Star Bulk Carriers Corp. Price & Performance (SBLK)

And I would like to welcome you to our conference call regarding our financial results for the fourth quarter of twenty twenty four.

Before we begin, I kindly ask you to take a moment to read the Safe Harbor statement on Slide number two of our presentation. In today's presentation, we will go through our Q4 results Star Bulk's investment proposition actions taken to create value for our shareholders, cash evolution during the quarter, an update on the Equivalc integration, vessel operations, fleet update, the latest on the ESG front and our views on industry fundamentals before opening up for questions. Let us now turn to Slide number three of the presentation. For a summary of our fourth quarter twenty twenty four highlights. For the fourth quarter twenty twenty four, the company reported the following. Net income amounted to $42,000,000 with adjusted net income of $41,000,000 or $0.35 adjusted earnings per share. Adjusted EBITDA was $104,000,000 for the quarter, On December 2024, we announced an amended our dividend policy alongside a new $100,000,000 share repurchase program. Under this policy, the company may allocate up to 60% of excess cash flow towards dividends with the remainder reserved for opportunistic share buybacks growth initiatives and fleet renewal. For the fourth quarter, the excess cash flow amounted to $17,600,000 and as per our new dividend policy, we declared a dividend per share of $0.09 payable on or about 03/18/2025 and we repurchased 500,000 Star Bulk shares for a total amount of $7,400,000 on an average price of $14.83 per share.

Overall, since December 2024, that we renewed our Ceri Petros program, we have bought back and subsequently canceled 893,000.5 shares for a total cost of $13,500,000 at an average price of $15.08 As of today, the number of shares outstanding is 117,127,531 Our pro form a total cash today stands at $452,000,000.

Meanwhile, our pro form a total debt stands at $1,300,000,000 In February 2025, we received the credit committee approval for a senior secured revolving facility of an amount up to $50,000,000 dollars Finally, we currently have 13 debt free vessels with an aggregate market value of $250,000,000 and we will have raised additional cash of approximately $28,000,000 to be used for fleet renewal and general corporate purposes. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was $16,129 per vessel per day, Our combined daily OpEx and net cash G and A expenses per vessel per day amounted to 6,320 Therefore, our CC less OpEx and cash G and A is around $9,809 per vessel per day, Since the EDPAL transaction was completed on 04/09/2024 until today, the synergies achieved from the integration resulted to an amount approximately $22,000,000 and we have reached the threshold of $50,000,000 in annualized synergies almost twelve months before our original schedule. Slide four provides an overview of the company's capital allocation policy over the last three years and the various levers we have used to strengthen the company increase the intrinsic value of our shares and return capital to shareholders.

Starbucks has been growing the platform through consecutive fleet buyouts by issuing shares at or above NAV. In total, since 2021, we have taken actions of $2,600,000,000 to create value for our shareholders. On the bottom of the page, we show our net debt evolution Our average net debt per vessel has decreased from 12,900,000.0 per vessel to $5,400,000 per vessel, a reduction of more than 50%. As a result of this deleveraging process, our current net debt is covered by the fleet scrap value. Slide five. Graphically illustrates the changes in the company's cash balance during Q4, Star started the quarter $473,000,000 in cash, [indiscernible] generated positive cash flow from operating activities of 76,000,000 After including debt profits and repayments, CapEx payments [indiscernible] ESD and ballast water treatment installations and the third quarter dividend payment we arrived at a cash balance of $441,000,000 at the end of the fourth quarter. I will now pass the floor to our Chief Operating Officer, [indiscernible] for an update on the Eagle Bulk integration and our operational performance, Thank you, Simal. Slide six provides an update on the Eagle integration and synergies. We continue to realize savings on the operating expense front, as we take in house accrual of the quarter and typically facing our third party managers and having centralized procurement on all stores spare parts, bunkers and lubricants.

Other side of technical management was a former Econfleet been consolidating the company's headquarters in Athens allowing the implementation of uniform maintenance protocols and marine safety standards, we reflected [indiscernible] Allotex and G and A savings for the Eagle fleet stood at $16.85 dollars per vessel per day.

In addition, due to our scale in relation with the yards, and service providers, we have reduced significantly in the rational cost on the former $4,400,000 for the quarter. Interest expense savings are accumulated with service in Q2 of twenty twenty four.

Cumulative cost synergies since closing TALA $20,000,000 Our Q4 twenty twenty four synergies start at $4,600,000 implying the run rate of $50,000,000 in annualized synergies that Simos mentioned before. Please turn to Slide seven.

Where we provide an operational update. OpEx for the fourth quarter stood at $5,056 and 5,123 for the full year of 2024.

Webcast G and A expenses were $12.64 dollars per day and $12.84 dollars per day for the same period respectively. In addition, we continue to rank at the top amongst our list [indiscernible] Slide eight, provides a quick update and some guidance around our future driver and the relevant total of holiday. On the bottom of the page, we provide our expected driver expense schedule which for 2025 is estimated 68,000,000 with dry docking of 53 vessels. [indiscernible] we expect to have approximately sixteen forty five days for the same period. We want to take advantage of the current slower market we have arranged the front load drydockings during Q1 twenty twenty five. [indiscernible] we have our CapEx schedule, illustrating our new building CapEx and energy efficiency upgrades. Based on our latest construction schedule, our newbuild vessels are expected to be delivered in Q4 twenty twenty five and the first half of 2026. With these vessels, we have secured $130,000,000 worth of debt refinancing [indiscernible] In RIIO, EXI and CII regulations, we continue investing in upgrading our fleet [indiscernible] aimed in improving our fuel consumption and reducing our environmental food Further enhancing [indiscernible] Regarding energy saving devices retrofit program, have completed 42 installations by the end of twenty twenty four.

We would like to retrofit another 23 vessels with ESDs during 2025.

Please turn to Slide nine for our last page of our fleet. On the vessel sales front, we have been disposing [indiscernible] In 2024, we sold trading vessels for total gross profits of two of two thirty three million dollars reducing our average fleet base and improving overall fleet efficiency. During Q1, we are going to sell more vessels of Bitters and is expected to be delivered to the new owners in Q2 twenty twenty five. Following the rollover of Bagel Bulk, existing chartering contracts, now have a total of 10 chartering vessels We have five term shipping contracts within our shipyard [indiscernible] We operate on the largest global fleet among U. S. And European peers with 155 vessels on a fully diluted basis and an average age of 11.8 years. I will now pass the floor to Archis Carregiobsen, Thanks, Nico. Please turn to Slide 10 where we highlight our continued leverage sheet on the AECO product.

In 2024, Carlos obtained its free call in the carbon [indiscernible] new requirement under the CPP submitted for the first time. Cabot has received a top priority in the protecting blue whales and blue skies second speed reduction program in Southern California and the San Francisco regions within the highest requirement of over 85% of systems traveled at low cost and knowledge. [indiscernible] the startup fleet retains average C plus score in the greenhouse gas rating from Barrochip.

We further improved the company's Asset Analytics ESG risk management tool, twenty eighteen point four indicating low risk and maintaining Starbucks' proposition among U. S. Business Cargo was recognized in the Automated Nuclear Systems Special Rescue Award by reduced cost card [indiscernible] that take 70 people in total. [indiscernible] we actively engaged with our stakeholders to closely monitor [indiscernible] regarding global marketplace measures for the reduction of greenhouse emissions.

We also explored optimal compliance strategies for the fueling human rights and regulation which aim to force on 01/01/2025.

We continue our employee well-being and engagement programs having increased retention rate of our store employees. As well as our corporate social responsibility initiatives. The technology front, we are progressing with the upgrade digital infrastructure and cybersecurity systems [indiscernible] In December 24, [indiscernible] [indiscernible] for accomplishing the Meritor with B. I will now pass the floor to our CEO, Pedro Sapas, for a market update and closing remarks. Thank you, Haris.

Please turn to Slide 11 for a brief update of supply. During 2024, a total of 33,800,000 deadweight was delivered 3,800,000 deadweight was sent to demolition for a net fleet growth of 30,000,000 deadweight represent year on year.

New building order book increased over the last two years but still stands at a relatively low level of 10.5% of the fleet Contracting decreased to $47,300,000 that weighed during 2024 due to limited available CIBD capacity up to twenty twenty building costs and future grid propulsion uncertainty. Vessels above twenty and fifteen years of age spend at 9.824.9% of the fleet while scrap prices have stabilized at relatively elevated levels, along with high dry dock cost should induce demolition of overheads and energy inefficient tunnels during a seasonal downturn.

Moreover, an increasing number of vessels delivered during the 02/2011 [indiscernible] will go through their third special survey during 2025 twenty twenty six and help train effective capacity by approximately 0.5% [indiscernible] speed of the fleet has decreased to a new low of 10.8 knots as reduced earnings high bunker costs and stricter environmental regulations provide a strong incentive to slow Star. Global port congestion was fully normalized during the second half of 2024 following a strong reduction the gradually inflated supply by approximately 6% over the last two years. Congestion presently stands slightly above last year's levels and is expected to follow seasonal trends.

Focusing on Canal inefficiencies, Panama transit of drybulk vessels have almost fully recovered. While the recovery of Red Sea crossings is expected to take time as the cease fire agreement looks fragile and will mainly affect smaller vessel sizes. As a result of the above trends, fleet capacity growth will not exceed 3% per annum during [indiscernible] 2025 and 2026, while effective supply growth might drop below 2% per annum after adjusting for changes in speed congestion, and light bulk of hires.

Let me now turn to Slide 12 for a brief update on demand. According to Clarksons, during 2024, total drybulk trade expanded by 3.3% in tons and 5% in ton miles supported by record high iron ore and minor bulk exports. Canal inefficiencies and favorable weather conditions for Atlantic exporters during the first half of the year inflated ton mile growth but a strong correction in grain trade since July and weaker iron ore trade gradually reversed the positive effect and led to a weaker fourth quarter. Despite weak economic performance, and a struggling property [indiscernible] China's total drybulk imports increased by 19.5% over the last two years supported by post COVID recovery, and strength in infrastructure, manufacturing and exports. Imports to the rest of the world experienced a strong recovery during the last May as lower commodity prices and easing monetary policy helped for raw materials During 2025, the airbag trade is projected to increase by 0.4% in tons and 0.9% in ton miles. With the IMF forecast in global GDP growth at 3.3% China's GDP is projected to slow down to 4.6% from 4.8% in 2024. While EPS GDP should remain stable 6.5%. Headwinds for global trade, but the direct impact on drybulk is relatively small difficult to forecast [indiscernible] as domestic production of iron ore coal and grains increased throughout 2024 while stock stands at high levels, Having said that, Chinese authorities announced strong stimulus measures in September with Star target to boost private consumption helped stabilize the property market and minimize the negative effect of a potential trade war.

Iron ore trade expanded by 5.3% during '20 and is projected to expand by 1% during 2025 Crude steel production in China declined by 1.9% during 2024 but during the fourth quarter showed signs of stabilization increased by 6.1% year over year. Crude steel production in the rest of the world increased 2.1% during 2024 driven by strong growth in India and Turkey.

Iron ore trade will most likely underperform during the first half of twenty twenty five as the La Nina wet weather conditions will lead to a return of seasonal disruptions for and domestic production have increased.

Nevertheless, new iron ore Atlantic mines of high end of 2025 gradually substituting low quality Chinese domestic production and Indian exports positively impacting [indiscernible] Coal trade expanded by 6.5% during '24 and is projected to contract by 2.7% during 2025. Global focus on energy security during the last years inflated coal trade volumes has come primarily from short haul Indonesian exports.

Chinese coal imports increased by 14.5% in 2024 following higher thermal electricity production, strategic decision to leave stockpiles. Indian coal imports were stable during most of 2024, but suffered a strong pullback during the fourth quarter. Domestic production of coal in China and India grew at a higher pace than consumption during the second half being a negative indicator for coal imports during the first half of twenty twenty five.

Having said that, increasingly competitive international coal prices may incentivize Chinese and Indian coal imports during the next few years, while strong demand for from Southeast Asian economies will continue to provide support. Expanded by 2.9% during 2024 and is projected to expand by 2.2% during 2025. Grain exports contracted by 2.5% during the second half of twenty twenty four, driven by a strong reduction of Brazil corn exports to China weakness in Australian and Russian wheat exports with a strong negative effect on tonn miles of smaller sizes During the Fourth Quarter, U. S. Exports recovered during the last quarter, while the Brazilian soybean season is projected to be strong utilizing uncertainty on U. S. China geopolitics.

Creating an incentive to import from Latin America during the second quarter of twenty twenty five.

Furthermore, and potential resolution of the war in Ukraine is viewed as a tailwind for grain trade inflating Black Sea demand for middle sized vessels. Minerals and bulk trade expanded by 4.7% during 2024 and is projected to expand by 2% during 2025. Minor bulk trade has the highest correlation to global GDP growth is supported by improving global macroeconomic fundamentals.

China steel exports reached record high levels during 2024, are expected to pull back due to rising protectionist measures by importing nations, while bauxite exports out of West Africa increased by 13% during 2024 and should continue to generate strong ton miles for Capesize vessels.

As a final comment, we expect the volatile market in 2025 as the aggressive approach of the new U. S. Administration implies changes in international trade patterns, Amid the imposition of tariffs, subsequent retaliation acts. We nevertheless remain cautiously of [indiscernible] for the dry bulk market given the favorable supply picture, stricter environmental regulations and the recent steps by the Chinese government to stimulate the economy. In a period of increased geopolitical uncertainty, we remain focused on actively managing our diverse scrubber fitted fleet to take advantage of emerging market opportunities and to continue creating value for our shareholders. Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have. Thank you. We'll now be conducting a question and answer session. Thank you. Our first question is from Chris Robertson with Deutsche Bank. Please proceed with your question. Hey, good morning everybody and thank you for taking my questions. This might be a question for Nikos, just going back to the cost synergies and savings from the Ewood bulk merger. Guys mentioned you're able to pull forward some of the savings ahead of schedule. So I'm just wondering here how much runway you think we have left in terms of future savings?

Have we reached kind of a floor for OpEx per day from your perspective? And are there any inflationary counter forces that might be a counterbalance to that. Thank you, Chris. I think we have more margin for improvement here. [indiscernible] we're still learning crew ages. I think we have a good way to go to improve these margins further. I will reserve any comments to what we expect, but we think it will be significant. And we're still aligning operating expenses as we're restructuring the entire wave things were done in the past.

So I think we are not there yet realizing the full scale of efficient [indiscernible] Hamish Norton. The cost savings are easy to prove. But there are probably also some revenue synergies, which are very hard to we think they're there. [indiscernible] I guess turning to the market for a moment, you guys talked a little bit about the potential trade war and how it could impact the grain trade here. But can you remind us what is the ton mile advantage, let's say, of Brazilian soybeans versus U. S. And what kind of impact that would have the Chinese diversify and go more heavily into Brazilian crop I do not know offhand, but I would suggest I would suppose it's about 10% to 15% longer ton miles.

Plus the fact that I think that South American ports are probably not as efficient as U. S. Ports, So that might create more congestion Okay, got it. And the last question for me, just as it relates to the fleet renewal program and you guys mentioned divesting the non eco vessels over time, there's quite a number of camps or MAC vessels that kind of fit that age profile.

So just any comments around how the S and P market the appetite for some of those types of vessels is in the current market? Well, prices have fallen, especially more on older vessels vessels. We expect that the market will improve in the next several months. And that it will give us an opportunity to continue to sell older and perhaps less efficient vessels as time goes by.

All right, great. Thank you for taking my questions. I'll turn it over. Thank you. Thank you. Next question is from Omar Nachta with Jefferies. Please proceed with your question. Thank you. Hey guys, good afternoon. Good morning. Just a couple of questions from me, more just on sort of the capital allocation of the updated policy on that. Just first and it's very simple. What would you say is kind of for us the best way to calculate or reconcile the definition of excess cash should we just assume it's basically operating cash flow less your debt payments and scheduled dry docks, is it as simple as that? Hi, Omar. This is Chris Lars.

That's actually pretty accurate. So it's operating cash flow less our debt principal repayments less dry dock expenses for a specific quarter Of course, subject to the $2,100,000 cash threshold we have for each vessel that we have in our fleet. So that should essentially generate what is available for dividends as well as the 40% that we have announced that is for other general corporate purposes.

Okay. Thank you. And then just maybe kind of following up on that part, you mentioned the 40%. So clearly the $0.09 dividend seems to be that 60% of excess cash. Share buybacks look like they in January lined up with that 40% remainder. I would say the first question on that is, is that by design? And then the other question is sort of in the past you had earmarked dividends with 100% of your excess cash, Now we've shifted to 60 Back prior to the latest update to the policy, ship sales funded buybacks that the valuation made sense. Kind of when you think about it going forward, is the plan to keep the buybacks contained within that 40% or up to 100% presumably of ongoing cash or do vessel sales continue to be a source of buyback of that opportunity and accept Well, the answer is we may use 40% or even more of cash to buy back shares But we also may use sales of ships to buy back shares [indiscernible] retaining the flexibility, frankly, to use the cash for the best use we sometimes will be share buybacks and sometimes maybe keeping the cash on hand for possible better opportunities later.

Basically, what we're saying is that we're not going to pay out more than 60% of cash flow.

As a dividend. And Norma, just to give an example, The excess cash that we announced for the fourth quarter was 17,600,000.0 The 60%, which is the maximum distribution available for dividend, corresponds to the $0.09 per share dividend that we announced. The remaining, this is about $10,200,000 The remaining $7,400,000 has been already used to buy within January the 500,000 Starbucks shares out of these excess cars as we said, at $14.83 per share but in the meanwhile, since we announced the new share repurchase program, We have also bought in addition to that an additional 393,000 shares which financed by the vessel sales. So it's a combination of the excess cash flow that we described in the dividend formula and the vessel sale proceeds.

Okay. Well, thank you. That's That's clear. So we have definitely capital returns are not contained with the net excess cash and [indiscernible] Well, good. Well, that's it for me. I'll turn it over. Our next question is from Clement Mullins value investors Please proceed with your question. Good afternoon. You for taking my questions. Most was already being covered, but I wanted to ask about the seven vessels in charter den under long term agreements. Could you confirm whether those seven contracts are at a fixed rate? And secondly, could you talk a bit about what portion of the $26,000,000 in charter expenses for the quarter attributable to those vessels The first part of the question, I can answer. Yes, there are fixed levels They're chartered in at fixed level for the for the initial seven years duration and there are a couple of optional years. But the fixed duration is at the same levels, yes. And on the second part of your question, this is not only the the charter in expense for these seven vessels. We have in addition chartering In the normal course of business, few vessels during the quarter We have three remaining legacy chartering vessels from the Eagle Bulkaf as a company that are redelivered by the June, these three vessels.

So this charter expense that they have in the BNL includes both the long term chartering vessels that we have you've mentioned the seven vessels plus the additional shorter durations.

Makes sense.

And could you provide some color on what portion of the $26,000,000 was actually attributable to the long term charter? About 50%.

All right. That's very helpful. I'll turn it over. You for taking my questions. Thank you. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mr. Pappas for any closing remarks.

Thank you, operator. No further closing remarks. Thank you for listening.

Concludes today's conference call.