Star Bulk Carriers Corp., a global shipping company focusing on the transportation of dry bulk cargoes, announced its unaudited financial and operating results for the second quarter of 2021. Unless otherwise indicated or unless the context requires otherwise, all references in this press release to "we," "us," "our," or similar references, mean Star Bulk Carriers Corp. and, where applicable, its consolidated subsidiaries.
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“We are pleased to report a record quarter in profitability for Starbulk, with Q2 2021 Net Income of $124.2 million and daily TCE per vessel across the fleet of $22,927. Our chartering coverage for Q3 is at $28,345 for 65.7% of Q3 available days but as we continue to expect a strong market for Q4, we have kept our fleet mostly spot trading.
Star Bulk continued to generate significant operating cash flow during the quarter, producing $140.5 million, a significant part of which will be returned to shareholders via a $0.70 per share dividend payment. In addition, we continue to strengthen and delever our balance sheet, with net debt decreasing a further $36.2 million after having taken delivery of 3 new vessels and having paid a $30.7 million dividend with respect to Q1 during the quarter.
The record low orderbook, combined with the lack of yard space and future vessel propulsion uncertainty combined with covid related inefficiencies, create a very favorable supply side picture for our industry. Increased government spending due to the synchronized pandemic stimulus programs has led to strong commodity demand globally with robust volumes of iron ore, coal, grains and minor bulks being transported, a trend which we expect will continue, supporting our optimistic view on the future prospects of the dry bulk market.”
Declaration of Dividend
As of June 30, 2021, we owned 128 vessels and our Total Cash Balance was $242.8 million (or $282.8 million pro forma for the expected financing of the last delivered vessels Star Elizabeth and Star Pavlina, as described below, the acquisition of which was fully financed by internal funds). Taking into account the Minimum Cash Balance per Vessel as of June 30, 2021 of $1.65 million, on August 5, 2021, pursuant to our dividend policy, as reported in our press release dated May 19, 2021, our Board of Directors declared a quarterly cash dividend of $0.70 per share payable on or about September 8, 2021 to all shareholders of record as of August 23, 2021. The ex-dividend date is expected to be August 19, 2021.
Share Repurchase Program
On August 5, 2021 our Board of Directors authorized a share repurchase program of up to an aggregate of $50.0 million. The timing and amount of any repurchases will be in the sole discretion of the Company’s management team, and will depend on legal requirements, market conditions, stock price, alternative uses of capital and other factors. Repurchases of common shares may take place in privately negotiated transactions, in open market transactions, including pursuant to Rule 10b-18 of the Exchange Act and/or pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company is not obligated under the terms of the program to repurchase any of its common shares. The repurchase program has no expiration date and may be suspended or terminated by the Company at any time without prior notice. Common shares purchased as part of this program will be cancelled by the Company.
On July 30, 2021, we redeemed all of our outstanding 8.30% Senior Notes due in 2022 for 100% of the outstanding principal amount, or $50.0 million, plus accrued and unpaid interest up to but not including the redemption date.
On June 24, 2021, we entered into an agreement with the National Bank of Greece for a term loan with one drawing in an amount of up to $125.0 million (the “NBG $125.0 million Facility”). On June 28, 2021, we drew down $125.0 million under the NBG $125.0 million Facility to refinance the outstanding amount of $98.5 million under the DNB $310.0 million Facility, as defined in our Annual Report on Form 20-F in respect of the fiscal year ended December 31, 2020 (the “2020 20-F”). The NBG $125.0 million Facility will mature on June 28, 2026 and is secured by first priority mortgages on the same 17 vessels financed under the DNB $310.0 million Facility. Following the repayment of the DNB $310.0 million Facility, we terminated early the existing interest rate swap agreements with DNB Bank ASA and Skandinaviska Enskilda Banken AB, which interest rate swap agreements were originally set to mature in September 2023 and which were hedging the variable interest payments under the DNB $310.0 million Facility, and we entered into a new interest rate swap agreement with the National Bank of Greece with a notional amount of $125.0 million and a fixed rate at 0.65%, which is effective from June 28, 2021 to June 28, 2023.
In June 2021, we received credit committee approval from ING Bank N.V., London Branch, to increase the financing by $40.0 million and to include additional borrowers under the existing ING $170.6 million Facility, as defined in the 2020 20-F (the “ING $210.6 million Facility). The additional financing amount of $40.0 million is available in two tranches, which will be used to finance the recently delivered vessels Star Elizabeth and Star Pavlina, as further described below, the acquisition of which was fully financed by internal funds. The two additional tranches will mature five years after their respective drawdowns. The ING $210.6 million Facility will be secured also by a first priority mortgage on the two additional vessels.
In August 2021 we signed a committed term-sheet with ABN AMRO Bank N.V. for a new loan facility of up to $97.15 million (the “ABN AMRO New Facility”), which will refinance an existing facility provided by Citibank with outstanding amount of $93.5 million as of June 30, 2021. The ABN AMRO New Facility includes a margin over Libor which is 105bps lower than the margin of the existing Citibank facility, thereby saving approx. $0.8 million per year in interest cost and further increasing our average loan maturity.
In August 2021, we received credit committee approval for a new loan syndicated facility led by DNB Bank ASA of up to $107.5 million (the “DNB $107.5 million Facility”), which will refinance the existing debt of eight of our vessels amounting to $88.1 million as of June 30, 2021 spread across three different existing facilities. Once the drawdown is effected, the excess funds will cover part of the funds used for the redemption of the 8.30% Senior Notes due in 2022. The DNB $107.5 million Facility will mature five years from its drawdown and will be secured by a first priority mortgage on the eight financed vessels (Star Polaris, Star Borealis, Star Electra, Star Luna, Star Astrid, Star Genesis, Star Monica and Star Glory). The DNB $107.5 million Facility includes a margin over U.S. LIBOR which is on average approximately 109bps lower than the average margin of the existing facilities, thereby saving approximately $0.6 million per year in interest cost and further increasing the average loan maturity of the financing of these eight vessels by approximately two years.
In August 2021, we received credit committee approval from Crédit Agricole Corporate and Investment Bank for a new loan facility of up to $62.0 million (the “Credit Agricole $62.0 million Facility”), which will refinance the existing debt of five of our vessels amounting to $53.4 million as of June 30, 2021. The Credit Agricole $62.0 million Facility will mature five years from its drawdown and will be secured by a first priority mortgage on the five financed vessels (Star Despoina, Star Piera, Stardust, Star Sky and Star Martha). The Credit Agricole $62.0 million Facility includes a margin over U.S. LIBOR which is on average approximately 102bps lower than the average margin of the existing facilities, thereby saving approximately $0.35 million per year in interest cost and further increasing the average loan maturity of the financing of these five vessels by approximately two years.
The above mentioned savings in annual interest costs are in addition to the $4.15 million savings in annual interest costs from the redemption of the 8.30% Senior Notes.
On May 25, 2021 and June 16, 2021, we took delivery of the Star Elizabeth (ex-YZJ2015-2263) and the Star Pavlina (ex-YZJ2015-2264), respectively, or the Kamsarmax Resale Vessels.
Shares Outstanding Update:
As of August 5, 2021, we have not sold any common shares under our recently launched at-the-market (ATM) Programs and our outstanding number of shares is 102,239,716.
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. 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, including the new Delta variant of COVID-19, which appears to be the most transmissible variant to date, 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.
Vessel Employment Overview
For the second quarter of 2021 our TCE rate was:
Capesize / Newcastlemax Vessels: $30,106 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $20,930 per day.
Ultramax / Supramax Vessels: $17,469 per day.
For the first half of 2021 our TCE rate was:
Capesize / Newcastlemax Vessels: $24,281 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $17,987 per day.
Ultramax / Supramax Vessels: $15,675 per day.
Amounts shown throughout the press release and variations in period–on–period comparisons are derived from the actual unaudited numbers in our books and records. Reference to per share figures below are based on 102,038,883 and 95,797,142 weighted average diluted shares for the second quarter of 2021 and 2020, respectively.
Second Quarter 2021 and 2020 Results
For the second quarter of 2021, we had a net income of $124.2 million, or $1.22 earnings per share, compared to a net loss for the second quarter of 2020 of $44.1 million, or $0.46 loss per share.
Adjusted net income, which excludes certain non-cash items, was $128.8 million, or $1.26 earnings per share, for the second quarter of 2021, compared to an adjusted net loss for the second quarter of 2020 of $18.0 million, or $0.19 loss per share.
Net cash provided by operating activities for the second quarter of 2021 was $140.5 million, compared to net cash provided by operating activities of $23.4 million for the second quarter of 2020. Adjusted EBITDA, which excludes certain non-cash items, was $182.5 million for the second quarter of 2021, compared to adjusted EBITDA of $35.2 million for the second quarter of 2020.
Voyage revenues for the second quarter of 2021 increased to $311.4 million from $146.1 million in the second quarter of 2020 which is indicative of the improved market conditions prevailing during the current period. Time charter equivalent revenues (“TCE Revenues”) (please see the table at the end of this release for the calculation of the TCE Revenues) were $254.9 million for the second quarter of 2021, compared to $96.9 million for the second quarter of 2020. TCE rate for the second quarter of 2021 was $22,927 compared to $9,402 for the second quarter of 2020.
For the second quarters of 2021 and 2020, vessel operating expenses were $53.0 million and $42.5 million, respectively. Vessel operating expenses for the second quarter of 2021 included pre-delivery and pre-joining expenses of $1.9 million and additional crew expenses related to the increased number of crew changes performed during the period as a result of COVID-19 restrictions imposed during 2020 estimated to be $1.7 million. Our daily operating expenses per vessel for the second quarters of 2021 and 2020 were $4,618 and $4,027, respectively. Excluding non-recurring expenses such as pre-delivery and pre-joining expenses and the increased costs due to the COVID-19 pandemic in 2021 (nil in 2020), our daily operating expenses per vessel for the second quarter of 2021 were $4,307.
General and administrative expenses for the second quarters of 2021 and 2020 were $10.1 million and $9.0 million, respectively. Vessel management fees for the second quarters of 2021 and 2020 were $4.9 million and $4.6 million, respectively. Our daily net cash general and administrative expenses per vessel (including management fees and excluding stock-based compensation and other non-cash charges) for the second quarters of 2021 and 2020 were $1,099 and $1,035, respectively.
Interest and finance costs net of interest and other income/(loss) for the second quarters of 2021 and 2020 were $15.1 million and $17.8 million, respectively. Despite the increase in the weighted average balance of our outstanding indebtedness to $1,644.3 million during the second quarter of 2021, from $1,601.4 million for the same period in 2020, 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 in 2020 and 2021 and the lower LIBOR rates during the second quarter of 2021 compared to the same period in 2020.