Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (NASDAQ:
SBLK), a global shipping company focusing on the transportation of
dry bulk cargoes, today announced its unaudited financial and
operating results for the three and the nine months ended September
30, 2012.
For the third quarter 2012, Star Bulk reported a net loss of
$308.7 million mainly due to a non-cash impairment charge of $303.2
million related to the total fleet of our eight Supramax vessels
and to our oldest Capesize vessel. Adjusted net loss for the third
quarter 2012 amounted to $3.8 million.
Financial Highlights
(Expressed in
thousands of U.S. 3 months 3 months 9 months 9 months
dollars, except for ended ended ended ended
daily rates and per September 30, September 30, September 30, September 30,
share data) 2012 2011 2012 2011
Average Number of
Vessels 14.0 12.5 14.2 11.5
Time Charter
Equivalent Rate $15,201 $18,817 $15,560 $20,166
(TCE)
Average OPEX per day
per vessel $4,878 $5,682 $5,239 $5,478
Net Revenue $18,417 $26,255 $68,224 $78,440
Impairment Loss ($303,219) - ($303,219) -
EBITDA ($297,289) $10,464 ($278,549) $39,548
Adjusted EBITDA (1) $7,629 $11,918 $34,020 $41,227
Net l(loss) / income ($308,677) ($2,996) ($313,137) $384
Adjusted Net loss /
income (1) ($3,760) ($1,542) ($568) $2,063
(Loss) / earnings
per share basic and ($57.15) ($0.59) ($58.09) $0.08
diluted (2)
Adjusted (Loss) /
earnings per share
basic and diluted ($0.70) ($0.30) ($0.11) $0.46
(2)
(1) See the table at the back of this release for a
reconciliation of TCE to Time Charter Revenue, EBITDA and Adjusted
EBITDA to Net Income, Adjusted Net Income to Net Income and
Adjusted Earnings Per Share to Earnings Per Share, the most
directly comparable financial measures calculated and presented in
accordance with generally accepted accounting principles in the
United States ("U.S. GAAP").
(2) Adjusted to give effect to the 15 to 1 reverse stock split
that became effective on October 15, 2012.
Spyros Capralos, President and CEO of Star
Bulk, commented: "Despite the already soft market for the past
4 years, this quarter has been one of the most challenging in
recent shipping history. The Baltic Dry Index (BDI) for the quarter
ended September 30, 2012 averaged a record low index of 846, which
was lower than the previous all-time low recorded in the quarter
ended December 31, 2001, which averaged 875. The exceptionally weak
freight market environment has affected our revenues due to our
increased spot market exposure, especially in the Supramax sector.
However, our prudent strategy to hedge our Capesize fleet with
first class charterers has reduced the weak market impact. Our $3.8
million adjusted loss in this quarter includes a loss of revenue of
$1.5 million due to the main engine damage of the Star Polaris,
which received no hire. The vessel has been repaired and re-entered
her charter of $16,500 per day to our first class charterer. In the
meantime, we are pursuing our claim against the shipyard.
Historically freight rates and asset values are closely
correlated and, as one would expect, vessel values have dropped
significantly during the last several quarters. As a result of
these adverse market conditions, as of September 30, 2012, we were
not in compliance with some covenants in our loan agreements. We
are currently in advanced discussions with our lenders to clear
these issues. Whilst a mutually agreeable solution is being sought,
our Board of Directors has decided to suspend the payment of
dividend on the Company's common stock.
Our medium-term outlook for the dry bulk industry is turning
positive as we move past this year's imbalanced supply growth.
While demand for dry bulk commodities from major developing
countries continues its growth for the foreseeable future, we
expect the market to start improving due to the reduced orderbook,
increased scrapping, slow steaming and the lack of bank
financing."
Simos Spyrou, Chief Financial Officer of Star
Bulk, commented: "As a result of the low freight rates and low
asset values, we performed an impairment test as of September 30,
2012. We determined that the book values of the total fleet of our
Supramax vessels and our oldest Capesize vessel were not
recoverable as of September 30, 2012 and thus a non-cash impairment
loss of $303.2 million was recognized. We believe that our book
values, following the impairment, provide a better estimation of
the current values of our assets consistent with market
conditions.
On the income statement side, we have continued to successfully
implement our cost optimization strategy. Our general and
administrative expenses were $2.0 million for the quarter ended
September 30, 2012 compared to $3.0 million in the same period of
2011. This reduction was achieved while our average number of
employees increased by 14%.
Our operating expenses for the quarter ended September 30, 2012
were $6.3 million, 4% lower than the same period of 2011. This
reduction was achieved while our fleet expanded by 12%.
Specifically, average daily operating expenses per vessel were
$4,878 for the quarter ended September 30, 2012, compared to $5,682
for the same period of 2011, a reduction of 14%, despite an
increase in our average size of vessels operated during the
period."
Fleet Profile (As of November 30,
2012)
Vessel Name Type DWT Year Built
------------- -------------- --------- ----------
Star Aurora Capesize 171,199 2000
Star Big Capesize 168,404 1996
Star Borealis Capesize 179,678 2011
Star Mega Capesize 170,631 1994
Star Polaris Capesize 179,546 2011
Star Sigma Capesize 184,403 1991
Star Cosmo Supramax 52,247 2005
Star Delta Supramax 52,434 2000
Star Epsilon Supramax 52,402 2001
Star Gamma Supramax 53,098 2002
Star Kappa Supramax 52,055 2001
Star Omicron Supramax 53,489 2005
Star Theta Supramax 52,425 2003
Star Zeta Supramax 52,994 2003
Total 14 1,475,005
Third Quarter 2012 and 2011 Results For
the quarter ended September 30, 2012, total voyage revenues
amounted to $18.3 million compared to $26.2 million for the quarter
ended September 30, 2011, a reduction of 30%. This decrease was
mainly due to lower charter rates for some of our vessels due to
the decline in the dry bulk charter market. In addition, voyage
revenues for the quarter ended September 30, 2012 included a
deduction of $1.6 million associated with the amortization of fair
value of above market acquired time charters, attached to vessels
acquired in the quarter ended September 30, 2011, which time
charters are amortized over the remaining period of the time
charters. For the quarter ended September 30, 2011 this deduction
was $0.8 million. Voyage revenues were also negatively affected by
the main engine damage of the Star Polaris, which resulted to an
off hire period of 92 days and a loss of revenue of $1.5
million.
For the quarter ended September 30, 2012, operating loss
amounted to $306.8 million compared to $2.2 million for the quarter
ended September 30, 2011. For the quarter ended September 30, 2012,
net loss amounted to $308.7 million, or a loss of $57.15 per basic
and diluted share, based on 5,400,827 shares, which is the weighted
average number of shares, basic and diluted, giving effect to the 1
to 15 reverse stock split effective October 15, 2012 ("reverse
split-adjusted basis"). Net loss for the quarter ended September
30, 2011 amounted to $3.0 million, or $0.59 loss per basic and
diluted share, based on 5,118,131 shares, which is the weighted
average numbers of basic and diluted shares on a reverse
split-adjusted basis.
Net Income for the quarter ended September 30, 2012 includes the
following non-cash items:
- Impairment loss of $303.2 million, or $56.14 per basic and
diluted share, related to the total fleet of our eight Supramax
vessels and to one of our Capesize vessels, Star Sigma.
- Amortization of fair value of above market acquired time
charters of $1.6 million, or $0.30 per basic and diluted share,
associated with time charters attached to vessels acquired in the
third quarter of 2011, including vessels Star Big and Star Mega,
which time charters are amortized over the remaining period of the
time charter as a decrease to net revenue.
- Expenses of $0.1 million, or $0.013 per basic and diluted
share, relating to the amortization of stock based compensation
recognized in connection with the unvested restricted shares issued
to directors and employees.
Excluding these non-cash items, net loss for
the quarter ended September 30, 2012 would amount to $3.8 million,
or $0.70 loss per basic and diluted share, based on 5,400,827
shares, which is the weighted average number of basic and diluted
shares, on a reverse split-adjusted basis.
Net Income for the quarter ended September 30, 2011 includes the
following non-cash items:
- Amortization of fair value of above market acquired time
charters of $0.8 million, or $0.15 per basic and diluted share,
associated with time charters attached to vessels acquired in the
third quarter of 2011, including vessels Star Big and Star Mega,
which time charters are amortized over the remaining period of the
time charter as a decrease to net revenue.
- Expenses of $0.6 million, or $0.11 per basic and diluted share,
relating to the amortization of stock based compensation recognized
in connection with the restricted shares issued to directors and
employees.
- An unrealized loss of $0.1 million, or $0.02 per basic and
diluted share, associated with the mark-to-market valuation of all
the Company's derivatives.
Excluding these non-cash items, net loss for
the quarter ended September 30, 2011 would amount to $1.5 million,
or $0.3 loss per basic and diluted share, based on 5,118,131
shares, which is the weighted average number of basic and diluted
shares, on a reverse split-adjusted basis.
Adjusted EBITDA for the quarters ended September 30, 2012 and
2011 excluding the above items was $7.6 million and $11.9 million,
respectively. A reconciliation of EBITDA and adjusted EBITDA to net
cash provided by cash flows from operating activities is set forth
below.
We owned and operated an average of 14.0 and 12.5 vessels during
the quarters ended September 30, 2012 and 2011, respectively, which
earned an average Time Charter Equivalent, or TCE, rate of $15,201
per day and $18,817 per day, respectively. We refer you to the
information under the heading "Summary of Selected Data" later in
this earnings release for information regarding our calculation of
TCE rates.
For the quarter ended September 30, 2012, voyage expenses
decreased by $2.5 million to $3.4 million compared to $5.9 million
for the quarter ended September 30, 2011. The decrease is mainly
due to voyage expenses of $4.5 million related to chartering-in a
third party vessel to serve a shipment under a Contract of
Affreightment (COA) recorded in the third quarter of 2011. There
was no corresponding expense during the same period in 2012. During
the three months ended September 30, 2012, one of our vessels was
under a voyage charter agreement, which resulted in an increase in
voyage expenses of $2.1 million due to the fact that the Company
was obligated to pay for bunkers. None of our vessels were under
voyage charter agreements that required the Company to pay for
bunkers during the three months ended September 30, 2011.
For the quarter ended September 30, 2012, vessel operating
expenses totaled $6.3 million compared to $6.5 million for the same
period of 2011. The decrease is mainly due to improvements in our
operational efficiency which resulted in a decrease in daily
operating expenses per vessel to $4,878 for the quarter ended
September 30, 2012 compared to $5,682 for the same period in
2011.
For the quarter ended September 30, 2012 dry-docking expenses
totaled $2.0 million compared to $0.2 million for the same period
in 2011. The amount of $2.0 million for the quarter ended September
30, 2012 consists of $1.7 million attributable to the dry-docking
of one of our Capesize vessels, Star Mega, which underwent a
dry-docking survey in late June 2012, and, the remaining amount is
attributable to the dry-docking of one of our Supramax vessels,
Star Cosmo, which underwent a dry-docking survey in late September
2012.
Even though we had an increase in the number of vessels that
operated during the three month period ended September 30, 2012
compared to the same period in 2011, depreciation expense decreased
to $9.5 million for the quarter ended September 30, 2012 compared
to $12.7 million for the quarter ended September 30, 2011. Decrease
in depreciation expense is mainly due to reduced depreciable value
of our oldest Capesize vessel, Star Sigma, after the related
impairment loss was recognized as of December 31, 2011 and due to
the sale of the other oldest Capesize vessel, Star Ypsilon, in
March 2012.
General and administrative expenses during the quarter ended
September 30, 2012 decreased to $2.0 million compared to $3.0
million during the quarter ended September 30, 2011. This decrease
is mainly due to lower stock based compensation expenses of $0.5
million in the third quarter of 2012 compared to the same period in
2011 and due to the fact that general and administrative expenses
for the quarter ended September 30, 2011, included a non- recurring
severance payment of $0.7 million to the former Chief Financial
Officer (CFO), who resigned as our CFO and from our Board of
Directors on August 31, 2011, which was payable pursuant to the
terms of his employment and consultancy agreement. Our general and
administrative expenses decreased during the quarter ended
September 30, 2012 compared to the same period in 2011 even though
our number of employees increased during the period as a result of
the growth of our fleet.
During the quarter ended September 30, 2012, we recorded an
impairment loss of $303.2 million in the book value of our eight
Supramax vessels and one of our oldest Capesize vessels, Star Sigma
in order the carrying values of the respective vessels to reflect
their fair market values.
Other operational gain amounting to $1.9 million during the
quarter ended September 30, 2012, includes non-recurring revenue of
$1.4 million, which represented a settlement of a commercial claim
and a gain of $0.5 million regarding a hull and machinery claim.
Other operational gain totaled to $0.2 million during the nine
months ended September 30, 2011 related to a hull and machinery
claim.
In September 2010, the Company has signed an agreement to sell a
45% interest in the future proceeds related to the settlement of
certain commercial claims. As a result, in connection to the
settlement amount of $1.4 million described in other operational
gain above, during the quarter ended September 30, 2012, the
Company incurred an expense of $0.7 million described in other
operational loss. During the quarter ended September 30, 2011, no
other operational loss was recorded.
Nine months ended September 30, 2012 and 2011
Results
For the nine months ended September 30, 2012, total voyage
revenues amounted to $68.0 million compared to $78.4 million for
the same period of 2011. This decrease was mainly due to lower
charter rates for some of the vessels during 2012 compared to the
same period of 2011. In addition, the Company for the nine months
ended September 30, 2012 recorded lower revenue of $4.8 million
associated with the amortization of fair value of above market
acquired time charters attached to vessels acquired, compared to
$0.6 million of lower revenue recorded for the nine months ended
September 30, 2011. For the nine months ended September 30, 2012,
voyage revenues were also affected by the Star Polaris' grounding
and damage of main engine, which resulted in an off hire period of
142 days and $2.3 million in lost revenues. Operating loss amounted
to $307.3 million for the nine months ended September 30, 2012
compared to an operating income of $2.9 million for the same period
of 2011. Net loss for the nine months ended September 30, 2012
amounted to $313.1 million representing $58.09 loss per basic and
diluted share based on 5,390,553 shares, which is the weighted
average number of shares, basic and diluted, on a reverse
split-adjusted basis. Net income for the nine months ended
September 30, 2011 amounted to $0.4 million representing $0.08
earnings per basic and diluted share calculated on 4,525,501 and
4,528,822 weighted average number of shares, basic and diluted,
respectively, on a reverse split-adjusted basis.
Net loss for the nine months ended September 30, 2012, includes
the following non-cash items:
- Impairment loss of $303.2 million, or $56.25 per basic and
diluted share, related to one of our Capesize vessels, Star Sigma,
and the total fleet of our eight Supramax vessels.
- Amortization of fair value of above market acquired time
charters of $4.8 million, or $0.88 per basic and diluted share,
associated with time charters attached to vessels acquired in the
third quarter of 2011, which are amortized over the remaining
period of the time charter as a decrease to voyage revenue.
- Expenses of $1.5 million, or $0.27 per basic and diluted share,
relating to the amortization of stock based compensation recognized
in connection with the unvested restricted shares issued to
directors and employees.
- Loss on sale of vessel of $3.2 million, or $0.59 per basic and
diluted share, in connection with the sale of vessel Star Ypsilon
that took place in first quarter of 2012.
- An unrealized gain of $0.1 million, or $0.02 per basic and
diluted share, associated with the mark-to-market valuation of the
Company's derivatives.
Excluding these non-cash items, net loss for
the nine months ended September 30, 2012 would amount to $0.6
million, or $0.11 loss per basic and diluted share, based on
5,390,553 shares, which is the weighted average number of basic and
diluted shares, on a reverse split-adjusted basis.
Net income for the nine months ended September 30, 2011 includes
the following non-cash items:
- An increase of revenue of $0.5 million, or $0.1 per basic and
diluted share, representing write-off of remaining balance of
deferred revenue related to the fair value of below market acquired
time charters attached to vessels acquired, due to early redelivery
of vessel Star Cosmo by its charterers, of which $0.2 million is
included under Voyage revenues and $0.3 million is included under
Gain on time charter agreement termination.
- Amortization of fair value of above market acquired time
charters of $0.8 million, or $0.17 per basic and diluted share,
associated with time charters attached to vessels acquired in the
third quarter of 2011, including vessels Star Big and Star Mega,
which time charters are amortized over the remaining period of the
time charter as decrease to voyage revenues.
- Expenses of $1.2 million, or $0.27 per basic and diluted share,
relating to the amortization of stock based compensation recognized
in connection with the unvested restricted shares issued to
directors and employees
- An unrealized loss of $0.2 million, or $0.04 per basic and
diluted share, associated with the mark-to-market valuation of the
Company's derivatives.
Excluding these non-cash items, net income for
the nine months ended September 30, 2011 would amount to $2.1
million, or $0.46 earnings per basic and diluted share, based on
4,525,501 and 4,528,822 weighted average numbers of shares, basic
and diluted, respectively, on a reverse split-adjusted
basis.
Adjusted EBITDA for the nine months ended September 30, 2012 and
2011 was $34.0 million and $41.2 million, respectively. A
reconciliation of EBITDA and adjusted EBITDA to net cash provided
by cash flows from operating activities is set forth below.
We owned and operated an average of 14.2 and 11.5 vessels during
the nine month period ended September 30, 2012 and 2011,
respectively, earning an average TCE rate of $15,560 and $20,166
per day, respectively. We refer you to the information under the
heading "Summary of Selected Data" later in this earnings release
for further information regarding our calculation of TCE rates.
Voyage expenses amounted to $17.5 million for the nine month
period ended September 30, 2012 compared to $17.0 million for the
nine month period ended September 30, 2011. The expense for
chartering-in third party vessels to serve shipments under a COA
amounted to $4.1 million and $14.4 million for the nine month
period ended September 30, 2012 and 2011, respectively. Excluding
these expenses for chartering-in third party vessels, the increase
in voyage expenses is mainly due to the fact that during the nine
month period ended September 30, 2012 our vessels were under six
voyage charter agreements, pursuant which voyage expenses were paid
by the Company, while during the same period in 2011 none of our
vessels were under voyage charter agreement. The revenues earned
from the voyage charter agreements during the nine month period
ended September 30, 2012 was $18.1 million.
For the nine months ended September 30, 2012 vessel operating
expenses totaled $20.5 million compared to $17.2 million for the
same period of 2011. The increase is mainly due to the fact that
the average number of vessels increased to 14.2 during the nine
months ended September 30, 2012 compared to 11.5 during the same
period in 2011. Daily operating expenses decreased to $5,239 for
the nine month period ended September 30, 2012 compared to $5,478
for the same period in 2011. This decrease is mainly attributable
to improvements in our operational efficiency.
For the nine months ended September 30, 2012 and 2011 our
dry-docking expenses were $3.0 million and $1.6 million,
respectively. The increase is mainly due to the fact that in the
nine months ended September 30, 2012 we had one Supramax vessel and
one Capesize vessel that underwent dry docking surveys, compared to
two Supramax vessels that underwent periodic dry-docking survey in
the same period in 2011.
Even though we had an increase in the number of vessels that
operated during nine months ended September 30, 2012 compared to
the same period of 2011, depreciation expense decreased to $28.7
million for the nine months ended September 30, 2012 compared to
$36.7 million for the nine months ended September 30, 2011.
Decrease in depreciation expense is mainly due to reduced net book
values of our two oldest Capesize vessels Star Sigma and Star
Ypsilon, after the related impairment losses were recognized as of
December 31, 2011.
General and administrative expenses totaled $7.3 million during
the nine month period ended September 30, 2012 compared to $10.0
million during the nine month period ended September 30, 2011,
respectively. The decrease in general and administrative expenses
in nine month period ended September 30, 2012 is mainly due to the
non-recurring severance payment to the Company's former Chief
Executive Officer and President and to the Company's former Chief
Financial Officer, which was payable pursuant to the terms of their
employment and consultancy agreements with the Company, totaling to
$2.8 million. Our general and administrative expenses decreased
during the quarter ended September 30, 2012 compared to the same
period in 2011 even though our number of employees increased during
the period as a result of the growth of our fleet.
During the nine months ended September 30, 2012, we recorded an
impairment loss of $303.2 million in the book value one of our
oldest Capesize vessels, Star Sigma, and the whole fleet of our
eight Supramax vessels, in order the carrying values of the
respective vessels to reflect their fair market values.
Gain on time charter agreement termination totaled $6.5 million
for the nine months ended September 30, 2012, representing a cash
payment of $5.73 million and fuel oil valued at $0.72 million which
was received as compensation for the early redelivery of vessel
Star Sigma from its previous charterer. Gain on time charter
agreement amounting $1.8 million for the nine months ended
September 30, 2011 consisted of $1.2 million cash compensation in
connection with the early redelivery of the Star Omicron by its
previous charterer and $0.6 non-cash gain in connection with early
redelivery of the Star Cosmo, by its previous charterer. The
non-cash gain relates to the write off of both the unamortized fair
value of below market acquired time charter on the respective
vessels' redelivery date and the deferred revenue from the
terminated time charter contract.
Other operational gain amounting to $2.0 million during the nine
months ended September 30, 2012, mainly consists of non-recurring
revenue of $1.4 million, which represents a settlement of a
commercial claim and a gain of $0.7 million regarding a hull and
machinery claim. Other operational gain totaled to $9.3 million
during the nine months ended September 30, 2011 consisted of $9.0
million received from the settlement of a commercial claim and a
gain of $0.3 million regarding a hull and machinery claim.
Other operational loss amounted to $0.7 million during the nine
months ended September 30, 2012 representing the cash payment made
by the Company to a third party pursuant to the terms of the
agreement that was signed in September of 2010, to sell a 45%
interest in the future proceeds related to the settlement of
certain commercial claims. The expense of $0.7 million was incurred
in connection to the settlement amount of $1.4 million described in
other operational gain above. Other operational loss totaled $4.1
million during the nine months ended September 30, 2011, due to the
payment made by the Company to a third party pursuant to the terms
of the same agreement as described above. The payment of $4.1
million was made in connection to the settlement of a commercial
claim in the amount of $9.0 million described in other operational
gain.
Loss on sale of vessel of $3.2 million represents a loss on sale
of the vessel Star Ypsilon during the nine-month period ended
September 30, 2012. There was no sale of vessels during the nine-
month period ended September 30, 2011.
(*) Amounts relating to variations in period-on-period
comparisons shown in this section are derived from the actual
numbers in the Company's books and records.
Liquidity and Capital Resources
Cash Flows Net cash provided by operating
activities for the nine months ended September 30, 2012 and 2011,
was $19.5 million and $35.6 million, respectively. Cash flows
generated by the operation of our fleet decreased mainly due to
lower average TCE rates, (see "Summary of Selected Data" below) as
a result of the decline in the prevailing freight rate environment.
For the nine months ended September 30, 2012 the Company earned a
daily TCE rate of $15,560 compared to a daily TCE rate of $20,166
for the nine months ended September 30, 2011.
Net cash provided by investing activities for the nine months
ended September 30, 2012 was $14.1 million. Net cash used in
investing activities for the nine months ended September 30, 2011
was $108.9 million. For the nine months ended September 30, 2012
net cash provided by investing activities consisted of the proceeds
from sale of the Star Ypsilon amounting to $8.0 million, a net
decrease of $2.2 million in restricted cash, insurance proceeds
amounting to $4.0 million, and $0.1 million relating to additions
to office equipment. Net cash used in investing activities for the
nine months ended September 30, 2011, consisted of $29.3 million
related to the acquisition of second hand Capesize vessels Star Big
and Star Mega plus a cash consideration of $23.1 million paid for
the acquisition of the above fair market charter rates attached to
these two vessels, plus $33.3 million related to the delivery of
our newbuilding vessel Star Borealis, plus installments amounting
to $22.5 million related to our newbuilding vessel Star Polaris and
a net increase of $1.8 million in restricted cash offset by
insurance proceeds amounting to $1.1 million.
Net cash used in financing activities for the nine months ended
September 30, 2012 was $36.5 million. Net cash provided by
financing activities for the nine months ended September 30, 2011
was $76.8 million. For the nine months ended September 30, 2012,
net cash used in financing activities consisted of loan installment
payments amounting to $32.0 million, cash dividend payments of $3.6
million, and $0.9 million paid for the repurchase of 925,957 shares
under the terms of the existing share re-purchase plan. For the
nine months ended September 30, 2011, net cash provided by
financing activities consisted of loan proceeds amounting to $85.5
million in a relation to the acquisition of the second hand vessels
Star Big and Star Mega as well as progress installment payments for
our new building vessels Star Borealis and Star Polaris and
proceeds from the public offering amounting to $28.7 million,
offset by, cash dividend payments of $10.4 million, financing fees
amounting to $0.9 million, and loan installment payments amounting
to $26.1 million.
Impairment loss As a result of the decline
in charter rates and vessel values during the last four years and
because market expectations for future rates are low and vessel
values are unlikely to increase to the high levels of 2008 in the
foreseeable future, we performed an impairment test using the value
in use method as of September 30, 2012. We determined undiscounted
projected net operating cash flows for each vessel and compared it
to the vessel's carrying value. In developing our estimates of
future cash flows, we made assumptions about future charter rates,
ship operating expenses and the estimated remaining useful lives of
the vessels. These assumptions are based on current market
conditions, historical trends as well as future expectations The
projected net operating cash flows were determined by considering
the charter revenues from existing time charters for the fixed
vessel days and an estimated daily time charter equivalent for the
unfixed days over the estimated remaining economic life of each
vessel, net of brokerage commissions, expected outflows for
scheduled vessels' maintenance (dry-docking and special surveys)
and vessels' operating expenses. Estimates of revenue are based on
the current FFA rates for as long as they are available and
historical average rates of similar size vessels for the period
thereafter. As result of this analysis, we determined that the
carrying amount of the total fleet of our eight Supramax vessels
and one of our oldest Capesize vessels, Star Sigma, were not
recoverable as of September 30, 2012 and thus we recognized a loss
amounting to $303.2 million. This impairment loss does not
represent a cash expense and it does not affect the Company's cash
flow.
Financing Update As of September 30, 2012,
we were not in compliance with several financial and security
coverage ratio covenants in our loan agreements. As a result, the
Company may be required to prepay indebtedness, provide additional
collateral, or obtain waivers to the respective terms of the
facilities. The Company is currently in advanced discussions with
its lenders to address the issues. If we are not able to reach a
mutually acceptable resolution with our lenders, our total
indebtedness may be reclassified as current and our lenders may
accelerate our indebtedness and foreclose their liens on our
vessels, which would impair our ability to continue to conduct our
business.
In order to preserve our existing liquidity position while we
discuss certain modifications with our lenders, the Board of
Directors has decided to suspend the payment of dividend, on the
Company's common stock until a mutually agreeable solution can be
reached with our lenders and the general freight rate environment
improves.
Recent Developments Effective as of the
opening of trading on October 15, 2012, the Company affected a
one-for-fifteen reverse stock split of its common shares. The
reverse stock split was approved by shareholders at the Company's
2012 Annual General Meeting of Shareholders held on September 7,
2012. The reverse stock split reduced the number of the Company's
common shares from 81,012,403 to 5,400,810 and affected all issued
and outstanding common shares. No fractional shares were issued in
connection to the reverse split. Shareholders who would otherwise
hold a fractional share of the Company's common stock received a
cash payment in lieu of such fractional share. The share and per
share information for all periods presented in this press release
has been adjusted to reflect the reverse stock split.
Summary of Selected Data
(TCE rates expressed in U.S. dollars)
3 months ended 3 months ended
September 30, September 30,
2012 2011
-------------- --------------
Average number of vessels (1) 14.0 12.5
-------------- --------------
Number of vessels (as of the last day of the
periods reported) 14 14
-------------- --------------
Average age of operational fleet (in years)
(2) 10.6 11.0
-------------- --------------
Ownership days (3) 1,288 1,148
-------------- --------------
Available days (4) 1,157 1,122
-------------- --------------
Voyage days for fleet (5) 1,087 1,117
-------------- --------------
Fleet utilization (6) 93.9% 99.6%
-------------- --------------
Average per-day TCE rate (7) $ 15,201 $ 18,817
-------------- --------------
Average per day OPEX per vessel $ 4,878 $ 5,682
-------------- --------------
9 months ended 9 months ended
September 30, September 30,
2012 2011
-------------- --------------
Average number of vessels (1) 14.2 11.5
-------------- --------------
Number of vessels (as of the last day of the
periods reported) 14 14
-------------- --------------
Average age of operational fleet (in years)
(2) 10.6 11.0
-------------- --------------
Ownership days (3) 3,904 3,139
-------------- --------------
Available days (4) 3,704 3,089
-------------- --------------
Voyage days for fleet (5) 3,556 3,074
-------------- --------------
Fleet utilization (6) 96.0% 99.5%
-------------- --------------
Average per-day TCE rate (7) $ 15,560 $ 20,166
-------------- --------------
Average per day OPEX per vessel $ 5,239 $ 5,478
-------------- --------------
(1) Average number of vessels is the number of vessels that
constituted our fleet for the relevant period, as measured by the
sum of the number of days each vessel was a part of our fleet
during the period divided by the number of calendar days in that
period.
(2) Average age of operational fleet is calculated as at
September 30, 2012 and 2011, respectively.
(3) Ownership days are the total calendar days each vessel in
the fleet was owned by the Company for the relevant period.
(4) Available days for the fleet are the ownership days after
subtracting for off-hire days with major repairs, dry-docking or
special or intermediate surveys or transfer of ownership.
(5) Voyage days are the total days the vessels were in our
possession for the relevant period after subtracting all off-hire
days incurred for any reason (including off-hire for dry-docking,
major repairs, special or intermediate surveys).
(6) Fleet utilization is calculated by dividing voyage days by
available days for the relevant period.
(7) Represents the weighted average per-day TCE rates, of our
entire fleet. TCE rate is a measure of the average daily revenue
performance of a vessel on a per voyage basis. Our method of
calculating TCE rate is determined by dividing voyage revenues (net
of voyage expenses and amortization of fair value of above/below
market acquired time charter agreements) by voyage days for the
relevant time period. Voyage expenses primarily consist of port,
canal and fuel costs that are unique to a particular voyage, which
would otherwise be paid by the charterer under a time charter
contract, as well as commissions. TCE rate is a standard shipping
industry performance measure used primarily to compare
period-to-period changes in a shipping company's performance
despite changes in the mix of charter types (i.e., spot charters,
time charters and bareboat charters) under which the vessels may be
employed between the periods. We included TCE revenues, a non- GAAP
measure, as it provides additional meaningful information in
conjunction with voyage revenues, the most directly comparable GAAP
measure, because it assists our management in making decisions
regarding the deployment and use of its vessels and in evaluating
their financial performance.
Unaudited Consolidated Condensed Statement of
Operations
3 months 3 months 9 months 9 months
(Expressed in thousands of ended ended ended ended
U.S. dollars except for September September September September
share and per share data) 30, 2012 30, 2011 30, 2012 30, 2011
---------- ---------- ---------- ----------
Revenues:
Voyage Revenues 18,346 26,186 68,016 78,356
Management Fee Income 71 69 208 84
---------- ---------- ---------- ----------
18,417 26,255 68,224 78,440
Expenses:
Voyage expenses (3,424) (5,932) (17,453) (16,953)
Vessel operating expenses (6,283) (6,523) (20,452) (17,194)
Dry-docking expenses (1,971) (247) (2,997) (1,605)
Depreciation (9,535) (12,675) (28,732) (36,684)
Management fees - - - (54)
(Loss)/gain on derivative
instruments (23) (114) 41 (93)
General and administrative
expenses (1,988) (2,996) (7,325) (10,010)
Vessel impairment loss (303,219) - (303,219) -
Gain on time charter
agreement termination - - 6,454 1,806
Other operational gain 1,891 21 2,031 9,261
Other operational loss (663) - (663) (4,050)
Loss on sale of vessel (26) - (3,190) -
---------- ---------- ---------- ----------
Operating (loss) / income (306,824) (2,211) (307,281) 2,864
---------- ---------- ---------- ----------
Interest and finance costs (1,905) (1,086) (6,047) (3,127)
Interest and other income 52 301 191 647
---------- ---------- ---------- ----------
Total other expenses, net (1,853) (785) (5,856) (2,480)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net (loss) / income (308,677) (2,996) (313,137) 384
========== ========== ========== ==========
(Loss)/ earnings per share,
basic* (57.15) (0.59) (58.09) 0.08
========== ========== ========== ==========
(Loss)/ earnings per share,
diluted* (57.15) (0.59) (58.09) 0.08
========== ========== ========== ==========
Weighted average number of
shares outstanding, basic 5,400,827 5,118,131 5,390,553 4,525,501
========== ========== ========== ==========
Weighted average number of
shares outstanding, diluted 5,400,827 5,118,131 5,390,553 4,528,822
========== ========== ========== ==========
*The computation of basic earnings per share is based on the
weighted average number of common shares outstanding during the
period, as adjusted to reflect the reverse stock split effective
October 15, 2012
Unaudited Consolidated Condensed Balance Sheets
(Expressed in thousands of U.S. dollars)
September 30, December 31,
ASSETS 2012 2011
------------- -------------
Cash and restricted cash(current and non-
current) 39,375 44,755
Other current assets 13,364 12,166
Fixed assets, net 295,520 638,532
Fair value of above market acquired time charter 15,931 20,699
Other non-current assets 1,401 1,776
------------- -------------
TOTAL ASSETS 365,591 717,928
============= =============
Total debt 234,114 266,140
Total other liabilities 13,419 17,575
------------- -------------
TOTAL LIABILITIES 247,533 283,715
STOCKHOLDERS' EQUITY 118,058 434,213
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 365,591 717,928
============= =============
Unaudited Cash Flow Data
9 months 9 months
ended ended
September September
(Expressed in thousands of U.S. dollars) 30, 2012 30, 2011
------------ ------------
Net cash provided by operating activities 19,475 35,574
Net cash provided by / (used in) investing
activities 14,061 (108,932)
Net cash (used in) / provided by financing
activities (36,518) 76,750
EBITDA and adjusted EBITDA Reconciliation
Star Bulk considers EBITDA to represent net income before interest,
income taxes, depreciation and amortization. EBITDA does not
represent and should not be considered as an alternative to net
income or cash flow from operations, as determined by United States
generally accepted accounting principles, ("U.S. GAAP"), and our
calculation of EBITDA may not be comparable to that reported by
other companies. EBITDA is included herein because it is a basis
upon which the Company assesses its liquidity position it is used
by our lenders as a measure of our compliance with certain loan
covenants and because the Company believes that it presents useful
information to investors regarding the Company's ability to service
and/or incur indebtedness.
The Company excluded amortization of the fair value of
above/below market acquired time charters associated with time
charters attached to vessels acquired, vessel impairment loss, loss
on bad debts non-cash gain or loss related to early time charter
termination, non-cash gain or loss related to sale of vessel,
change in fair value of derivatives and stock-based compensation
expense recognized during the period, to derive adjusted EBITDA.
The Company excluded the above non-cash items to derive adjusted
EBITDA because the Company believes that these non-cash items do
not reflect the operational cash inflows and outflows of the
Company's fleet.
The following table reconciles net cash provided by operating
activities to EBITDA and adjusted EBITDA:
3 months 3 months 9 months 9 months
ended ended ended ended
(Expressed in thousands of September September September September
U.S. dollars 30, 2012 30, 2011 30, 2012 30, 2011
Net cash provided by
operating activities 121 10,994 19,475 35,574
Net increase in current
assets 7,053 3,880 4,309 5,891
Net (decrease)/increase in
operating liabilities,
excluding current portion
of long term debt (1,789) (3,684) 4,157 (2,739)
Amortization of fair value
of above/below market
acquired time charter
agreements (1,601) (765) (4,768) (313)
Vessel impairment loss (303,219) - (303,219) -
Other non-cash charges (32) (13) (83) (18)
Amortization of deferred
finance charges (118) (64) (375) (221)
Stock - based compensation (72) (575) (1,474) (1,203)
Change in fair value of
derivatives - (114) 82 (163)
Total other expenses, net 1,853 785 5,856 2,480
Loss on sale of vessel (26) - (3,190) -
Gain from Hull & Machinery
claim received 541 20 681 260
---------- ---------- ---------- ----------
EBITDA (297,289) 10,464 (278,549) 39,548
========== ========== ========== ==========
Less:
Change in fair value of
derivatives - (82) -
Plus:
Amortization of fair value
of above/below market
acquired time charter
agreements 1,601 765 4,768 313
Stock-based compensation 72 575 1,474 1,203
Vessel impairment loss 303,219 - 303,219 -
Loss on sale of vessel 26 3,190
Change in fair value of
derivatives - 114 - 163
---------- ---------- ---------- ----------
Adjusted EBITDA 7,629 11,918 34,020 41,227
========== ========== ========== ==========
Conference Call details: Star Bulk's
management team will host a conference call to discuss the
Company's financial results today, November 30 at 11 a.m., Eastern
Standard Time (EST).
Participants should dial into the call 10 minutes before the
scheduled time using the following numbers: 1(866) 819-7111 (from
the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452 542 301
(from outside the US). Please quote "Star Bulk."
A replay of the conference call will be available until December
7, 2012. The United States replay number is 1(866) 247-4222; from
the UK 0(800) 953-1533; the standard international replay number is
(+44) (0) 1452 550 000 and the access code required for the replay
is: 3128607#.
Slides and audio webcast: There will also
be a simultaneous live webcast over the Internet, through the Star
Bulk website (www.starbulk.com). Participants to the live webcast
should register on the website approximately 10 minutes prior to
the start of the webcast.
About Star Bulk Star Bulk is a global
shipping company providing worldwide seaborne transportation
solutions in the dry bulk sector. Star Bulk's vessels transport
major bulks, which include iron ore, coal and grain and minor bulks
which include bauxite, fertilizers and steel products. Star Bulk
was incorporated in the Marshall Islands on December 13, 2006 and
maintains executive offices in Athens, Greece. Its common stock
trades on the Nasdaq Global Market under the symbol "SBLK".
Currently, Star Bulk has an operating fleet of fourteen dry bulk
carriers. The total fleet consists of six Capesize and eight
Supramax dry bulk vessels with a combined cargo carrying capacity
of 1,475,005 deadweight tons. The average age of our current
operating fleet is approximately 10.6 years.
Forward-Looking Statements Matters
discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995
provides safe harbor protections for forward-looking statements in
order to encourage companies to provide prospective information
about their business. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or
performance, and underlying assumptions and other statements, which
are other than statements of historical facts.
The Company desires to take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
and is including this cautionary statement in connection with this
safe harbor legislation. The words "believe," "anticipate,"
"intends," "estimate," "forecast," "project," "plan," "potential,"
"may," "should," "expect," "pending" and similar expressions
identify forward-looking statements.
The forward-looking statements in this press release are based
upon various assumptions, many of which are based, in turn, upon
further assumptions, including without limitation, examination by
the Company's management of historical operating trends, data
contained in its records and other data available from third
parties. Although the Company believes that these assumptions were
reasonable when made, because these assumptions are inherently
subject to significant uncertainties and contingencies which are
difficult or impossible to predict and are beyond the Company's
control, the Company cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors
that, in the Company's view, could cause actual results to differ
materially from those discussed in the forward-looking statements
include the strength of world economies and currencies, general
market conditions, including fluctuations in charter rates and
vessel values, changes in demand for dry bulk shipping capacity,
changes in the Company's operating expenses, including bunker
prices, drydocking and insurance costs, the market for the
Company's vessels, availability of financing and refinancing,
changes in governmental rules and regulations or actions taken by
regulatory authorities, potential liability from pending or future
litigation, general domestic and international political
conditions, potential disruption of shipping routes due to
accidents or political events, vessels breakdowns and instances of
off-hires and other factors. Please see our filings with the
Securities and Exchange Commission for a more complete discussion
of these and other risks and uncertainties. The information set
forth herein speaks only as of the date hereof, and the Company
disclaims any intention or obligation to update any forward-looking
statements as a result of developments occurring after the date of
this communication.
Contacts: Company: Simos Spyrou CFO Star Bulk
Carriers Corp. c/o Star Bulk Management Inc. 40 Ag. Konstantinou
Av. Maroussi 15124 Athens, Greece www.starbulk.com Investor
Relations / Financial Media: Nicolas Bornozis President Capital
Link, Inc. 230 Park Avenue, Suite 1536 New York, NY 10169 Tel.
(212) 661-7566 E-mail: starbulk@capitallink.com
www.capitallink.com
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