Star Bulk Carriers Corp.

Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers Conference call on the first quarter 2023 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 Reskos, Chief Operating Officer, and Mrs. Charis Lakantanachis. Chief Strategy Officer for the company. At this time, all participants are in 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 star 1 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.

Thank you very much. I'm Simo Spirou, Co-Chief Financial Officer of Stable Carriers, and I would like to welcome you to our conference call regarding our financial results for the first quarter of 2023. 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 first quarter results, cash evolution during the quarter, an update of our balance sheet, an overview of interest rate risk management, the banker benefit and vessel operations, the latest on the ESG front, and our views on the 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 2023 highlights. For the first quarter of 2023, the company reported the following. Net income amounted to 46 million, with adjusted net income of 37 million, or 36 cents per share adjusted earnings. Adjusted EBITDA was at 85 million for the quarter. For the first quarter, after our existing dividend policy, we declared a dividend per share of 35 cents, payable on or about June 27, 2023. During this quarter, we have bought back 531,223 shares at a cost of 11.26 million. Since 2021, dividend distributions and share buybacks are over 1 billion. On May 16, 2023, our board of directors canceled the previous share repurchase program, under which 8.5 million was still outstanding, and authorized a new share repurchase plan of up to an aggregate of 50 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 at $14,199 per day per vessel. Our combined daily OPEX and net cash G&A expenses per vessel per day amounted to $5,755. Therefore, our TCE, less OPEX and G&A is around $8,444 per day per vessel. Looking towards fleet renewal, we have agreed to charter in seven high-specification, latest-generation, scrubber-fitted ecovessels. We have added a table at the bottom of the page with an overview. We have entered into long-term chartering agreements for four Camsomax new buildings and two Ultramax new buildings, which are expected to be delivered during 2024, with a minimum duration of seven years. In addition, in November 2021, we took delivery of the Cape-sized vessel, Star Sibumi, under a long-term charter contract for a period up to November 2028. Slide 4 graphically illustrates the changes in the company's cash balance during the first quarter. We started the quarter with 330.5 million in cash, adjusted for the refinancing, and generated positive cash flow from operating activities of 83.2 million. After including debt proceeds and repayments, CAPEX payments for energy-saving devices and ballast water treatment systems, The Q4 dividend payment and series purchases, we arrived at a cash balance of 305.9 million at the end of the first quarter, which implies a dividend payment of 35 cents per share to the shareholders of record of June 7th, 2023. Please turn now to slide five, where we highlight the strength of our balance sheet. Our pro forma total liquidity today stands at 375 million. Meanwhile, our total debt stands at 1.23 billion. Net sale proceeds from the three vessels stands at 75.5 million after debt repayment and will be excluded from the cash that can be distributed as dividend and will be kept for general corporate purposes. Note that the 11.2 during the previous couple of months will be deducted from these 75.5 million proceeds. We have a positive trade working capital of 79.5 million and a mark-to-market of the derivatives of 21.9 million as of March 31, 2023. Given current market conditions, we expect that the trade working capital will grow further in the course of the second quarter of the year. Our next 12-month amortization is at 177 million USD. In slide number six, we present an overview of our risk management on the debt side. Given the increasing interest rate environment we are in, we have focused on reducing leverage and managing interest expense in order to ensure the lowest possible finance cost compared to peers. Since 2022, we have completed refinancing totaling 525 million that reduced our interest costs by approximately 7 million per annum as a result of achieving significantly lower margins. In 2020, we proactively hedged the base rate for a significant part of our senior debt at an average rate of 45 basis points. The current outstanding notional is approximately 637 million for an average remaining maturity of one year. Total realized gains from these activities are 11.6 million as of March 31, 2023, And as of the same date, the mark-to-market of the remaining position of the swaps was at 26 million. The cumulative effect of this decision is depicted in the graphs at the bottom of the page, where one can see that Starbuck has reduced its average interest rate and currently has the lower average interest cost among its listed peers. I will now pass the floor to our COO, Nikos Reskos, for an update on our operational performance.

Thank you, Simo. In slide 7, we illustrate how Stavro continues to benefit from the fuel spread between HSFO and LSFO. Our 118 SCOBER-fitted vessels have surpassed 137,000 over 18 days, with an average system availability of 99.4%. The spread secured during the first quarter stands at $185 per ton, and currently hovers at around $122 per ton, based on Singapore's spot prices, where we cater for approximately 60% of our annual fuel demand. Indicatively, our average high-five spread since inception stands at $170 per ton. For illustrative purposes, on the top right of the slide, we present a sensitivity table that shows the impact the banker's benefit can have on our bottom line based on consumption of approximately 685,000 tons of HSS4 per annum to our squadron fitted vessels. Please start the slide, Dave. and $59 per vessel per day for the same period. In addition, we continue to rate at the top among our listed peers in terms of the ride-shift safety score. Slide 9 provides a fleet update and some guidance around the future dry dock and vessel efficiency upgrade expenses and the relevant total off-hire days. During the first quarter, we took advantage of the increase in vessel values and agreed to opportunistically sell two 2011-built Cape-size vessels, the Star Borealis and the Star Polaris. We have further reached agreement on the constructive total loss of the Star Pablina to the war-risk insurers, given its prolonged detainment in Ukraine following the war. As part of our strategy towards fleet renewal and improving the overall fleet fuel efficiency, we have secured seven long-term chartering, latest-generation echo vessels, built at first-class Japanese shipyards, six of which have been delivered during 2024. We have by now completed our past water installation program across the fleet, and in line with EXI and CII regulations, we will continue investing and upgrading our fleet further with energy-saving devices, telemetry, and other technologies, all aimed at improving our fuel consumption and reducing our environmental footprint, together with enhancing the commercial attractiveness of the startup fleet. Our expected driving expense for the nine months remaining of 2023 is estimated at $23.7 million for the dry docking of 28 vessels, with another $9 million towards our vessel upgrade capex. In total, we expect to have approximately 775 days for the same period. The above numbers are based on current estimates around drive of the rest of the planning, vessel employment, and yard capacity.