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Operator
Thank you for standing by, ladies and gentlemen, and welcome to the Star-Bulls Harriers Conference call on the fourth quarter 2022 financial results. We have with us Mr. Petros Papas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Simo Spirou, and Mr. Christos Beglaris, Co-Chief Financial Officers, Mr. Nikos Leskos, Chief Operating Officer, and Mrs. Charis Plakantonaki, Chief Strategic 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 would like that, please press star one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. We will now pass the floor to one of our speakers for today. Mr. Spiro, please go ahead, sir.
Petros Papas
This is Christos Begleris. Thank you, operator. I am co-chief financial officer of Starbell Carriers, and I would like to welcome you to our conference call regarding our financial results for the fourth 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 Q4 results, cash evolution during the quarter, an overview of our balance sheet, an update on the banker benefit and vessels operations, 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 2022 highlights. Net income for the quarter amounted to 86 million, an adjusted net income of 93 million, or 84 cents per share adjusted earnings per share. Adjusted EBITDA was 135 million for the quarter. For the fourth quarter, as per our existing dividend policy, we declared a dividend per share of 60 cents, payable on or about March 14, 2023. The graph on the bottom of the page highlights the cumulative performance over the last 12 months, which illustrates the strength of the platform in a robust drive-up market. Our last 12 months adjusted EBITDA is $809 million, and adjusted net income is $609 million U.S. dollars. Over the same period, we have returned a cumulative dividend of $5.1 per share or $526 million to our shareholders. Since 2021, we have declared a total dividend of $9.35 per share or $961 million. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was 19,590 per vessel per day. Our combined daily OPEX and net cost GNA expenses per vessel per day amounted to 5,182. Therefore, our TCE less OPEX and GNA is approximately $14,400 per day. Slide 4 graphically illustrates the cash flow bridge for Q4. We started the quarter with $393 million in cash and generated positive cash flow for operating activities of $116 million, after including debt proceeds and repayments, capex payments for energy-saving devices and balanced water treatment system installments, and a third-quarter dividend payment, we arrived at a cash balance of $286 million at the end of the quarter. For the calculation of our dividend distribution, we add back the debt repayment of $44 million that we drew on January 2023 to end at an adjusted balance of $331 million. Please turn to slide five, where we highlight the strength of our balance sheet. Our pro forma total liquidity today stands at 356 million. Meanwhile, our total debt stands at 1.32 billion. Since 2022, we have completed refinancings totaling 430 million that reduced our interest costs by approximately 5.2 million per year as a result of achieving significantly lower margins. Our next 12-month amortization is 186 million. We have 13 unlevered vessels with market value of $176 million and no debt maturities until 2024. In an increasing interest rate environment, we have interest rate swaps with an outstanding notional of approximately $722 million fixed at an average rate of 46 basis points for an average remaining maturity of 1.1 years. As of December 31st, 2022, the mark-to-market value of these swaps was 33 million. I will now pass the floor to our COO, Nikos Reskos, for an update on our operational performance. Thank you, Christos.
Christos Begleris
In slide six. Our 120 scrubber-fitted vessels have surpassed 131,000 operating days with an average system availability of 99.5%. With the current high fire spread at healthy levels, our scrubbers meaningfully contribute to our profitability. The highest fire fuel spread and $274 per ton for the full year of 2022. For administrative purposes, on the top right of the slide, we present a sensitivity table that shows the impact that micro-benefits can have on our bottom line based on consumption of approximately 700,000 tons of HSF water running for our scrubber-fitted vessels. Please turn to slide 7, where we provide an operational update. OPEX, excluding non-recurring for Q4 2022. Netcast GMA expenses were $977 per vessel per day for the same period. During Council 2022, Stavros assumed management of an additional 19 vessels from third-party managers, streamlining ship management operations and costs further. In addition, we continue to rate at the top amongst our listed peers in terms of ride ship safety score. Turning to slide 8, we provide a fleet snapshot and some guidance around our future dry bulk and vessel upgrade expenses and the relevant total of hire days. We have completed our balanced water installation program across the fleet, and in line with EXI and CNA regulations, we'll continue investing in upgrading our fleet further Our expected driver expense for Canada 2023 is estimated at $27.8 million for the dry docking of 31 vessels, with another $41.1 million towards our vessels' upgrade cap. In total, we expect to have approximately 870 days of hire for the same period. The above numbers are based on current estimates around dry dock and air traffic planning, vessel employment, and yard capacity. I will now pass the floor for an update on our ESG efforts.
Stavros
Thank you, Nikos. Please turn to slide 9, where we provide an update on ESG markets. For the second year in a row, Starbucks has participated in the Carbon Disclosure Project, achieving a score of B and improving its performance versus last year, where it had scored a B-. continues to place the company at management level, indicating a maturity of taking coordinated action on climate issues. It also places Starbuck above both the industry average of sea and the global average of sea, which indicates awareness level. During 2023, Starbuck will aim to continue improving its environmental stewardship by measuring and reporting for the first time also its scope 3 emissions, mainly the emissions that we indirectly affect in our value chain. On the regulatory front, Starbucks has taken all necessary technical and operational measures to ensure compliance with the EXI and CII targets assessed by the International Maritime Organization, which came into force in January 2023. We continue enhancing our well-being program, both on board the vessels and on shore, and also making contributions towards vulnerable groups, environmental protection, education, and sports. With regards to the company's governance, Starbuck is deploying new systems to optimize its commercial and operational performance, and is also further strengthening its cybersecurity systems, processes, and controls. I will now pass the floor to our CEO, Petros Papas, for a market update and his closing remarks.
Nikos
Thank you, Harris. Please turn to slide 10 for a brief update of supply. During 2022, a total of 31.2 million dead weight was delivered and 4.6 million uncertainty on future proportions, scrubber savings. GlobalPort Let's now turn to slide 11 for a brief update of demand. According to Clarkson's the sift of corn, while lower domestic iron ore output and stockpiles provide a positive indicator for imports going forward. miles. Miner but trade contracted 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 be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. Our first question is from Amrit Malhotra with Deutsche Bank.
Malhotra
Please proceed with your question. Hey, good morning, everyone. This is Chris Robertson on for a minute. Sorry, he's traveling this morning. Just wanted to talk about the cash flow movement kind of expected in the coming quarter. I think probably people are pretty hyper-focused on the upcoming dividend here and then testing the bottom of the seasonally weak rates. So can you talk us through about how you're thinking about kind of working capital movements? You've laid out the maintenance capital and dry docking costs pretty well on slide eight. Could you also remind us kind of the regular debt, debt amortization expected this year as well?
Petros Papas
Hi, Chris. So, let's start with the easy, which is the debt amortization. As you said, this is approximately $190 million for 2023, for the entire year. So it's slightly down from what we had in 2022 due to better amortization schedules that we obtained during our refinancing. Now, for the first quarter of 2023, in a market that is essentially decreasing, we would expect the change in working capital to be slightly positive. That is to be a source of cash.
Malhotra
Correct. Right. Okay. That makes sense. Any other things that we could be aware of besides the ballast water system installations, dry docking, the working capital, any other cash flow movements that could impact the dividend here?
Petros Papas
We have provided, I believe, those figures in our investor presentations. So if you go to that on our website, you will find it actually pays eight of our investor presentations. You will find all CAPEX items as well as dry stock estimates that we expect for the next few quarters.
Malhotra
Okay, great. Just as a follow-up, you guys had some pretty good cost control here on the OpEx front. I think last Q, the non-recurring OpEx was reported around $4,700 per day. Now it's down around $4,200 per day. Can you talk about how you achieved this savings? And are there any cost pressures out there right now that we should be aware of that might put upward pressure back on OpEx? Or do you think you can maintain it at this new level for the coming quarters?
Christos Begleris
It's taking in a big number of third-party managerships and trying to streamline the cost basis. We're trying to increase our reach on getting better discounts and curb the inflation pressure we're getting on our spares and supplies. And that's really the source of it.
spk03
Okay. Sorry, Max. that you have there for Q4, 4,200, I would be a bit more conservative and, you know, I would give a figure of around 4,500, which is in the middle between Q3 and Q4 figures for the entire 2023. Got it. That's really helpful.
Malhotra
Just a really quick last question for me. I mean, I think capital discipline is very much a feature of Starbucks. You guys have done an incredible job over the years doing accretive acquisitions in the past using your shares as currency. So I guess that said, you might not be looking at any deals on the table at the moment, but But kind of looking forward, do you think there's interesting opportunities out there, generally speaking, for either in-block acquisitions or kind of anything that's come to you that you found compelling?
Chris
Well, you know, Chris, we are looking at things now, and, you know, we're hopeful that the environment may be a little easier to close deals in than it had been in the last year or so. So we're optimistic, actually, that we...
Malhotra
Okay, interesting. All right, I'll turn it over. Thank you very much for the time.
Operator
Thank you. Our next question is from Omar Nocta with Jefferies. Please proceed with your question.
Omar Nocta
Thank you. I was going to ask, but before I get to what I was planning, to ask. I know it's probably a bit sensitive, but in terms of getting deals done, would that be kind of along the Starbuck way in the past of using shares in those deals?
Chris
Everything we're looking at, you know, would involve shares. Okay.
Omar Nocta
All right. Thank you. I did want to ask maybe just a bit broadly about the on slide 13, that the bookings you've got so far in the first quarter, that even if rates remain as soft as they are, you'll remain profitable in the first quarter. And, you know, my question is, I guess, one, do you agree that you could remain in positive territory here in the first quarter? And then also... If we assume no changes in the market from here and holding all else equal in terms of, say, fuel spreads or eco spreads or maybe the size premium you're able to capture with your bigger vessels, would you be profitable in the second quarter also? And I guess what I'm getting at is really just trying to get a sense for how much of you being profitable in this down market is a result of fixing shifts earlier before the pullback in spot rates? and really how much of it is due to the quality premiums you're able to capture across the different shifts you have.
Nikos
Hi, Omar. It's Petros. Yes, I think we will be profitable during Q1. I believe our break-even is around $12,000, and you see that we're just above $15,000 right now. And we think that we will be able to maintain the level, depending, of course, how our market goes. One thing you have to understand is the following. You look at the spot rate being like $2,500 on the capes. But that is according to a speed of, I think, 13 knots. We slow-steam the vessels, and a trip that would calculate at 2,500 actually ends up calculating at 8,000, because we burn much less fuel oil. If to that you add the scrubber benefit, which for CAPES Newcastle & Michaels is higher than other vessels, and the carrying capacity of the bigger vessels, you can reach levels which should be very close to what the average is, even if the market during March stays where it is, although the market during March is a little bit, the FFA market at least is a bit better than what it is right now. Now, regarding Q2, if you look at the FFA average, Now, if you add to that the scrubber benefits and the fact that we slow steam vessels during not very good markets, I think we will be profitable again in Q2 and probably, hopefully, better than, I guess, the Q1. And we're very positive for the rest of the year.
Omar Nocta
Great. Thanks for that, Petros. That's very helpful to see that the $2,500 that we see published is really almost, I guess it's relevant, but not really indicative of the earnings power when you take into account the speeds, simply excluding the whole scrubber and whatnot.
Nikos
Yeah, because if you run a cape at 13 knots and you burn 50 tons, then if you go at 11 knots, which is about 15% less speed, you probably burn 25 tons or 28 tons, which is almost 50% below the That's where you gain from.
Omar Nocta
Yeah, thanks for that additional color. And maybe just one final follow-up, and maybe related to Chris's first question about the dividend. You know, obviously you've had threshold, what does the dividend look like if ending cash is below that amount? Does it just simply be you stick with the actual policy and the dividend is zero or a few pennies, or is there a certain floor that you have on
Chris
Our policy is pretty clear, and, you know, we don't, frankly, anticipate, you know, any market in the foreseeable future leaving us with less cash than, you know, the minimum amount that would call for a dividend. But, you know, if basically... our cash balance declines over the quarter and, you know, declines below the minimum threshold, then, you know, as in, you know, 2020, parts of 2020, there might not be a dividend, but we don't anticipate that actually happening. Okay, great.
Omar Nocta
Well, thanks, Hamish, for that, and thanks, Petros. I'll turn it over.
Operator
As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. Thank you. There are no further questions at this time. I would like to hand the floor back over to management for any closing comments.
Nikos
No further comments, operator. Thank you very much.
Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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