
10,806 |
$ |
33,837 |
$ |
33,199 |
||||||||
|
Ownership days |
10,672 |
10,685 |
31,784 |
30,096 |
||||||||||||
|
Charter-in days |
349 |
2,372 |
1,075 |
5,581 |
||||||||||||
|
Average daily Net Cash G&A expenses per vessel |
$ |
985 |
$ |
828 |
$ |
1,030 |
$ |
931 |
||||||||
Conference Call details:
Our management team will host a conference call to discuss our financial results on Tuesday, November 17, 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 Tuesday, November 24, 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. The content on our website is not incorporated by reference into this release.
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.
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. 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 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 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 length and severity of the COVID-19 outbreak; the impact of public health threats and outbreaks of other highly communicable diseases; the impact
of the expected discontinuance of LIBOR after 2021 on interest rates of our debt that reference LIBOR; 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: [email protected]
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
www.capitallink.com
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