Star Bulk Reports Improved 2013 3Q Results

MarineLink.com
Tuesday, November 26, 2013
Photo: Star Bulk

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 three and the nine months ended September 30, 2013. Adjusted Net income for the third quarter of 2013 was $2.3 million compared to an adjusted net loss of $3.8 million during the same quarter in 2012. Adjusted Net income for the nine months ended September 30, 2013 was $7.6 million compared to an adjusted net loss of $0.6 million during the same period of the previous year.

Spyros Capralos, President and Chief Executive Officer of Star Bulk, commented, “It is with great pleasure to see the rapid transformation of Star Bulk, to continue for another quarter. On October 7 we successfully completed a follow on offering of 8,050,000 of our common shares, raising approximately $70.8 million, which demonstrated the increasing confidence and support of our Company by investors. Along with our backstopped rights issue completed in July 2013, we have raised a total of approximately $150 million, providing us with the capital needed to implement our growth strategy.

We continue to execute our strategy to expand and upgrade our fleet at a low point in the shipping cycle. During the quarter we increased our newbuilding program to 9 vessels, and on November 18, 2013 we announced the acquisition of two modern Ultramaxes, to be named Star Challenger and Star Fighter, for a total purchase consideration of $58.1 million, with expected deliveries in early December 2013 and January 2014 respectively. As of today, we have ordered or acquired a total of 11 modern and high quality vessels at historically low prices, and we remain committed to successfully implement our contracted fleet expansion and renewal program. In addition, we extended our ship management services to five additional third party vessels, bringing our operational fleet to 24 vessels currently, 15 owned and nine managed.

On the operational side, we are pleased to report positive results for another quarter, as our Adjusted Net Income was $2.3 million for the quarter ended September 30, 2013 compared to an Adjusted Net Loss of $3.8 million for the third quarter of 2012. Going forward, we expect to further improve our operational performance, through our ongoing cost containment efforts, and through the economies of scale from the management of a larger fleet.

Lastly,the recent improvement in freight rates demonstrates the upside potential in the dry bulk industry. Moving past the last years’ abnormal fleet supply growth, we believe that the positive demand fundamentals will be better reflected in freight rates and vessel values, supporting a market recovery to historical levels. Once Star has completed its current expansion phase, we expect the larger and more competitive asset base to substantially increase the company’s cash flow. In this context, the company will examine in the coming years the most appropriate ways to return capital to shareholders that have entrusted us to capitalize on the current opportunity in the dry bulk market.”

Simos Spyrou, Chief Financial Officer of Star Bulk, commented, “We are pleased to report another profitable quarter on an adjusted basis. The financial results of this quarter are inclusive of the scheduled dry docking of two of our vessels, namely Star Aurora and Star Theta, along with the associated expenditure of $1.6 million.

For the third quarter of 2013, our net daily G&A expenses excluding non-cash items, stood at $1,338 per vessel, 7% lower than the same period last year. This is due to the expansion of our third party managed fleet to a total of nine dry bulk vessels during this quarter, while we expect to experience the full positive impact from this activity going forward, mainly through economies of scale and cost synergies.

Following two successful equity capital raises, our cash stands today at $107.8 million. Our total debt stands at $190.7 million, bringing our net debt to $82.9 million. Furthermore, we have already paid a total amount of $72.9 million in the form of advances for the 11 vessels on order or acquired. The above figures are inclusive of the $5.8 million down payment we have made in relation to the acquisition of Star Challenger and Star Fighter announced on November 18, 2013, representing the 10% of their aggregate purchase consideration.

We are currently in active discussions with leading financial institutions to secure commercial debt financing for these vessels. We estimate that our total equity CAPEX requirements for the nine newbuilding and the two secondhand vessels from today until the end of 2014 will be approximately $26 million."

For the third quarter of 2013, total voyage revenues amounted to $17.3 million compared to $18.3 million for the third quarter of 2012. This decrease was mainly attributed to the lower charter rates for some of our vessels and to the lower average number of vessels during the third quarter of 2013 compared to the third quarter of 2012, due to the sale of the Star Sigma in March 2013. Revenues from the management of third party vessels amounted to $0.5 million in the third quarter of 2013, versus $0.1 million in the third quarter of 2012, a 541% increase, due to the increase in the number of third party vessels under our management.

For the third quarter of 2013, operating income amounted to $1.4 million compared to operating loss of $306.8 million for the third quarter of 2012. Net loss for the third quarter of 2013 amounted to $0.2 million or a loss of $0.01 per basic and diluted share, based on 16,807,757 shares, which is the weighted average number of basic and diluted shares. Net loss for the third quarter of 2012 amounted to a loss of $308.7 million, or a loss of $57.15 per share calculated on 5,400,827 shares, which was the weighted average number of basic and diluted shares.
 

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