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. Simos Spiro, and Mr. Christos Begleris, Co-Chief Executive Officers, Mr. Nikos Reskos, Chief Operating Officer, and Ms. Charles Plakopanaki, 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 one of your speakers for today, Mr. Spiro. Thank you, sir. Please go ahead.

Thank you, operator. I'm Christos Begleris, 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 Eagle Bulk transaction, 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 5 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 pro forma total cash today stands at $437 million. Meanwhile, our pro forma total debt stands at $1.2 billion. Through a non-drone revolver facility, we have additional liquidity of $50 million, resulting to pro forma liquidity of almost 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, agreement, and 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 Eagleback 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 for 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, Starbuck 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 percent. As a result of this deleveraging process, our current net debt is covered by the fleet 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 proceeds and repayments, capex payments for energy saving devices and balanced water treatment system installments, vessel sales proceeds, share buybacks, and the fourth quarter dividend payment, we arrived at a cash balance of $437 million at the end of the quarter. I will now pass the floor to our COO, Nikos Reskos, for an update on the Eagleback integration and our operational performance.

Thank you, Christos. Slide 6 provides an update on the Eagle integration and synergies. We continue to realize savings this quarter on the operating expenses front, have completed consolidation of ship management practices across the ex-Eagle vessels and offices with the company's headquarters, further reflecting our low general 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 hence realizing further cost optimization. On completion of the last remaining crew changes, our dedicated crewing pool will comprise of more than 5,000 seafarers. operating expenses and GMA savings for the Eagle fleet stand close to $2,140 per vessel per day. In addition, due to our scale 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 IngoBot transaction in April 2024. Our cost synergies for Q1 stand at 18.4 million. Please turn to slide seven, where we provide an operational update. Operating expense for Q1 2025 stands at $4,898 per vessel per day. Net cap chain expenses were 1,319 per vessel per day for the same period. In addition, we continue to rate 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 high 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 this year in order to take advantage of the dry dock 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 COMSOMAX new building vessels, constructed at Kingsdale 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, aimed at 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 another 21 planned for 2025. Please turn to slide 9 for an update on our fleet. On the vessel sales front, we'll continue disposing non-ECO 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 Star Bittern, Star Omicron, and Strays of Francois. Furthermore, during the second quarter, we have further agreed to sell Star Puffin, Star Canary, and Star Petrel 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 roll-over of the Eagle Buck existing chartering contracts, we now have a total of nine chartering vessels. Considering the aforementioned changes in our fleet mix, we operate one of the largest level of 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, Haris Plakantonaki, for an update on recent global environmental regulation developments. Thank you, Niko.

Please turn to slide 10, where we highlight the major developments 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 shipping by 2050. The new regulation introduces a greenhouse gas fuel intensity metric, which is a way to weight 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 SIP with a compliance deficit can use surplus units from other SIPs or purchase remedial units from the IMO at $100 or $380 per ton CO2 equivalent deficit, depending on whether the SIP's fuel intensity is between the base and direct target or above the base target. The profits 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, Petros Papas, for a market update and his closing remarks.

Thank you, Harris. Please turn to slide 11 for a brief update of supply. During the first four months of 2025, was delivered and 1.1 million dead weight was sent to demolition for a net fleet growth of 11.1 million dead weight or 2.9% year-on-year. kept new orders under control. At the same time, the fleet is aging, and by the end of 2027, approximately 50 percent 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. 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 volume. Let us now turn to slide 12 for a brief update of demand. According to Clarkson's, after two years of strong demand expansion, total dry bag trade is projected to contract during 2025 by 1.2% in tons and 0.4% in ton miles. President Trump's aggressive During the first quarter of 2025, total dryback volumes were year-on-year, supported by strong bauxite and minor bulk shipments, while iron ore, coal, and grains volumes combined declined by 3.5% year-on-year. Suez Canal crossings remained at 50% of pre-Houthi attacks levels, and Red Sea passages will probably be slow to restart. China's GDP exceeded expectations Operator?

Yes, we can hear you.

On the other hand, drive-back imports from the rest of the world expanded by 4.5 percent year-on-year as lower commodity prices, easing monetary policy and preemptive 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 11.7% in Q1 2025. Cold trade is projected contract. Great trade is projected... Minor bug trade is projected to expand by zero for the Cape size fleet. 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 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 Nocta of Jefferies. Please go ahead.

Thanks, Operator. Hi, Petros. Hi, guys. Thanks for the update. Yeah, you were mentioning just at the end of your comments, expecting a bit of a volatile year, just given everything that's going on. It does feel, when we look at dry bulk, that it seems to be in somewhat of a holding pattern in terms of where rates are. Rates aren't terrible. They're also not exciting. We're just sort of in this... Interesting, period. We've also seen asset values hold up seemingly quite well, especially 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 feeling you have for how this market starts to progress here in the coming quarters?

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 difficult to foresee. Anyway, we have views 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 On the pros, we have the bauxite from West Africa and the iron ore from West Africa and Brazil that are coming in the future. Especially during, due to the environmental regulations, China and others will need to 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, cement do come, 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 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 they 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. 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. 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. bulk carriers have been less affected than other types of vessels, but that's going to be a negative anyway. Then we see that there's not a lot of scrapping, and the order book is usually about 3, 3.5% per annum, and scrapping is 0.5%. So we actually need 3%. We have 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 microfaith 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 first half, but without amazing results. But if anything like... reconstruction or Iran opening and all that happens, then I think that this is going to be an extra bonus for the market. So, summing up, I think we will be seeing a moderate year with potential, upward potential in case the world stops.

Thanks, Dr. Oswald. Very obviously, incredibly detailed. And I had a couple of follow-ups that you 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.

Hey, 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 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 proceeds.

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 US$38.5 million are basically fully received at 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 further share repurchases here as 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, Grace.

Thank you. Again, that's Star 1. 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. 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, you know, 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 3 percent, I think that the environmental regulations will play a big role. I think that the exports from West Africa 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 things will definitely cover part of that 3 percent. Then if we have any reconstruction in the places that I mentioned earlier, 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 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? You know, these ships do not seem to be leaving the fleet, you know, as ships age and get over 20 years. What's their use? Why are they not being retired? Does your customers have any... 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, you know, we have very low operating expenses and we have scrubbers. 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 matter. Unless if 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?

It will definitely slow down speed. It will take longer time to install ESDs in the shipyards and to keep the vessels in better condition 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 consumer, 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 docks. 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.