Star Bulk Carriers Corp., a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the fourth quarter and year ended December 31, 2020.
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“In the fourth quarter of 2020 Star Bulk earned net income of $27.8 million, TCE Revenues of $140.7 million and Adjusted EBITDA of $81.5 million, with TCE for the quarter increasing to $13,415/day per vessel. On a full year basis, we managed to have a profitable year, despite the challenges posed by Covid-19, with net income of $9.7 million and Adjusted EBITDA of $229.1 million. The strong cash flow from operations during the second half of the year has enabled us to reduce our net debt by $149.0 million to date.
2020 presented several operational and commercial difficulties, which the Company dealt with, while maintaining its financial strength and quality of service. Operationally we promptly and effectively implemented measures to assure the wellbeing of our people onboard and ashore. On the financial side, we strengthened the Company’s liquidity by approximately $111 million, raising over $500 million of new debt and taking advantage of record low interest rates to fix LIBOR on approximately $1 billion of debt at 46 bps for a period of approximately 4 years.
A recovering freight market during the second half of the year has enabled us to make accretive vessel acquisitions for shares to expand our platform while at the same time allowing the Company to retain its balance sheet strength. We remain optimistic about the market dynamics in our industry, with a record low orderbook and environmental regulations limiting future fleet growth and strong demand fundamentals across all key dry bulk commodities.”
On January 26, 2021 we took delivery of the three capesize vessels E.R Bayonee, E.R Buenos Aires and E.R Borneo (collectively, the “E.R. Acquisition Vessels”) from entities affiliated with E.R. Capital Holding GmbH & Cie. KG, pursuant to the transaction previously announced on December 17, 2020. Consideration for the acquisition was payable in the form of $39.0 million in cash and 2,100,000 of our common shares, which shares were issued on January 26, 2021. The cash consideration of this transaction was financed through proceeds of a new five-year term loan from a leading European financial institution, as described below.
On February 2, 2021 we entered into an agreement with Scorpio Bulkers Inc. (NYSE: SALT) to acquire SBI Pegasus, SBI Subaru and SBI Ursa, Ultramax bulk carriers built in 2015, SBI Capoeira and SBI Carioca, Kamsarmax bulk carriers built in 2015, and SBI Lambada and SBI Macarena, Kamsarmax bulk carriers built in 2016 (collectively, the “Eneti Acquisition Vessels”), by assuming their outstanding lease obligations, which amount to $102.3 million as of the date of this press release. On February 4, 2021, Scorpio Bulkers Inc. announced that the change of its name to “Eneti Inc.” would take effect, and its common shares were expected to begin trading on the New York Stock Exchange under the ticker symbol “NETI”, on February 8, 2021. As consideration, we expect to issue to Eneti Inc. 3,000,000 newly issued common shares of the Company. The transaction is subject to customary closing conditions and documentation. The Eneti Acquisition Vessels are expected to be delivered to us within the first and early second quarter of this year. On a fully delivered basis we expect to have 102,239,716 shares issued and outstanding. Assuming the delivery of the Eneti Acquisition Vessels, our fleet will consist of 126 vessels with an aggregate capacity of 13.9 million dwt, average age of 9.3 years, 120 of which (95%) will be scrubber fitted.
In November 2020, we finalized the sale and leaseback agreement with China Merchants Bank Leasing for the vessel Diva. The drawdown amount of $7.2 million was used in part to refinance the $5.3 million outstanding under the vessel’s loan agreement.
In addition, in December 2020, we drew down $57.6 million under the loan agreement with China Export-Import Bank, which is secured by the vessels M/V Star Wave, M/V Star Gina 2GR, M/V Star Charis and M/V Star Suzanna. The drawn amount was used in part to refinance the $54.2 million outstanding under the loan and lease agreements of the above-mentioned vessels.
The above two transactions resulted in additional liquidity of $5.3 million.
On January 22, 2021, we entered into a loan agreement with a major European Bank for an amount of $39.0 million, which amount was drawn on January 25, 2021 and used to finance the cash consideration for the E.R. Acquisition Vessels, as discussed above. The facility matures five years after the drawdown and is secured by first priority mortgages on the three aforementioned vessels.
On February 8, 2021, we obtained the approval from a major Chinese financial institution to assume the outstanding lease obligations, which amount to $102.3 million as of the date of this press release, of the Eneti Acquisition Vessels. The sale and leaseback agreements are expected to be concluded by the end of February 2021 and the lease terms will be for 5.0 years with purchase options during and at the expiration of the bareboat charters term.
During the fourth quarter of 2020, the Company repaid in full the amount outstanding under the $30.0 million HSBC Working Capital Facility France. As of December 31, 2020 and as of today, $30.0 million remains available to the Company under this facility, which amount represents an additional source of liquidity for the Company. The Company has agreed with the applicable lender to extend the maturity of this facility for an additional year to February 2022.
COVID-19 and Our Proactive Measures
Despite the global gradual recovery from COVID-19, we continue to take proactive measures to ensure the health and wellness of our crew and onshore employees while maintaining effective business continuity and uninterrupted service to our customers. On January 28, 2021, we became a signatory of the “Neptune Declaration on Seafarer Wellbeing and Crew Change”, a worldwide call to action to end the unprecedented crew change crisis caused by the Covid-19 pandemic, signed by more than 300 companies and organizations across the maritime value chain.
The overall impact of COVID-19 on our business, and the efficacy of any measures we take in response to the challenges presented by the COVID-19 pandemic, will depend on how the outbreak further develops, the duration and extent of the restrictive measures that are associated with the pandemic and their impact on global economy and trade, which is still uncertain.
Daily Time Charter Equivalent Rate (“TCE”) and TCE Revenues are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of the respective measures.
For the fourth quarter of 2020 our TCE rate was:
Capesize / Newcastlemax Vessels: $17,383 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $12,486 per day.
Ultramax / Supramax Vessels: $10,681 per day.
For the year ended December 31, 2020 our TCE rate was:
Capesize / Newcastlemax Vessels: $16,001 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $10,577 per day.
Ultramax / Supramax Vessels: $9,106 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 96,983,233 and 95,923,034 weighted average diluted shares for the fourth quarter of 2020 and 2019, respectively.
Fourth Quarter 2020 and 2019 Results
For the fourth quarter of 2020, we had a net income of $27.8 million, or $0.29 earnings per share. Net income for the fourth quarter of 2019 was $23.5 million, or $0.24 earnings per share.
Adjusted net income for the fourth quarter of 2020, which excludes certain non-cash items, was $29.5 million, or $0.30 earnings per share, compared to an adjusted net income for the fourth quarter of 2019 of $34.3 million, or $0.36 earnings per share.
Net cash provided by operating activities for the fourth quarter of 2020 was $58.1 million, compared to net cash provided by operating activities of $53.2 million for the fourth quarter of 2019. Adjusted EBITDA for the fourth quarter of 2020, which excludes certain non-cash items was $81.5 million, compared to adjusted EBITDA for the fourth quarter of 2019 of $88.3 million.
Voyage revenues for the fourth quarter of 2020 decreased to $186.0 million from $248.6 million in the fourth 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 $140.5 million for the fourth quarter of 2020, compared to $147.5 million for the fourth quarter of 2019. TCE rate for the fourth quarter of 2020 was $13,415 compared to $15,535 for the fourth quarter of 2019.
For the fourth quarters of 2020 and 2019, vessel operating expenses were $46.1 million and $42.2 million, respectively. Vessel operating expenses for the fourth 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 $1.6 million. Our average daily operating expenses per vessel for the fourth quarters of 2020 and 2019 were $4,320 and $3,899, respectively. Excluding non-recurring expenses such as the increased costs due to the COVID-19 pandemic in 2020, our average daily operating expenses per vessel for the fourth quarter of 2020 were $4,169.
General and administrative expenses for the fourth quarters of 2020 and 2019 were $7.6 million and $8.1 million, respectively. The decrease is mainly attributable to the decrease in stock based compensation expense to $0.3 million in the fourth quarter of 2020 from $1.6 million in the fourth quarter of 2019. Vessel management fees for the fourth quarters of 2020 and 2019 were $4.6 million and $4.7 million, respectively. Our average daily net cash general and administrative expenses per vessel (including management fees and excluding stock-based compensation and other non-cash charges) for the fourth quarters of 2020 and 2019 were $1,068 and $939, respectively.
Interest and finance costs net of interest and other income/(loss) for the fourth quarters of 2020 and 2019 were $15.2 million and $21.1 million, respectively. Despite the increase in the weighted average balance of our outstanding indebtedness to $1,618.6 million during the fourth quarter of 2020, from $1,598.9 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 fourth quarter of 2020 compared to the same period in 2019.