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Operator
Thank you for standing by, ladies and gentlemen, and welcome to the Starbuck Careers Conference call on the first quarter of 2022 financial results. We have with us Mr. Petros Papas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Nikos Reskos, Chief Operating Officer, Mr. Simos Spiro, and Mr. Christos Begleris, Co-Chief Financial Officer's and Charisse Blanco-Tanaki, Chief Strategy Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, please press the star and 1 in your telephone keypad and wait for the automated message advising line is open. I must advise you that this conference is being recorded. We now pass the floor to one of your speakers today, Mr. Seamus Spiro. Please go ahead, sir.
Petros Papas
Thank you, operator. I'm Simo Spirou, co-chief financial officer of Starbuck Carriers, and I would like to welcome you to our conference call regarding our financial results for the first quarter of 2022. 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 Q1 results, cash evolution during the quarter, a walkthrough of our dividend policy, an overview of our balance sheet, an operational update, an ESG update, and the latest industry fundamentals before opening up for questions. Let us now turn to slide number three of the presentation for a summary of our first quarter 2022 highlights. The company reported the strongest first quarter result in Starbucks history. Net income for the first quarter amounted to 170.4 million, and adjusted net income of 175.6 million, or 1.72 adjusted earnings per share. Adjusted EBITDA was at 225.9 million for the quarter. For the first quarter, as per our existing dividend policy, we declared a dividend per share of $1.65, payable on June 16, 2022. With the graph on the bottom of the page, we want to highlight the cumulative performance over the last 12 months, which illustrates the strength of the platform in a rising dry bulk market. Our last 12 months adjusted EBITDA is at 1.04 billion and adjusted net income of 831 million. At the same time, we have returned a cumulative dividend of 576 million to our shareholders. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was $27,405 per vessel per day. Our combined daily operating expenses and net cost GNA expenses per vessel per day amounted to $5,812. Therefore, our TCE less OPEX and GNA is around $21,600 per day per vessel. Looking at the similar fleet-wide adjusted TCE, less operating expenses and GNA figure on a full-year basis, Starbuck has been able to significantly outperform the adjusted peer average by more than $5,000 per day per vessel, implying an annual EBTA overperformance of more than $230 million on a 128-vessel fleet, and demonstrating how assets are efficiently utilized in the Starbuck platform. Looking at chartering coverage for the second quarter of 2022, we have covered 74% of our fleet's available days at a daily rate of $29,760 per day per vessel. Slide four. graphically illustrates the changes in the company's cash balance during the first quarter of 2022. We started the quarter with $473.3 million in cash and generated meaningful positive cash flow from operating activities of $229.2 million due to the strong freight market. After including debt proceeds and repayments, CAPEX payments for ballast water treatment systems installments, and the fourth quarter dividend payment, we arrived at a cash balance of $444 million at the end of the quarter. Slide five has a walkthrough of our dividend policy with an example for the dividend calculation for the first quarter of 2022 of $1.65 per share. As of March 31, 2022, we owned 128 vessels and our total cash balance was at $440 million. With a minimum cash balance per vessel as of March 31 of $2.1 million per vessel, on May 24, 2022, pursuant to our dividend policy, our board of directors declared a quarterly cash dividend of $1.65 per share payable on June 16 to all shareholders of record as of June 3, 2022. The ex-dividend date is expected to be June 2, 2022. In the last 12 months, our company has distributed dividends of $5.6 per share. We should note here that our dividend policy, as announced, is heavily dependent on changes in working capital. In a rising freight and bankers market, our receivables and our inventories are increasing, and this affecting our working capital. Given recent rally in the market and increase in banker prices, we currently estimate that our working capital will increase by approximately 40 million in the second quarter of 2022, negatively affecting our cash balance or quarter end and our dividend for the quarter by approximately 40 cents per share. This is a timing difference driven by the difference between when earnings are recognized and when cash comes in, and it will reverse at some point in the future. Please turn now to slide six, where we highlight the continued strength of our balance sheet. Our total cost today stands at $533 million. Our total debt stands at approximately $1.47 billion. Our next 12-month amortization is approximately $200 million. We have six unlevered vessels and no debt maturities until the end of the third quarter of 2023. We have fixed approximately 55% of our floating interest rate exposure to LIBOR at an average rate of 45 basis points. In slide 7, we demonstrate the inherent operating leverage and cash flow potential of the company, and the illustrative free cash flow per share, as well as the potential cash flow yield. With approximately 46,700 fleet available days per year, based on the current 2022 FFA care, Starbuck will produce $6.1 of free cash flow per share and a yield of 19%. I will now pass the floor to our COO, Nikos Reskos, for an update on our operational performance. Thank you, Simo.
Simo Spirou
Please turn to slide 8, where we provide an operational update. OPEX excluding non-recurring expenses was $4,747 per vessel per day for Q1 2022. Net cash G&A expenses were $1,065 per vessel per day for the same period. Despite continued adverse COVID-related restrictions and inflationary pressures which have a direct impact on OPEX, combination of our in-house management and the scale of the group enable us to sustain a very competitive cost base and maintain our position as the lowest cost operator among our peers. In addition, we continue to rate among the top three of our listed peers in terms of rights rating. Slide 9 provides a fleet snapshot and some guidance on our future dry job and balanced water system expenses for the next 12 months and a relevant total of high days. Our expected dry dock expense for the next 12 months is estimated at $36.4 million for the dry docking of 35 vessels, with another $16 million towards our vessel upgrade CAPEX. In total, we expect to have an approximate 1,200 off-hire days for the forward 12-month period. We anticipate that 98% of our fleet will be ballast water fitted by the end of Q4 2022. The above numbers are based on current estimates around dry dock and retrofit plumbing, vessel employment, and yard capacity. On the scrubber utilization front, Starbucks has by now surpassed 100,000 days of scrubber operating experience. High-five spreads have been volatile throughout the year, and it's currently hovering around $300 per ton, based on Singapore's spot prices, where we cater for 60% of our annual fuel demand. Q2 2022. With an estimated annualized consumption of 800,000 tons of heavy fuel oil across the fleet, at a conservative price of $150 per ton, we'll be reducing our cash break even by $2,500 per vessel per day. With 94 of our vessels being scrubber fitted, a continued increase in high fire spread can be a significant value generator for our company. I'll now pass the floor to our Chief Strategy Officer, Haris Lakatonaki, for an ESG update.
Strategy Officer
Thank you, Nico. Please turn to slide 10, where we highlight our continued efforts on ESG. Consistent with the Starball decarbonization strategy to lead in the industry's efforts to fade out greenhouse gas emissions, we have signed and announced the company's participation in an iron ore consortium, along with three of our major charterers, This partnership, led by the Global Maritime Forum, will create a framework for the development of a green corridor for the iron ore trade between Australia and East Asia, a route that accounts for more than 22 million tonnes of CO2 equivalent each year, or more than 2.5 of global shipping emissions. The parties in the consortium will jointly assess the economic infrastructure and logistics for the supply and bankering of green ammonia, as well as the necessary commercial agreements and first-inver mechanisms to enable a viable Australia-to-East Asia iron ore corridor. Through this work, and with inputs from the wider value chain and the public sector, we aim to set the foundation and accelerate the real-world implementation of zeroed emission shipping in this specific trade route, and to catalyze green corridor developments also in other parts of the world. I will now pass the floor to our CEO, Petros Papas, for a market update and his closing remarks.
Nico
Thank you, Haris. Please turn to slide 11 for a brief update of supply. During the first four months of 2022, a total of 11 million deadweight was delivered, and 1.5 million deadweight was sent to demolition for a net fleet growth of 9.5 million deadweight, or 3.4 percent year-on-year. The supply outlook is the best we have seen in the recent history of drive-back shipping. The order book has decreased to a record low with just 3.5 million deadweight reported as new firm orders between January and April. Uncertainty on future propulsion, along with surging shipbuilding costs, have helped keep new orders under control, while the strong Net lead growth is projected to drop below 2.5% in 2022 and is unlikely to exceed 2% during 2023 and 2024. Furthermore, increase of global steel prices. year to 11.4 knots as a result of a strong increase of banker costs. We expect oil prices and subsequently banker costs to remain inflated for the next few quarters amid the sanctions imposed by the Western countries to Russia and the gradual recovery of economies from the pandemic. Port congestion stands close to record high levels and around 4.3% higher than last year due and seasonal bottlenecks. Let's now turn to slide 12 for a brief update of demand. According to Clarkson's, total dryback trade in tons during 22 and 23 is projected to expand by 0.3 percent and 1.7 percent, respectively, but 1.6 and 2 percent in ton miles. The war in Ukraine has negatively affected the economic outlook worldwide, with the IMF projecting global GDP growth to slow down to 3.6% during 2022 and 2023. Inflationary pressures on energy and food have a negative impact on end users' demand, especially in low-income regions. During the first quarter of 2022, Total dry bulk volumes were down by approximately 0.7% as a result of the Indonesia export ban on coal, China Winter Olympics and zero COVID policy, poor weather conditions in Brazil and a war in Ukraine. uncertainty and the fear of future sanctions. Furthermore, the resuffling of coal, grain, and steel product trade patterns to longer haul routes are inflating ton-miles and have helped moderate the decrease in volumes. Iron ore trade is expected to expand by 0.7 percent, both in tons and ton-miles. over the country's property market and production curbs related with the Winter Olympics. Nevertheless, production has recovered significantly during the last months and stands slightly below last year's record levels. Going forward, we expect further improvement over the next quarters, as domestic, economic, and social development, while iron ore stockpiles are declining at a high pace and consumption stands at elevated levels. Brazil iron ore exports decreased by 8.5 percent during the first four months of the year, but Vale has recently confirmed the annual guidance of 320 to 335 million tons, indicating inflated shipments for the rest of the year. Coal trade is expected to expand by 0.5 percent in tons and 4 percent in ton miles during 2022. Sanctions announced by major importers of Russian coal, limited capacity for expansion of Atlantic producers, and soaring gas prices have pushed coal prices to record high levels. European buyers are on a rush to secure energy commodities and are substituting imports from Russia with Australia and Indonesia, while Russia is exporting more coal to India and other Asian countries, a situation that is benefiting Ton Miles. During the last months, China and India dependent on imports. However, India is in the midst of an energy crisis, as the stockpiles are available for only eight days of consumption, and the government is even urging utilities to increase coal imports in order to avoid last year's blackouts. Green trade is expected to contract by 3.8 percent in tons and 0.4 percent in total Grain exports account for approximately 10 percent of total grain trade. And since the invasion in late February, exports have fallen dramatically. Importers have turned to the U.S., Australia, and Europe for additional quantities. U.S. outstanding sales are close to record high levels for this time of the year, and indicate a healthy North American grain season during the second half of 2022. resulting in weaker than expected soybean production. China's demand for grains during the next years is projected to remain strong, as the five-year plan is focused on food security and inventory building. Miner bulk trade is expected to expand by 1 percent flows from the Pacific and provide support for gear tunnels. Moreover, expanding West Africa bauxite exports continue to inflate tonne miles, with year-to-date cape-size exports up by 15 percent. Finally, our outlook for the dry bulk market remains positive, and our company is well positioned to enjoy and take advantage of it. Main driver remains the limited supply growth with a coming environmental regulations further suppressing orders and speeds. Whilst demand in tons may only increase by 0.3% during 2022, ton miles are expected to increase by 1.6%, heavily tilted towards the second half of the year due to longer distances arising out of severe trade dislocations. Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have.
Operator
Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star and one in your telephone keypad and wait for the automated message advising your line is open. Please state your first and last name before you ask your question. If you wish to cancel your request, please press star two. Once again, if you wish to ask a question, please press star and one. As your first question, Your line is open. Please go ahead.
Chris
Hi, good morning. This is Chris Robertson at Jefferies. How are you? Hi, Chris. Good morning. Good, good. So I was wondering if you guys could break down average of 29,759, but if you could go into a little bit more detail on the various segments, that would be helpful.
Petros Papas
Hold on a moment, Chris. Chris, you mean the coverage for the first quarter or the coverage for the second quarter?
Chris
The numbers, Chris, are as follows. For CAPES, we have covered approximately 69% at 26,750. For Panamaxies, we have covered 78% at approximately 30,000. That's Panamaxies and Campsamaxies. And then for Supras and Ultras, we have covered 81% at 32,000. And sorry, that was Christos.
Chris
That's super helpful. Thanks, guys. I'll hop back in the queue.
Operator
Okay. And your next question. Your line is open. Please ask your question.
spk04
Hi, this is Drew Mulligan. I'm with the Woodward Fund. So I just had a question for some additional clarification, and it looks like you guys are doing very well. Congratulations on that. You mentioned there's a regulation coming in that you think is going to increase the scraps going forward come 2023. I didn't quite catch. Do you have any more detail on what that is that you're expecting?
Nico
It's the environmental regulations that actually oblige vessels to reduce their consumption versus their speed. So the vessels will have to start performing better going forward and consuming less fuel oil. The older vessels, some of the older vessels, and especially some vessels that are from third-tier yards, they may not be able to do that without reducing their speed substantially. And if the vessels reduce their speed substantially, this means that supply is cut, and therefore that's good for the market. Okay. Thanks.
Operator
Thank you. Once again, if you wish to ask a question, please press star and 1. No more questions at this time. Please continue.
Nico
No more comments, operator. Thank you very much. Thank you.
Operator
Thank you. And this concludes today's conference call. Thank you for participating. You may now disconnect.
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