Star Bulk Carriers Corporation ( SBLK)

Q2 2011 Earnings Conference Call

August 10, 2011 11:00 AM ET

Executives

Spyros Capralos - President and CEO

George Syllantavos - CFO

Analysts

James Woods - FBR & Co

Natasha Boyden - Cantor Fitzgerald

Michael Pak - Clarkson Capital Markets

Presentation

Operator

Thank you for standing by ladies and gentlemen and welcome to the Starbulk conference call on the second 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.

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) This conference is being recorded today, Wednesday, August 10, 2011. 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 afternoon or good morning ladies and gentlemen. I am Spyros Capralos, the President and Chief Executive Officer of Starbulk Carriers and I would like to welcome you to the Starbulk Carriers second quarter and first half 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 two of our presentation. Since you are quick readers, let us now turn to slide number three of the presentation to first discuss our balance sheet, which we like to highlight, because we believe is one of the healthiest in the drybulk industry.

As of this Monday, August 8, our senior debt stood at $257 million. The senior debt figure includes both the $31 million loan facility of ABN Amro for the acquisition of Star Big and Star Mega, as well as approximately $43 million debt from the Credit Agricole loan facility for the financing of the two new buildings.

The company is in full compliance with bank covenants for all our loan facilities. Important to mention is that we have zero CapEx commitments for the two cape new buildings with $21 million available from the Credit Agricole loan facility. On the other hand, the CapEx remaining for the Star Mega is $7 million. I would like to note that we expect to take delivery of Star Mega within next week.

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, as you can see in the graph, during 2010, our principal repayments stood at $68 million, while our remaining repayment commitments for 2011 stand at around $15 million from $37 million at the beginning of the year, $38 million for 2012 and $36 million for $2013.

This loan repayment schedule includes the undrawn portions of both the ABN Amro loan regarding Star Mega and the Credit Agricole loan regarding to the two new buildings. I would like to inform my investors that our current cash position stands at $52 million.

Lastly, I would like to reiterate that Starbulk has reduced its exposure to interest rate swaps and we are taking the full benefit of the prevailing low interest rates as all of our loans are on floating rate basis.

Please turn to slide four to discuss our first half and second quarter 2011 financial highlights. For the first half of 2011, gross revenue amounted to $52.2 million and net income amounted to $3.4 million. Excluding non-cash items, our net income for the first half of 2011, amounted to $3.6 million.

Adjusted EBITDA for the first half of 2011 was $29 million, while average daily operating expenses were $5,360 per vessel. The Time Charter equivalent in the first half of 2011 was 20,943 per day. The adjusted net income of $3.6 million represents $0.06 earnings per share basic and diluted.

In the second quarter of this year, gross revenue amounted to $22.7 million and net income amounted to $1.7 million. Excluding non-cash items, our net income for the second quarter of 2011 amounted to $2.2 million. Adjusted EBITDA for the second quarter of 2011 was $15.1 million while average daily operating expenses were $5547 per vessel.

The Time Charter equivalent was $18,664 per day. The adjusted net income of $2.2 million represents $0.03 earnings per share basic and diluted which is $0.09 above Bloomberg consensus.

Turning to slide number five. I would like to point out in this slide that since reinstating, reinstituting the dividend in the second quarter of 2009, we have rewarded shareholders with nine consecutive quarterly dividends. Our dividends represent a meaningful yield which currently is the highest within the drybulk universe exceeding 14% on an annualized basis calculated as of yesterday’s close.

As you can see on the graph, only four out of the ten US listed drybulk peers have distributed dividends to their shareholders in 2011. Again, Starbulk having the highest yield. I would like to remind our investors that Starbulk is one of the few companies in the drybulk industry that has consistently paid dividends since inception.

Slide six illustrates our modern fleet of drybulk vessels consisting of 12 drybulk carriers with two fully funded capesize new buildings on their way to being delivered in the fourth quarter of 2011 and with the addition of the Star Mega to our fleet, within next week we’ll have increased our operating fleet by 75% in terms of cargo carrying capacity from the beginning of this year.

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