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Star Bulk Carriers Corp. (SBLK)

Q1 2012 Earnings Conference Call

May 31, 2012, 11:00 a.m. ET


Spyros Capralos - President and CEO

Simos Spyrou - CFO


Natasha Boyden - Global Hunter Securities

Tony Pollock - Maxim Group



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Welcome to the Star Bulk Conference Call on the First Quarter 2012 Financial Results. We have today Mr. Spyros Capralos, President and Chief Executive Officer; and Mr. Simos Spyrou, Chief Financial Officer of the company.

At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today on Thursday, May 31, 2012.

We now pass the floor to one of our speaker today Mr. Spyros Capralos. Please go ahead sir.

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Spyros Capralos

Thank you, operator and good morning everybody. I’m Spyros Capralos, President and Chief Executive Officer of Star Bulk Carriers, and I’d like to welcome you to the Star Bulk Carriers’ first quarter 2012 financial results conference call. Along with me today to discuss our financial results is our CFO, Mr. Simos Spyrou.

Before we begin I kindly ask you to take a moment to read the Safe Harbor statement from Slide number two of our presentation. While you read it I’d like to personally address some of the most frequent questions we have been receiving from various investors.

First of all, it is true that this year unlike most of the previous year’s our first quarter results came out a little later than usual. The main reason behind this is the fact that as of the beginning of the year, we have appointed new auditors. In view of this, we decided it would be better to allow enough time for our new auditors namely Ernst & Young to complete all auditing procedures. Our cooperation with our previous auditors was exceptional and our relationship remained excellent, however, we believe that the company should reach auditors every five years in order to ensure better corporate governance and increase balance sheet towards its shareholders.

Another question we have been receiving recently has to do with our F3 filing. Our previous F3 registration statement expired and in order to continue using it, we had to file a new one with a same terms and conditions. This procedure is considered a standard practice for listed companies within the industry.

Finally, I’d like to underline the Star Bulk Carriers is a Marshall Islands company not a Greek company. It is true that we maintain offices in Greece and our fleet is managed from these offices, but the shipping unit is global even though a potential Greek exit from the euro zone would definitely have ripple effects throughout the global economy, our business is not affected directly. If anything, the current euro weakness works in our favor, since more than 70% G&A expenses are in Euros.

Let us now turn to Slide number three of the presentation to discuss our first quarter 2012 financial highlights in comparisons to last years. In the first quarter of 2012 gross revenues amounted to $28 million representing a 5% reduction versus the same period of 2011.

General and administrative expenses excluding amortization of stock-based compensation were less by 54% to 1.9 million in Q1 2012 versus 4 million in Q1 2011, mainly due to the one off severance payment of 2.3 million during last year’s first quarter. Excluding this item, our recurring G&A expenses were higher by 10%. This was a result of the additional staff the company hired in order to undertake the management of the additional four Capesize and two Supramax vessels during 2011.

Our net income for the first quarter 2012 amounted to $100,000 compared to 1.7 million in Q1 2011. Excluding non-cash items our net income for the first quarter amounted to $5.9 million compared to 1.3 in Q1 2011, mainly due to the 6.5 million related to the compensation for the early time charter termination of the Star Sigma.

Adjusted EBITDA for the first quarter was 17.9 million compared to 14.2 million last year. In Q1 2012, the time charter equivalent was $16,841 per day compared to $23,252 last year, representing mainly the expiration of our below market time charter agreements, the lost off-hire due to the grounding of the Star Polaris and the low freight rate environment.

Our average daily operating expenses were $5,582 per vessel, 8% higher than the same period last year emanating from the 28% rise in our fleet’s average vessel size from the addition of the four new Capes.

The adjusted net income of 5.9 million represent $0.07 earnings per share basic and diluted which is significantly higher than analyst consensus of $0.025 loss according to Bloomberg.

Please turn now to Slide four to discuss our balance sheet profile which we believe is one of the healthiest in the dry bulk industry. First of all, I’d like to point out the we currently have zero capital expense commitments as well as no exposure to interest rate swaps, so we are able to take advantage of the prevailing low interest rate environment as all our loans are based on floating rate.

As of today, total debt stands at 243.1 million and our current cash position stands at $41.9 million. Our net debt stands at around 4.4 times 2012 EBITDA. For this calculation we have annualized a Q1 2012 EBITDA and we have adjusted each for non-recurring and non-cash items.

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