Star Bulk Carriers (SBLK) 17 Nov 222022 Q3 Earnings call transcript

Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers Conference Call on the Third Quarter 2022 Financial Results.

We have with us Mr. Petros Pappas, Chief Executive Officer; Mr. Hamish Norton, President; Mr. Simos Spyrou; and Mr. Officers; Financial Co-Chief Begleris, Mr. Christos Operating Nicos Mrs. and Rescos, Chief Officer; company. Officer Charis Strategy the Plakantonaki, Chief of [Operator advise I today. Instructions] must being conference recorded is you that this now your one We floor Mr. today, of the pass speakers to ahead, go Spyrou, please sir.

you, for Bulk and to the of Star our third Thank Officer call regarding welcome like Carriers, I'm quarter Co-Chief I Simos Financial operator. our of to conference would you Spyrou, financial XXXX. results

industry on QX ask kindly the during fuel we before questions. for our to #X a spread the balance moment opening presentation. I read on today's go statement evolution of operations, the Before to vessel we on on Safe latest the Harbor update In and fundamentals take you Slide quarter, and front our overview the up results, of sheet, will an begin, ESG presentation, an through cost our views our

presentation third million for at Let of net for #X adjusted us summary million the and $X.XX million $XXX.X quarter Net income Adjusted EBITDA income earnings. a share $XXX.X turn the highlights. adjusted of our million to now the quarter. to $XXX.X XXXX or for per of amounted third was Slide quarter

illustrates share policy, December cumulative as performance we on payable the the strength the highlights dry graph the the of existing the page bulk XXXX. For of a dividend robust on per over third XX The per about our of XX, declared quarter, platform dividend which months, market. $X.XX a or in the last bottom

million. adjusted is $X.XX and $XXX income months net is EBITDA XX at adjusted at last Our billion,

shareholders. $XXX of we cumulative million period, a to same dividend the $X.XX per Over returned share or our have

vessel daily quarter. page, see our for of you On the figures right the the top will per

at $XX,XXX Our time day. vessel per equivalent rate per charter was

expenses per vessel at less our combined G&A vessel daily amounted net day. expenses, per $X,XXX Therefore, operating per expenses stands $XX,XXX per day per TCE to day. cash G&A less operating and Our expenses

remaining include XXXX following of costs. substantial realizable such third million, our the results compared the of quarter $XX.X from Our the net a board of the there bunker's resulting decrease inventories bunkers net write-down value vessels loss the for value. on is the of on their of and of the lower value our in at Usually, bunkers. acquisition between the price value no We to inventories volatility of realizable valuation historical

the is of from decrease and water for to generated meaningful to coverage continued quarter. we periods $XXX.X Slide second next in the be bunker dividend operating our with systems, presents of Slide performance. payment, CapEx cash of X commercial quarter million activities cannot treatment earnings. due end recognized $XXX bridge for strong equivalents be repayments, the flow the on forma and for ballast third flow cash graphically the started quarter. loss $XXX.X fleet payments third X balance However, No. quarter. at debt are the of it the We pro the extent million cash at including prices After and prudent in recovered million cash the the we of quarter balance and the to believe illustrates cash positive a

at Looking latest coverage of quarter vessel the fleet-wide is the on $XX,XXX of at available our based day. at pictures the fourth XX% per days XXXX, per

our day, Please per of now XX% strength the $XX,XXX max and day terms vessel. per balance vessel have vessels at per continued XX% from our our $XX,XXX Capesize fixed we XX% our Ultramax/Supramax at In size comes Slide segmentation, of #X, turn where per day to post-Panamax vessels vessels highlight of we of sheet. $XX,XXX of at per

our stands at today million. $XXX at total liquidity stands Meanwhile, total billion. debt approximately forma pro Our $X.XX

our debt agreed significantly we year, repayments of costs interest our approximately regular margins. that by result million lower as per a and annual achieving approximately reduced annum $XXX have decreased million $X million totaling refinancing the by During $XX.X

months at million. $XXX Our is next amortization XX

market value we increasing at vessels have $XXX notional swaps $XXX with approximately an interest for average unlevered rate million an basis and environment, of remaining years. XXXX. XX have of an of We maturity no approximately X.X with outstanding until rate XX points debt million, an of average interest maturities fixed rate In

As mark-to-market was million. of these of the $XX.X October XX, swaps value at

Yes. And it's Hamish Norton.

the obvious, just which anything It the happen this would today, the while point. interject here, it's should and you imply quarter pretty curve just few how will liquidity next dividend into dry the a it for today, point be an at market, on bulk Again, if over weeks Let turns the months. the FFA can is in that's obvious plus lower. -- that depend somewhat FFA our fourth look me reality curve

And Rescos, performance. I the to floor our now operational talk COO, to our pass will Nicos about

Bulk Thank Star HSFO how fuel you, widening Slide Simos. the In benefiting we is spread between illustrate X, from VLSFO. of and a

system with $XXX QX hovers Singapore average metric The and of HiX XX% gained achieved At ton. we the per our utilization our was Indicatively, XXX,XXX approximately current per surpassed levels, board currently contribute profitability. $XXX where and of spread around meaningfully defined spread fuel average on annual healthy fitted our operating prices during scrubbers to versus vessel during QX metric the demand. ton XXX having have availability at HiX scrubbers spread XX.X%. We days was

right Despite a vessel maintain our $XXX vessel for the same lowest excluding adverse Operating have the we for of pressures group HSFO the scale consumption operational in-house per our of impact of very for turn per where day the table enables XXX,XXX approximately $X,XXX and peers. to per a the the were a bottom as of Please position expenses vessels. Slide the which our based at competitive cost per and base present our illustrates XXXX. expenses day top provide on On continued cash of expenses on per combination annum to expenses, that Net inflationary period. operator direct COVID-related OpEx, QX and on G&A was us amongst cost impact nonrecurring an management our benefit have tons the sustain update. X, bunker line scrubber-fitted that slide, we can

operating expenses to We fourth the quarter. expect during our normalize

In continue the safety the peers future and we to Slide provides bulk around total Rightship offhire ballast score. fleet water relevant amongst addition, some at #X guidance and top in installation snapshot and dry our of terms a listed expenses treatment days. rate

the ballast a are We our this with of the quarter end nearing fleet year. fourth completion fitted XX% of by with installation our water of system the program

same hand dry XXXX period. million retrofit Chief expect XXX yard to with the planning, floor dock offhire numbers vessel vessel days current our Charis I'll approximately now are $X.X The of Officer, on Strategy above Plakantonaki, total, $XX drive and expected ESG expense XX million with CapEx. our an In to the capacity. for have for the based for we vessels, efforts. towards estimated Our update another is estimates our calendar employment of dry docking at a around on and upgrade

Thank you, highlight we on Nicos. front. Slide Please latest ESG where our to XX, the turn actions

SASB fourth in established report account a from ESG Compact the report disclosures company's disclosing prepared Core NASDAQ its performance consecutive have Reporting option, indicators. Standards Sustainability Bulk on principles. Marine we and ESG-related strategy, The key the year, and on Accounting transportation, external E&Y progress been provides has comprehensive the In guidelines For annual Star accordance which specific received with objectives performance. GRI company's indicators, the Stations Standards of transparent GRI for the assurance United and and Global limited

engaged stakeholders, the presented as We report. internal also prioritize external, in and and the have Bulk’s identify Star company's both to ESG certification

working the update Petros a programs. and years COVID-XX three On and of front, employee closing mental enhanced schemes, remarks. implementing the an engagement our for CEO, pandemic, to including and will his floor the flexible market following plan, I people's support, company is now employee Papas, pass health the well-being

to Thank for of you, a supply. brief turn Slide update Charis. Please XX

control. XX with until future have and to just be record on XX X.X% X.X bulk was capacity XX with XXXX, million X.X% low XXXX, reported of deadweight During tonnage Uncertainty a firm a along an million under was the fuel-efficient yard and overage year-to-date. net at fleet book million of ship stand downturns. -- in of The ship recent or growth new deadweight seen and of prices attractive scrap for limited keep order has costs orders XX.X total Furthermore, the The levels orders first elevated the sent fuel deadweight helped supply building tonnage and propulsion of demolition of X.X% high decreased fleet continues million and have an months inefficient deadweight make best during and demolition of year-to-date we to could the a to history year-over-year. dry shipping. outlook seasonal option delivered as attractive

fleet because bulk come will forward average high and We the knots record to bunker the The expect dry intensify of freight of year-over-year decreased regulations this XXXX steaming XX.X when to rates. into force. lower by X.X% speed as EEXI-CII costs of has

and and to inflate ongoing crisis. incentivize costs savings. will We remain and subsequently short in steaming continue and on expect This experienced as of bunker the correction prices inflated upcoming medium scrubber along environmental jurisdictions with a regulations, to oil situation, to the term energy Russian to has ports. the especially trading strong Nevertheless, congestion congestion for helped pre-COVID vessel seasonal levels, in quarters patterns debottleneck pandemic-related smaller arrivals global due above port easing bottlenecks. remains and changes used ports types during sanctions new with slow oil and the two Chinese last

fleet growth during to and result X% is annum a X.X% the approximately XXXX and between As net end per projected unlikely XXXX above trends, at is to exceed of up XXXX.

continued commodity in and of strict inflation is contract global to turn ton been by total According dollar, bulk rate to COVID a trade economic affect imports Let's Slide Ukraine, update zero Dry XXXX multi-decade war activity of prices, policy the as a X.X% during outlook Clarksons, the high by to has to brief weaker linked year strong surging this and XX Chinese for projected economic in demand. interest affected the dry trade strong decrease U.S. miles. to hikes. bulk now

is forecast During XXXX, reopening We is zero GDP COVID the benefit of bulk by of to standing strong strict marginally increase X.X% minor trade by trade presently in the bulk of have longer patterns dry global worldwide and in X.X%. and by expected X.X% to during miles. positive bulk with miles at contract to will restocking and coal, should Iron IMF the continue shift a for dry gradual that the X.X% the relaxation Chinese Furthermore, growth XXXX to grain demand routes effect increase haul policy ton economy the believe ore projected to and XXXX. for market. increased ton need

has has steel the Russia over of demand by high X.X% gone of and driven through the drop decreased energy-intensive XXXX. to coal stockpiles capacity record nine coal prices ton real months, situation X% industry and raw market, miles. next their dependent X.X% estate Atlantic in trade be Throughout have During from China July stocks, and strict year, buyers negative to increased XXXX, exporting other coal substituting major on policy from on and lower and have the world with to is that imports. limited the expand and impact China, reduce Asian high by recovered, domestic last are output focus Nevertheless, levels slowdown the sanctions and weak the security zero domestic indicator XXXX. activity arc a last India to during prices producers to help while prices production on less the major gas haul rest coal a is electric have ore by by prices Global Russian European Russia strong high XXXX Coal Chinese high The for first X% year, India on and since a is over production cargoes, imports. record pushed a years. export outlook quarters. positive Moreover, due significantly upgraded longer gradually importers order in COVID countries, by for and a material production of imports and and the benefiting crude during decreased energy margins, months China in provide Chinese more economic while profit expected worldwide. the in raise steel have furnaces trade iron the

X.X% relatively However, XXXX. contract low electricity at is to expand trade stand by growing Grain at to production also high XXXX is expected and while thermal pace, X.X% levels. during by during stockpiles still

of strong Over the to and last exports due corridor partial Brazilian agreement. improved Ukrainian have back grain a of the exports corn months, resumption fundamentals grain trade on the

grain recovery However, strong trade in trade expand would XXXX. ship Moreover, long by and and a affected soybean U.S. of food highest smaller soybean moderating sales while is slowdown is outstanding term. container Increased geared smaller Minor exports economic support Ukrainian expected high medium expected and the XXXX global global Minor of the export a volumes in record season continues market support correlation trade security and sizes vessels and GDP X.X% from has the harvest ton focus with on correction farmers. to the trade Brazilian bulk to provided the X.X% during growth to bulk during volumes. of the XXXX. is has that miles

shortages price to bauxite the inflate with arbitrage and other West products up hand, exports year-to-date positive in Atlantic. to the steel of incentivize expanding to the continue On China by continue Atlantic miles ton exports Moreover, to XX%. a Africa Pacific

high yard supply increased and take costs and The bulk favorable for market record picture positive, outlook advantage. our bunker combined well lack space fleet book of remains dry for our the side order Environmental a scrubber-fitted inefficiencies. positioned Finally, our regulations low to create is with industry.

side, the answer expected longer to Without infrastructure and Chinese now year. trade earnings of operator questions patterns investments to the support more I have. increased any over may are demand economy will distances you changes floor the pass reopening gradual your the next of of a taking to On time, any to

comes [Operator the of Instructions] first from line Deutsche with Mehrotra Amit question Our Bank.

with acquisition I to start wanted opportunities.

ships willing many sellers is I and is I think the today, these done attract which in probably you've liquidity those a are Bulk that? lot has you Are deals speaks of XX actually accept of actually really been a like where weaker way, remarkable, growth I have actually, the come think I to you've shares to about the been by but of any far pretty XX, to public by, north which the equity think the difficult a -- think price very trading, is it if to that's where know opportunities strength the Star able lot. points platform. sellers seeing cycle the I the that come of in at cases, of

a additional be And China, you to I'd you're opportunity for deals tough bulk just tape so in curious a in opportunity there's of recently, And do been seeing of has that? if general. like window can window where a maybe if for tough tape comment what on dry a that,

Yes. Sure, Amit.

to. much warning helpful very some not seeing get right anything We're see in strong on we’ll able necessarily a as deals weak. market we sellers sellers As when be come to of that trying much strong, had market. these then expectations. deals. small up in could it But when successful we the the things now. deals out, very done were you the pointed anything pay might be deals and lot closing focused in these go without market was of relatively much got hard and we as close a bunch that get the If higher And potential and M&A attention into a We're to market nervous, period because good became we weak a a close weak market, to

we don't is Amit, I value do deliveries this new buildings any we below not far not asset Also, as fuels Petros. to a think where issue as clear They're for buy There's assume vessels. intend have to I picture stock green going this XXXX. expensive. net And is and forward. engines. -- new order going will of We Also

for could. ones me, quick more of couple a just And if I

-- strategy at lot to bit, of which in trying it's level a there kind a your actually is now the stock, the the you was a bit that sort stock were into bit. back to one there's guess obviously a the even pretty the with capital strategy languishing little bit moment levels? more decent whether head commitment capital, uses stock little dividends -- question So dividend to get the has because the just you've I the the allocation a for sustainable. of of quite commitment past temporarily little NAV, volatile a below the for getting that done What's is But been with I'm that the these credit are stock hopefully and there and buying

idea to we it, mean gets it have to I how we've I continue will are. will we say actually say it until you Amit, said Well, and before, continue face blue. our stubborn we mean, no and

to it's large committed but a the are have we policy just not shareholding management dividend our dividends. the We committed, and and directors their want who's among directors

So I that. think you can count on

Yes. Last quick one for me.

I refinancing, you busy come down that. there new below think might has missed obviously -- debt Christos give might but can kind mentioned all-in now it. think I quite might a number? with the you in amortization of been have the Simos, mentioned the the that you XX,XXX know script, obviously but -- breakeven? XX,XXX I is, Question what's little What doing has It's bit. have I us the new is the have that you or

And Amit, fleet-wide. the provision includes dry docks well. XX,XXX this the breakevens also are around a as for

just add, is mean the of XX% at that our basis XX,XXX average points. swaps have because have Christos. reason rate said of this I And we interest XX I we to mean, is an for debt

the because of on of swaps losing essentially, rate tens without therefore, a we refinancings. affected and the XXXX done were the not Now swaps, were back those by remaining level slightly that those rate and in overall to XX% this approximately managed we to the the good saving refinance have rate. $XXX the debt up, close What pushes for last, therefore, the debt, interest Bulk of that the in our is years, XX% did cost majority two is essentially, of of Star lot millions holding spread our breakeven of is in base interest million, the total

the with question Jefferies. of comes Nokta line Omar next from Our

to you maybe Star Amit's a the at thinking question how about and maybe first the you're just wanted big had. Bulks positioning discussion I to think wanted picture Just guys moment. up on follow about

you plenty have scrubbers, the obviously, mass. -- You of earnings cash outsized giving critical

you, been wanted business to continuing the Any here seeing or And ask changes on slowdown here so about strategically or we've for how are just given financially? the and you thinking guys potentially near the think recently term.

a Well, could of few owners the moving let some me a look, may source ship the nervous then maybe nervous market and say But a might words weaker, we where Pappas say. that have into to deals. words be to few lead ship and is Mr. And owners. are period

try we we're to And debt until will for as we've been maturities I so deals we've out to that XXXX refinance much able as happy said, that as very get maturities. done, the refinanced earliest pushed

comfortable, cash dividend, we're So level, frankly, is the with several build we've pretty value with minimum asset debt we which pay our course, buffer, quite before we're large. from the comfortable, X/X able gets to pretty and which level paid. is the up cash cash our whenever of around been And dividend weeks of frankly, for

as gets actually never low cash as reserve. theoretical our the So cash

So take we're pretty we can weakness. advantage Hopefully, with happy of the situation.

Yes. XXX critical under And on business. bulk the vessels have dry every with sector mass management, of we

great we're no hurry. in So

if is it. comes, any look as M&A it And said is activity project will obviously right we always Now at carefully. will, of we opportunity, course, at previously, there very look If we amazing there. the

of to whether stage that, or has a central has exploring other the focused efficiency with period, just in are taking to this on ways maybe fleet, we whether are this fuel for efficiency as decarbonization. And quite do add this to our regulations environmental existing improving

our on now So agenda. also core of and top central this is right

it. helpful. you to equity issue earlier guess so. I do so, That's you NAV maybe assets. below you acquiring about wouldn't to were do made comment I if And a think And Got Petros, had

NAV? what to shares for of paying you have valuation the that, cash to premium below from you pay cash component growth your does Would if to a Or about vessel? a were come whole if thinking Just about to. were commit

transaction. the to trading it interest our NAV is would a an shareholders' below significant but be it that, reason the deal cash awfully use very to It have extent. in is imagine so be the below -- that cash trading buy share vessel the we'd vessels exceptional to with I good If have to compelling use any could would NAV, to with share

And me, final Cool. then Okay. Hamish. one for

wondering, always no, I think did I buyback. quarter, the the not maybe I ATM noticed about think this in ATM NAV the at here? just of when mode? you of and you nor And you at in play discount the we a I more still the the feel Or think cash buyback. then today. think tap the Is sort I into preservation are like buyback

see proceeds an that. with that opportunity back sales definitely we way we represents vessel serious of Look, a a would shares in arbitrage, do buy if to the

Okay.

triggering the buyback so necessarily committed yes, that's would assets spread, selling so because cash not come capturing And to... flow ongoing and from from a

want Correct. the to dividend. dividend. the defend flow operating We We want to cash use for

of with Ben Our Nolan next from question comes Stifel. the line

had interest not about given kind on that reasonable and around assets is debt in Hamish, majority Yes. for interest Obviously, Great. Ben. changes going rates? some rates question leverage, actually, just Or Is debt bands actually increasing for This you business about the kind just giving forward, is potentially a hedge of of that of talk of around but around it had level is of can kind X/X were sort the there. board. you Frank changing the Galanti there's I given of some with of X costs interest rates, a the of across leverage the uncertainty? mentioned debt.

debt Well, all. don't single so any low sort But the in to basically, to XX% then to the of is went way service. go at XX% in debt not want interest if XX%, rates with have difficult they rates you the interest XXXXs, digits, the

LIBOR at yes, point refinancing. LIBOR So with to so. comfortable. to we're our at quite spread in And And of is I XX% actually our currently is really you debt also, X%], should [X%, low equal mind think the keep swapped that this

Christos? So,

target only across spread is We essentially fleet. next It's some have senior don't X%, junior potentially debt. debt may that have, year. more average the any Yes, at we refinancings

down going is spread further. to as as So come even the concerned, hopefully, far it's

down if the debt an it's opportunity with So very -- comfortable to we've got. while the turn We're attractive we amount debt transaction. when never reduce of would

next line with Mehrotra Deutsche And our comes Bank. the from of Amit question

company, always So more interesting one too, thinking starts is get IMO, the I that think of vessels. is to selling if talking vessels opportunity then the calculation? remind may is, I starting value in to given of raise there's an I to and at make that never talk the but you we value about, me, ship think perspective sell any there's scope kind the growing if capital, difficult like the implied a the than fleet we're And with XXXX have I harder an that about the greater IMO sell the things And context? is and acquisitions, what's don't that older vessels but from of that grading I've emissions in sure. know criteria it just excluded dividend been if about wanted time XXXX. from is

Yes.

to sell the might, other the that So at excluded is from and If to dividend it have use stock. we some look, IMO make your want buy colors. regulations to maybe year, these standard, that but talk future, of very a will vessels, making older about of we vessels trying we let's through IMO But are emissions standards. to question for bunch terms are with And doing trouble some of sense of our a the very to things last that least of vessels older that some that we're sell answer things them creative back cash be But you vessels the first. creative, doing. in in Nicos might could buy with flying them are we actually sure get

are whether energy team have or that but I to or we extending about here on talk by technologies the much basically think existing is is low we're cannot technology, whether now. accelerating people and there's deploying that the doing, basically, vessels it still optimizing that a everything testing big of discuss working the I paints, we time that span friction the fleet and life whether all read mean do of other docks dry efficiency we that's we actually new about life

to installing We vessel first be are carbon going January. equipment a in capture on now our

in impact prices disassociate simply and basically, of trying where index having industry the are we're to instead we not performance will foresee for speed of IMO the coming of the are vessels fleet to we vessels the our on do for this until existing combining for going any make CII how the at when any So part the the the least regulation. of see operating and to of years. market and issues majority XXXX, a CII The the ships, decision next

I Right. my if follow-up, could. And last then

sitting Chinese were and obviously spot of years XX. coming So out quarter. the time moving first in here we're the away Year, started up of Several market November on New and typically seasonally that's mean a from in that weak you the period ago, contracting kind over period. I

now. chartering are don't think temporary like the to right I are as that in baseline kind first where know of the strategy first year fixtures if the there's into can you there's achieve that we you maybe quarter So a quarter. bleeding just even that and or it relates some in pivot

a the in somewhere whether were strategy, fell started July, had able using our September. spot the not early for fixing levels. much state then there, dropping option like year August, And forward year. higher follow we to was we market unfortunately, lower at or this around fix The we at Amit, much market levels could May. relatively And which

materialized. therefore, the quarter QX. a QX This to the expecting for there. been spot, And we coverage is not levels, better is higher So stay earned decided during

over the [Operator for Instructions] And are there like I'll looks management closing call to it remarks. Therefore, hand back no further questions.

No very operator. further remarks, Thank much. you

your this disconnect conference, may you participation. today's you and concludes this And time. Thank for