Star Bulk Carriers Corp.

Thank you for standing by, ladies and gentlemen, and welcome to the Starbuck Carriers Conference call on the first quarter 2025 financial results. We have with us today Mr. Petros Papas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Sima Spiro, and Mr. Christos Bigleres, Co-Chief Executive Officers, Mr. Nikos Raskos, Chief Operating Officer, and Ms. Charles Pakapunaki, Chief Strategy Officer of the company. At this time, all participants are on 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 star on your telephone keypad, followed by, I'm sorry, 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'll now pass the floor over to your speaker for today, Mr. Spiro. Thank you, sir. Please go ahead.

Thank you, operator. I'm Christos Bigleres, 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 2025. 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 highlight results, action taken to create value for our shareholders, cash evolution during the quarter, an update on the EagleBulk transactions, vessel operations, fleet update, the latest on the regulatory 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 first quarter 2025 highlights. For the first quarter of this year, the company reported the following. Net income amounted to 0.5 million with adjusted net loss of 7.8 million or 0.07 adjusted loss per share. Adjusted EBITDA was 49 million for the quarter. During Q1, we repurchased 1.3 million shares for a total consideration of 19.6 million. For the first quarter, we declared a dividend per share of five cents payable on or on June 6, 2025. Despite the fact that no dividend would be due based on our existing dividend formula, our board of directors decided to continue prioritizing returns to shareholders given the company's strong position. Our performance total cash today stands at 437 million. Meanwhile, our performance total debt stands at 1.2 billion. Through an of almost half a billion. Finally, we currently have 13 debt-free vessels with an aggregate market value of 270 million. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter grueling rate was 12,439 per vessel per day. Our combined daily OPEX and net cash GNA expenses per vessel per day amounted to 6,217. Therefore, our TCE less OPEX, less cash GNA is around $6,220 per day per vessel. Since the EGLEBALT transaction was completed on April 9, 2024, until today, the synergies achieved from integration resulted to almost 40 million. Integration process has been completed across all departments. Slide 4 provides an overview of the company's capital allocation policy over the last three years and the various levers we have used to strengthen the company, increase intrinsic value of our shares, and return capital to shareholders. In total, since 2021, we have taken actions of $2.6 billion in dividends, share buybacks, and debt repayments to create value for shareholders. At the same time, StarBulk has been growing the platform at opportune times through consecutive flip buyouts by issuing shares at or above net asset value. On the bottom of the page, we show our net debt evolution per vessel. Since 2021, our average net debt per vessel has decreased from $11.6 million per vessel to $5.4 million per vessel, which corresponds to a reduction of more than 50%. As a result of this deleveraging process, our current net debt is covered by the flip scrap value. Slide 5 graphically illustrates the changes in the company's cash balance during the fourth quarter. We started the quarter with $441 million in cash. We generated positive cash flow for operating activities of $49 million. After including debt process and repayments, cap experiments for energy saving devices, and balanced water treatment system installments, vessel sales process, share buybacks, and the fourth quarter dividend payment, we arrived at a cash balance of $437 million at the end of the quarter. We now pass the floor to our COO, Nikos Reskos, for an update on the Engelback integration and our operational performance.

Thank you, Christos. Slide 6 provides an update on the Engel integration and synergies. We continue to realize savings this quarter on the operating expenses front, have completed consolidation of ship management practices across the exigil vessels, and offices with the company's headquarters, further reflecting our low job administrative expenses. Importantly, we expect to complete the phase out of third-party crew managers by Q3 this year, replacing this critical function with our in-house crewing platform, and thus realizing further cost optimization. On completion of the last remaining crew changes, our dedicated crewing pool will comprise of more than 5,000 ship owners. For Q1, operating expenses and GMA savings for the Eagle fleet stand close to $2,140 per vessel per day. In addition, due to our scaling in relation to the shipyards and service providers, we have reduced significantly the drive-up costs of the former Eagle fleet, a saving of $8.6 million for the quarter. Interest expense savings have accumulated thanks to the refinancing of the former Eagle debt, which took place during the second quarter of 2024. Almost $40 million of cumulative cost synergies have been achieved since closing on the Eagle-Balt Transaction in April 2024. Our cost synergies for Q1 stand at $18.4 million. Please turn to slide 7, where we provide an operational update. Operating expense for Q1 2025 stands at $4,898 per vessel per day. Net cap GMA expenses were $1,319 per vessel per day for the same period. In addition, we continue to raise at the top among our listed peers in terms of ride ship safety scores. Slide date provides a fleet update and some guidance around our future dry dock and the relevant total of our days. On the bottom of the page, we provide our expected dry dock expense schedule, which for the remaining of 2025 is estimated at $47 million for the dry docking of 38 vessels. In total, we expect to have approximately 1,210 of hard days for the same period. We have arranged to front load dry docking first half of this year in order to take advantage of the drop-off market seasonality during the second half of the year. On the top right of the page, we have our CAPEX schedule illustrating our new building CAPEX and vessel energy efficiency upgrade expenses. Based on our latest construction schedule, our five Capsamax new building vessels constructed at Kingdow Shipyard are expected to be delivered during the first half of 2026. For these vessels, we have secured $130 million of debt financing against the new building installments. In line with IMO carbon reduction regulations, we will continue investing and upgrading our fleet with the latest operational technologies available, and in improving our fuel consumption and reducing our environmental footprint, further enhancing the commercial attractiveness of the Starbuck fleet. Regarding our energy saving technologies retrofit program, we have so far completed 42 installations with a rather 21 planned for 2025. Please turn to slide 9 for an update on our fleet. On the vessel sales front, we continue disposing non-neco vessels opportunistically, reducing our average fleet age, and improving overall fleet efficiency. During Q1, we agreed to sell some of our less efficient Supermax vessels, including Starbitter, Staromikron, and Stray Sub-Tranfer. Furthermore, during the second quarter, we have further agreed to sell Starpuffin, Tercanari, and Starport Trail Supermax vessels at attractive levels. We expect to receive an aggregate net sale proceeds of $38.6 million in the second and third quarter of 2025. Following the rule of the Eagle Buck existing chartering contracts, we now have a total of nine chartering vessels. Considering the affordation changes in our fleet mix, we operate one of the largest global fleet amongst U.S. and European listed peers with 150 vessels on a fully delivered basis and with an average age of 11.9 years. I will now pass the floor to our CSO, Harris Plakantonaki, for an update on recent global environmental regulation developments. Thank you, Nikos.

Please turn to slide 10, where we highlight the major development on global environmental regulations. The 83rd session of the IMO's Marine Environment Protection Committee introduced a new net zero framework, marking a major regulatory milestone toward achieving climate neutrality in international seething by 2050. The new regulation introduces a greenhouse gas fuel intensity metric, which is a way to wake greenhouse gas emissions per unit of energy used on board the ship. This is similar to the fuel EU regulation which came into force in January 2025. Each ship is required to report its fuel intensity annually to the IMO. Two tiers of requirements are set on the annual fuel intensity for a ship, a base target and a more stringent direct compliance target, which each ship is required to meet. A ship which generates compliance surplus can transfer surplus units to ships with a compliance deficit, or it can bank the units for later use within two subsequent calendar years. A ship with a compliance deficit can use surplus units from other ships or purchase remedial units from the IMO at $100 or $380 per ton CO2 equivalent deficit, depending on whether the ship's fuel intensity is between the base and direct targets or above the base targets. The process from the new regulation will go into the IMO net zero fund to be set up and managed by the IMO. Part of the revenues are intended to be circulated directly back to the industry as a reward for using near zero fuels or energy sources which are near zero. This new framework is set for adoption in October 2025, subject to final approval, with a first reporting period starting on 1st January 2028. Starbuck remains focused on researching and adopting optimal strategies to ensure timely and efficient compliance with the new global regulations. I will now pass the floor to our CEO, for a market update and closing remarks.

Thank you, Harris. Please turn to slide 11 for a brief update of supply. During the first four months of 2025, a total of 12.2 million dead weight was delivered, and 1.1 million dead weight was sent to demolition for a net growth of 11.1 million dead weight or .9% year on year. The new building order book stands at a modest .3% of the existing fleet, with new contracts during Q1 falling to an eight-year low of 2.8 million dead weight. Limited CPL capacity availability up to second half 2027, high C building costs and uncertainty over future green production have kept new orders under control. At the same time, the fleet is aging, and by the end of 2027, approximately 50% of the fleet will be over 15 years old. Moreover, the increasing number of vessels undergoing the third special survey is estimated to reduce effective capacity by approximately half percent per annum between 2025 and 2027. The average steaming speed of the fleet corrected to a new record low of 10.8 knots in February, driven by soft freight rates, inflated bunker costs, and environmental regulations. Although speeds have rebounded slightly on the back of improved earnings and lower oil prices, they remain below last year's levels. In the medium term, new regulations on carbon emissions introduced by the IMO can be expected to continue to incentivize low steaming and moderate effective supply. Finally, global port congestion fully normalized in the second half of 2024, after a two-year decline that inflated effective supply by about 6%. In Q1 2025, loading port congestion surged due to weather disruptions, while congestion in Chinese-discharged ports fell to historic lows, driven by a sharp drop in import volumes. For the remainder of 2025 and 2026, we expect congestion to have a neutral or slightly positive impact on the supply-difference balance and to follow seasonal trends. Let us now turn to slide 12 for a brief update of demand. According to Clauxions, after two years of strong demand expansion, total drive-off trade is projected to contract during 2025 by .2% in tons and .4% in ton miles. President Trump's aggressive tariff negotiations and policy shifts since taking office have raised uncertainty in traditional forecasting models. Following Liberation Day, international agencies lowered their projections for global GBT growth and trade. The IMF revised its 2025 global economic growth forecast to 2.8%, down from .3% in January, with the U.S. forecast reduced to .8% from 2.7%, and China to 4% from 4.6%. However, upward revisions could now be expected after the initial trade agreement between the U.S. and China took last weekend in Geneva. During the first quarter of 2025, total drive-back volumes were at -on-year, supported by strong box-side and minor bulk shipments, while iron ore, coal, and grains volumes combined declined by .5% -on-year. Suez Canal crossings remain at 50% pre-Hooty attacks levels, and Red Sea passages will probably be slow to restart. China's GDP exceeded expectations during Q1 and grew 5.4%, fueled by more aggressive stimulus measures as of September 2024, and an increase in retail sales, industrial production, and exports. Chinese drive-back imports contracted by .3% -on-year during the first quarter, driven by elevated inventories and rising domestic production of iron ore, coal, and grains throughout 2024. Can you hear us, operator?

Yes, we can hear you.

On the other hand, drive-back imports from the rest of the world, expanded by .5% -on-year, has lower commodity prices, easing monetary policy and creative stockpiling in anticipation of U.S. tariffs, helped stimulate demand for raw materials. Growth has been driven mainly by developing Southeast Asian nations and the Middle East, while European imports have steadily increased since mid-2024. Iron ore trade is projected to contract by .3% in tons and by .6% in ton miles during 2025. During Q1, China's steel production increased by .1% -on-year, supported by strong exports and lower input costs. During the rest of the year, government efforts to reduce steel overcapacity and growing protectionist measures by major steel importers may curb steel output. However, iron ore imports are expected to gain support, as Chinese port stockpiles have declined in recent months and domestic iron ore production fell by .7% in Q1 2025. Iron ore ton miles are projected to receive further support by late 2025 as new high-grade Atlantic iron ore mines begin operations, progressively replacing lower-quality Chinese domestic production and imports. Coal trade is projected to contract by .2% in tons and by .6% in ton miles during 2025. Falling record-high imports in 2024, Chinese and Indian coal imports sharply contracted in early 2025, driven by robust domestic coal production and -on-year contraction of thermal electricity generation. Rising renewable energy production in China and elevated coal inventories heightened downside risks for imports. While falling coal prices over the past six months have further compressed profit margins for international coal miners. Nevertheless, strong demand from Southeast Asian economies is expected to provide some support and coal trade over the next year. Green trade is projected to contract by .1% in tons but expand by .6% during 2025. During Q1, total grain exports declined by .6% -on-year, driven by nearly 50% drop in Chinese imports. The Brazilian soybean season was delayed, affecting long-haul shipments early in the year, but exports surged over the past two months, driven by increased Chinese buying to build inventories ahead of the U.S. export decision. Heavy sense that the recent U.S.-China trade agreement may boost U.S. exports to China during Q4, mirroring the trade deal during President Trump's first term. But the 2025 grain trade outlook will also depend on the U.S. oil and gas prices to harvest. Minor buck trade is projected to expand by .4% in tons and by .8% in ton miles during 2025. Minor buck trade may encounter challenges from heightened trade tensions due to its close ties to global GDP. But recent progress in U.S.-China trade relations could drive upward revisions to full-year projections. Bokside exports from West Africa continued a strong performance and expanded by 31% during Q1, generating strong ton miles for the Cape-sized fleet. As a final comment, we expect a volatile market in 2025 as the U.S. administration clearly states a risk to reset the trade landscape. We nevertheless remain cautiously optimistic about the medium-term outlook for the dry buck market, given the supply picture, stricter IMO environmental regulations, an accumulation of stimulus measures by the Chinese government, and positive signals from the U.S.-China tariffs negotiation. In a period of increased geopolitical uncertainty, we remain focused on actively managing our diverse scrapper-feeder fleet to take advantage of emerging market opportunities and create for our shareholders. Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time. Today's first question is coming from Omar Nukhta of Jefferies. Please go ahead.

Thank you. Thanks, operator. Hi, Petros. Hi, guys. Thanks for the update. Yeah. Hi, Omar. Just as you mentioned. Hi. Yeah, you were mentioning just at the end of your comments, you know, expecting a bit of a volatile year just given everything that's going on. It does feel when we look at dry bulk that seems to be in somewhat of a holding pattern in terms of where rates are. Rates aren't terrible. They're also not exciting, which is sort of in this interesting period. We've also seen asset values hold up seemingly quite well, especially, you know, as confirmed by your latest sales. I just want to get a sense from you. What do you think is ahead here for this market? I know it's probably a big picture question, but just in general, when we think of where asset values are and then where the underlying rates are, something has to give at some point any kind of any feeling you have for how this market starts to progress here in the coming quarters?

Thank you, Omar. Let me quote somebody first. Niels Bohr, the guy, the father of the atomic energy, said that prediction is very difficult, especially about the future. Yes. And that tells you that it's equal to 4C. Anyway, we have yous over here, so I'll talk for a few minutes about that. There are pros and cons in this market. The pros are mostly geopolitical and macro. The cons are more micro, I would say. Let me start. On the pros, we have the box sites from West Africa and the iron ore from West Africa and Brazil that are coming in the future, especially due to the environmental regulations. China and others will need higher content iron in the iron ore, and that will actually incentivize importing iron ore from longer distances. So that is going to be a positive, especially when the new ore iron ore, the Simandu, comes, for example, in starting to export their first tons towards the end of the year. So that's one thing. The environmental regulations are going to help in general, and that is a very important thing, and it will start to bite as years go by. Then we have the potential of, if the war in Ukraine stops, we have potential reconstruction over there, which will also lead to congestion, and that could also happen in Gaza and Syria if that war stops. And if there is an agreement in Iran, that would also incentivize trade. So these are potentialities that I think will come in the next months or very few years, and it will be very positive. Then we have China boosting their economy because of what's happening and the way that the U.S. president has treated them, and that's going to be a positive as well, because on the cons, China is actually going to be reducing imports the way we see it. Now, oil prices, if oil prices go down, this is a good macro effect in the sense that it will help GDPs of various countries. And if the dollar goes down, as is being forecasted, that is also a positive for trade because it reduces the cost of raw materials, it reduces the cost of freight in local currencies, and it also reduces the vessel prices in local currencies, so they would be willing potentially to pay more dollars for them. So these are generally the positives. The negatives, one big negative is China itself on coal. They will be importing less coal going forward, but this is going to be a story in general about coal. I think coal will be traded less every year. However, I think that the environmental regulations effect will counter the coal negative future. Also, China is trying to increase their own grain production, and they're engaging in GM crops, so that could be a negative as well. And if it is true that they will cut their crude steel production, then iron ore will reduce as well. So China is a potential negative. Then red sea opening is going to be a negative. Fortunately, bulk carriers have been less affected than other types of vessels, but that's going to be a positive. The total volume of the ship is usually about .5% per annum, and the scatting is 0.5%. So we actually need 3% increase in vessels. We need 3% increase in demand to negate that. And as a final major point, if oil prices go down, as I said, it's a positive in the sense that it's good for the economies in the world, but the micro-fave would be that vessels would speed up. So having said pros and cons, my view is that we're probably going to be seeing a similar market with not too many ups and downs following seasonal patterns, meaning that second half should be stronger than the first half, but without amazing results. But if anything like Ukraine reconstruction or Iran opening and more, they know that happens, then I think that this is an extra bonus for the market. So summing up, I think we will be seeing a moderate year with upward potential in case the world starts to stop.

Thanks, Dr. Oswald. Very obviously, incredibly detailed. And I had a couple of follow-ups that answered in your response. I appreciate that. So I'll pass it over. That's it for me. Thank you. Thank

you. Thank you. The next question is coming from Chris Robertson of Deutsche Bank. Please go ahead.

Good morning, guys. Thank you for taking my questions. Just wanted to dial in here on the recent asset sales on how to think about timing for delivery and incoming cash over the next couple of quarters. And should we be thinking about those aggregate sales proceeds as basically being kind of 50-50, or are some of the older assets kind of more weighted in the near term? And if you could talk about kind of the cadence of incoming cash.

Chris, all vessels that we have announced, the three vessels that we have announced that have been committed to be sold are basically being delivered to their buyers in the second and early third quarter of this year. Therefore, the total proceeds that we have announced of 38.5 million US dollars are basically fully received at the delivery of each vessel during this quarter and the beginning of next.

Got it. Okay. Thank you. And could you, just as a follow-up to that, how are you guys thinking about the use of those sales proceeds here? Are you reserving that cash on the balance sheet for potential reinvestment opportunities, or are you looking at kind of further share repurchases here as you know, shares continue to trade at a meaningful discount to NAV?

Chris, as long as our shares trade at a meaningful discount to NAV, today's levels essentially, the opportunity to buy back shares at a significant discount to net asset value by using proceeds from vessels sold at net asset value essentially locks a very nice arbitrage for us. Therefore, we think that first priority is essentially on buybacks.

Got it. That's very clear. Thank you for that. I'll turn it over. Thank you, Chris.

Thank you. Again, that's a star one. If you have a question, the next question is coming from Doug Smith of Everest. Please go ahead.

Thank you. As you show in your slides, the order book over the last five years has been relatively controlled, but this demolition has been negligible. And as you mentioned, about half a percent a year. So as a result, the net fleet growth over the last five years has significantly exceeded the underlying growth in ton miles. What is your view of what demolition is likely to do over the next few years? And what can you attribute as the causality of the low demolition rate over the last five years?

Yeah. Well, to be able to cover that gap of three percent, I think that the environmental regulations will play a big role. I think that the exports from West Africa and the increased exports from Brazil in the future of high quality iron will also be able to increase ton miles. You know, increasing ton miles is much more important than increasing tons. I think these will definitely cover part of that three percent. Then if we have any reconstruction in the places that I mentioned earlier, that will create congestion and that's going to be important as well. Now, you will see that in the last quarter, the order book was just 2.9 million tons dead weight. And I think this could be a result of not being able to foresee what is going to happen. Lately, the geopolitical regulations have been affecting us a lot. We do not know where this is going. So people actually do not order. Plus, the vessels are pretty expensive. So if that trend continues, it is possible that the order book will actually drop. I think it has dropped already to a certain degree. And I believe that this will continue. And if the market remains medium, I think people will just not order. Plus, let's not forget that we do not know which will be the engines of the future, which is going to be the fuel of the future. So all that creates a very hazy future that discourages ordering. And that is actually going to be good for the market.

Yes, as you sell a number of your older ships, can you provide any color on how the buyer is going to use them? These ships do not seem to be leaving the fleet. As the ships age over 20 years, what is their use? Why are they not being retired? Are they willing to pay a premium or a more efficient or modern ship? Or is there no premium that you can recognize in the market?

Well, first of all, for as long as the vessels are not making a loss, people do not scrap. That's one thing. Secondly, the buyers are Chinese. Now, I'm not sure what they're seeing. What we are seeing is that the return on investment on these vessels is not good enough for us. And we have very low operating expenses and we have scrappers. We actually have probably among the lowest operating expenses. And still the return is not good enough. And therefore we get rid of them. Now, what they are thinking and what kind of IRR they can survive with, it's, I suppose, their own unless they know something about China that we don't.

Do you see the environmental regulations as being a catalyst that's going to actually cause ships to be scrapped? Or is that unlikely to happen for the foreseeable future?

Yes. It will definitely slow down speed. It will take longer time to install ESDs in shipyards and to keep the vessels in better conditions so that they consume less and to clean their hull more often so that they don't burn more fuel, which will be a punishment for high consumers. Now, I think there may be a few, a number of older, heavier consuming Chinese vessels that may not be as competitive as others. And the result for those will be that they won't be making any profit. So I think that there will be a percentage that is scrapped because of these reasons. And perhaps we won't get to vessels that, we won't get to keep vessels over 20 years of age at some point. But I think the immediate effect is going to be on speed and delays in dry dogs. And then scrapping will follow. Okay. Thank you.

Thank

you, Doug.

Thank you. At this time, I'd like to turn the floor back over to management for any additional or closing comments.