Star Bulk reports wider loss in fourth quarter

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 fourth quarter and year ended December 31, 2015.

Financial Highlights

Year
ended
Year
ended
(Expressed in thousands of U.S. dollars, except for daily rates and per share data) Fourth quarter 2015 Fourth quarter 2014 December 31, 2015 December 31, 2014
Total Revenues $64,154 $65,650 $234,286 $147,387
EBITDA (1) ($281,907) $15,615 ($333,776) $41,937
Adjusted EBITDA (1) $6,623 $16,564 $13,375 $43,565
Net income/(loss) ($311,007) ($8,074) ($458,177) ($11,723)
Adjusted Net income / (loss) ($24,563) ($4,680) ($101,629) ($2,265)
Earnings / (loss) per share basic and diluted ($1.42) ($0.08) ($2.34) ($0.20)
Adjusted earnings / (loss) per share basic and diluted ($0.11) ($0.05) ($0.52) ($0.04)
Average Number of Vessels 71.1 50.8 69.4 28.9
Time Charter Equivalent Rate (“TCE”) $7,886 $11,384 $8,063 $12,161
Average daily OPEX per vessel $4,104 $4,704 $4,475 $5,037
Average daily OPEX per vessel (excluding pre-delivery expenses) $3,966 $4,378 $4,233 $4,750
(1) See the table at the back of this release for a reconciliation of EBITDA and Adjusted EBITDA to Net Cash Provided by / (Used in) Operating Activities, which is the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). To derive Adjusted EBITDA we exclude non-cash gains/(losses) and non-recurring items.

Corporate Highlights

  • In February 2016, the Company has agreed to defer the delivery of 5 Newcastlemax vessels from 2016 to 2017 and 2018. 3 vessels were deferred from Q1 2016 to Q1 and Q3 2017 and 2 vessels were deferred from Q1 and Q2 2016 to Q1 2018. Consequently, an amount of $188.0 million of CAPEX originally due in 2016, has been deferred to 2017 and 2018.
  • During the last twelve months, the Company has pushed back the delivery of 16 vessels for 124 months in aggregate, or 8 months per vessel.
  • In February 2016, the Company has agreed to terminate two shipbuilding contracts reducing the newbuilding program of the Company by 4 vessels in total. In addition, the Company has also agreed to adjust its remaining CAPEX obligations for the remaining vessels under construction, resulting in an aggregate benefit of $223.1 million in CAPEX out of which $80.5 million in equity funding requirements.
  • Since December 2015, the Company has agreed to sell 10 vessels with total equity proceeds of $56.0 million after repayment of debt and CAPEX obligations. The vessels will be delivered to their new buyers during the first four months of 2016.
  • Over the last 14 months, the Company has disposed of 23 vessels: 6 newbuilding, 6 modern and 11 old vessels for total equity proceeds of $86.2 million after repayment of debt and CAPEX obligations.
  • On February 17, 2016 the Company announced the formation of a Capesize pool, Capesize Chartering Limited (“CCL”) with BOCIMAR INTERNATIONAL NV, GOLDEN OCEAN GROUP LIMITED and C TRANSPORT HOLDING LTD. Star Bulk has currently 7 vessels in the pool and expects to benefit from the improved scheduling ability that the joint marketing efforts of CCL provide.
  • The Company has pro-actively raised $425.0 million through 2 public equity offerings in January and May of 2015, while in November 2014, it has successfully completed the issuance of $50.0 million Senior Notes due in November 2019.

Petros Pappas, Chief Executive Officer of Star Bulk, commented:

“The last twelve months have proven to be the most challenging market for dry bulk shipping over the last 30 years, with lacklustre demand and persistent oversupply. Amidst such a depressed market, our top priority has been and remains, to improve our liquidity position and strengthen our balance sheet and financial runway.

On the newbuilding front, we have reached agreements with our ship building yards and our lease financing institutions not to take delivery of 4 vessels. In addition, we have agreed to adjust the remaining CAPEX obligations for the remaining vessels under construction, saving in aggregate $223.1 million of CAPEX. We have also agreed to defer $188.0 million of CAPEX obligations for 5 Newcastlemax vessels from 2016 to 2017-2018.

Furthermore, the recently announced sale of 10 vessels will boost our current liquidity position by $56.0 million after taking into account existing indebtedness and future CAPEX obligations. The above initiatives are complemented by $21.0 million savings through cost cutting measures, with our average daily OPEX per vessel for 2015 reduced by 11% y-o-y and our average Net Cash G&A Expenses per vessel reduced by 21.5% over the same period.

Overall, the measures that we have taken to strengthen our balance sheet and improve our liquidity position during the last months, through equity raisings, vessel disposals and cancelations, delivery deferrals, purchase price reductions and cost cutting efforts are over $660 million.

It is encouraging that the ship owners’ response to the challenging market through supply adjustment has been unprecedented. In the first two months of 2016, approximately 9 million dwt has been sold for demolition, compared to 30 million dwt for the full year of 2015. Owners discipline in 2016 and 2017 is key for a sustainable dry bulk recovery.”

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