Star Bulk Carriers CEO Discusses Q1 2011 Results - Earnings Call Transcript

Star Bulk Carriers Corp. (SBLK)

Q1 2011 Earnings Call

May 13, 2011 9:00 am ET

Executives

Spyros Capralos – President and Chief Executive Officer

George Syllantavos – Chief Financial Officer

Analysts

Noah Parquette – Cantor Fitzgerald

Presentation

Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Conference Call on the First Quarter 2011 Financial Results. We have with us Mr. Spyros Capralos, President and Chief Executive Officer and Mr. George Syllantavos, Chief Financial Officer of the company. (Operator Instructions) I must advice you that the conference is being recorded today, Friday, May 13, 2011.

And we now pass the floor to one of your speakers today, Mr. Spyros Capralos. Please go ahead sir.

Spyros Capralos

Thank you, operator, and good morning ladies and gentlemen. I’m Spyros Capralos, the President and Chief Executive Officer of Star Bulk Carriers and I would like to welcome you to the Star Bulk Carriers’ first quarter 2011 financial results conference call. Along with me today to discuss our financial results is our CFO, George Syllantavos.

Before we begin, I kindly ask you to take a moment to read the Safe-Harbor statement on slide number 2 of our presentation. While you do that and before we commence the earnings presentation, I would like to take the time and inform those of you who did not have the time to read our latest press release this morning that Star Bulk has entered into definitive agreements to acquire two capesize vessels with long time charter rates attached to a high credit rating mining company and at favorable rates compared to current market levels. We will discuss this in further detail during the presentation.

Let us now turn to slide number three of the presentations to discuss the important financial data. On this slide, we’ll present certain key data to illustrate why we continue to believe that while Star Bulk continues to enjoy a very comfortable financial position, it remains substantially undervalued. As of May 12 th our minimum total growth contracted revenue including our two newly, to be acquired capes is approximately $245 million and our market capitalization stands at $146 million.

Our senior debt currently stand at about $225 million and our current cash position is approximately $41 million. I would like to reiterate that Star Bulk has reduced its exposure to interest rate swaps and have therefore taken the full benefit in the prevailing low interest rates. We are also very pleased with the fact that our principal repayment commitments for this year are down substantially compared to last year since our loan repayment schedules were intentionally designed to be front-loaded.

Specifically, during 2010, our loan repayments stood at $68 million, while our repayment commitments for 2011, 2012, and 2013 are $34 million, $32 million, and $31 million respectively. Please note that numbers regarding our principal repayment do not include any loans associated with our two new applications.

Please turn to slide four to discuss our first quarter 2011 financial highlights. For the first quarter, gross revenue amounted to $29.5 million and net income amounted to $1.7 million. Excluding non-cash items, our net income for the first quarter of 2011 amounted to $1.3 million.

Adjusted EBITDA for the first quarter of 2011 was $14.2 million, while average daily operating expenses were $5,170 per day per vessel. The Time Charter Equivalent was $23, 252 per day. The adjusted net income of $1.3 million represents $0.02 earnings per share, basic and diluted, which is $0.05 above Bloomberg consensus.

Turning to slide number 5, we’d like to point out in this slide that since reinstituting the dividend in the second quarter of 2009, we have rewarded shareholders with 8 consecutive dividends. Our dividend represent a meaningful yield which currently is the highest within the dry bulk universe, 8.7% on an annualized basis calculated as of yesterday’s close.

As you can see on the graph, only five out of 11 dry bulk peers distributed dividends to their shareholders, with Star Bulk having currently the highest dividend. I would like to remind our investors that Star Bulk is one of the few companies in the dry bulk industry that has paid dividends for 12 out of the 14 quarters since inception three years ago.

Slide 6 illustrates the fleet employment chart and counterparties, which you can also find on our website. 78% of our 2011 operating days are already picked, which most of the open days are in the Supramax category. Actually, our 2011 prime charter coverage in the Capesize sector is 94% (inaudible).

With charters expiring mainly in the Supramax category within 2011, we’re aiming to opportunistically recharter our vessels as the trade grade environment improves. I’ll not go into further details, as I believe the presentation is self-explanatory.

If you now turn to slide seven, we provide an overview of our counterparties, who are first class charterers while providing us with an excellent counterparty risk profile.

Please turn to slide eight for an update on our latest transaction. This morning, we announced that we have entered into definitive agreement to acquire two Capesize bulk carriers for approximately $51.5 million. The first Capesize vessel has a carrying capacity of approximately 168,000 tons and was built in South Korea in 1996. This vessel has a time charter agreement with a major mining company until November 2016 at a gross daily rate of 25,000 and is currently expected to be delivered to Star Bulk within July 2011.

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