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 2023. Unless otherwise indicated or unless the context requires otherwise, all references in this press release to "we," "us," "our," or similar references, mean Star Bulk Carriers Corp. and, where applicable, its consolidated subsidiaries.
Financial Highlights
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“Star Bulk reported Net Income of $44.3 million and a daily TCE of $15,835 for the second quarter of 2023. Given our liquidity position and our dividend policy, the Board of Directors has approved a dividend of $0.40 / share. Through continued dividends and buybacks, the Company has returned over $1 billion to shareholders since 2021.
We continue to opportunistically renew our fleet having agreed to sell five Supramax vessels built in 2012, taking advantage of elevated vessel S&P values. In aggregate, since the beginning of the year, we have sold seven vessels and received insurance proceeds from one vessel for total proceeds net of debt repayments of $153.1 million. This additional cash need not be used for dividends but can be used for general corporate purposes including fleet renewal, debt prepayment and share buybacks.
Global demand for dry bulk commodities continues to be robust and given the improving macro sentiment and favorable supply dynamics, we expect that rates will improve over the second half of the year when trade seasonally strengthens. Star Bulk remains focused on actively managing its fleet to take advantage of market opportunities and continue creating value for its shareholders.”
Recent Developments
Declaration of Dividend
On August 3, 2023, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.40 per share, payable on or about September 7, 2023 to all shareholders of record as of August 22, 2023. The ex-dividend date is expected to be August 21, 2023. Taking into account the share repurchases and the debt prepayments in connection with the changes in our fleet (as previously announced and discussed below) made in 2023, the cash threshold above which we will distribute dividends is set at $408.9 million.
Share Repurchase Program & Shares Outstanding Update
In June 2023, we repurchased 107,349 common shares in open market transactions at a price of $17.65 per share for an aggregate consideration of $1.9 million, pursuant to the $50.0 million share repurchase program announced in May 2023. The repurchased shares were cancelled and removed from our share capital as of the date of this release. As of the date of this release, there is $48.1 million remaining available under the share repurchase program.
As of the date of this release, we have 103,183,510 shares outstanding.
Fleet Update
On May 26, 2023, we agreed to sell the Supramax vessels Star Centaurus, Star Columba, Star Aquila, Star Hercules and Star Cepheus. The first three vessels were delivered to their new owner in July 2023 and it is expected that the remaining two will be delivered in August 2023. In addition, in connection with its agreed sale in March 2023, the vessel Star Polaris was delivered to its new owners on July 7, 2023. Following the delivery to their new owners of the six vessels previously agreed to be sold, the aggregate proceeds net of commissions to be received in Q3 2023 will be $110.7 million. The gain from sale of vessels that will be recognized in Q3 2023 and concerns the 5 Supramax vessels is expected to be approximately $20.0 million in aggregate.
Financing
In May 2023, we signed the SEB $30.0 million Facility as previously announced and an amount of $30.0 million was drawn on May 30, 2023. In July 2023, we signed the Nordea $50.0 million Facility as previously announced and an amount of $50.0 million was drawn on July 12, 2023.
Following the completion of the new refinancings that we performed during 2022 and 2023, and the sale of the 5 Supramax vessels, mentioned above, we will have 9 unlevered vessels.
As of today, following a number of interest rate swaps we have entered into, we have an outstanding total notional amount of $349.3 million under our financing agreements with an average fixed rate of 42 bps and an average maturity of 1.3 years. As of June 30, 2023 the Mark-to-Market value of our outstanding interest rate swaps stood at $20.1 million which are all designated as and qualify for hedge accounting.
Vessel Employment Overview
Time Charter Equivalent Rate (“TCE rate”) is a non-GAAP measure. Please see EXHIBIT I 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.
Second Quarter 2023 and 2022 Results
For the second quarter of 2023, we had a net income of $44.3 million, or $0.43 earnings per share, compared to a net income for the second quarter of 2022 of $200.1 million, or $1.95 earnings per share. Adjusted net income, which excludes certain non-cash items, was $48.5 million, or $0.47 earnings per share, for the second quarter of 2023, compared to an adjusted net income of $204.5 million for the second quarter of 2022, or $2.00 earnings per share.
Net cash provided by operating activities for the second quarter of 2023 was $96.9 million, compared to $239.9 million for the second quarter of 2022. Adjusted EBITDA, which excludes certain non-cash items, was $96.2 million for the second quarter of 2023, compared to $258.3 million for the second quarter of 2022.
Voyage revenues for the second quarter of 2023 decreased to $238.7 million from $417.3 million in the second quarter of 2022 and Time charter equivalent revenues (“TCE Revenues”)1 were $175.6 million for the second quarter of 2023, compared to $337.5 million for the second quarter of 2022. TCE rate for the second quarter of 2023 was $15,835 per day compared to $30,451 per day for the second quarter of 2022 which is indicative of the weaker market conditions prevailing during the recent quarter.
For the second quarters of 2023 and 2022, vessel operating expenses were $56.5 million and $58.4 million, respectively. The decrease is mainly due to the decrease in the average number of vessels in our fleet to 126.4 in the second quarter of 2023 from 128.0 for the corresponding quarter of 2022. Vessel operating expenses for the second quarter of 2023 included additional i) crew expenses related to the increased number and cost of crew changes performed during the period as a result of COVID-19 related restrictions, estimated to be $0.7 million and ii) $1.0 million pre-delivery expenses, due to change of management of certain vessels from third party to in-house. For the second quarter of 2022, the additional COVID-19 related costs and pre-delivery expenses were estimated to be $2.8 million and $1.1 million, respectively.
Drydocking expenses for the second quarters of 2023 and 2022 were $10.9 million and $10.4 million, respectively. During the second quarter of 2023, eleven vessels completed their periodic dry docking surveys while during the corresponding period in 2022, seven vessels completed their periodic dry docking surveys.
General and administrative expenses for the second quarters of 2023 and 2022 were $11.0 million and $17.1 million, respectively. The stock based compensation expense for the second quarter of 2023 decreased to $2.9 million compared to $10.2 million for the corresponding quarter in 2022. Vessel management fees for the second quarter of 2023 decreased to $4.2 million from $5.0 million for the second quarter of 2022, due to the change of management of certain vessels, from third party to in-house, as described above. Our daily net cash general and administrative expenses per vessel (including management fees and excluding share-based compensation and other non-cash charges) for the second quarters of 2023 and 2022 were $1,051 and $1,010, respectively.
Depreciation expense decreased to $35.0 million for the second quarter of 2023 compared to $39.0 million for the corresponding period in 2022. The decrease is primarily driven by the change in the estimated scrap rate per light weight tonnage from $300 to $400 effective January 1, 2023, which resulted in lower depreciation expense by $4.1 million in the second quarter of 2023 together with the decrease in the average number of vessels in our fleet.
Our results for the second quarter of 2023 include a loss on write-down of inventories of $2.6 million in connection with the valuation of the bunkers remaining on board our vessels, as a result of their lower net realizable value compared to their historical cost.
Interest and finance costs for the second quarters of 2023 and 2022 were $16.0 million and $12.2 million, respectively. The driving factor for this increase is the significant increase in variable interest rates, which was partially offset by the positive effect from our interest rate swaps and the decrease in our weighted average outstanding indebtedness.
Interest income and other income/(loss) for the second quarter of 2023 amounted to $3.4 million, compared to an Interest income and other income/(loss), of $(0.2) million in the second quarter of 2022. The increase of interest income is mainly due to higher interest rates earned from our fixed deposits during the second quarter of 2023 and foreign exchange gains recognized in the same period compared to the foreign exchange losses recognized in the second quarter of 2022.
