Star Bulk Carriers' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Star Bulk Carriers Corp. (SBLK)

Q2 2012 Earnings Call

Aug 29, 2012 11:00 am ET

Executives

Spyros Capralos – President and Chief Executive Officer

Simos Spyrou – Chief Financial Officer

Analysts

Natasha Boyden – Global Hunter Securities, LLC

Chris Snyder – Sidoti & Company

Presentation

Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Conference Call on the Second Quarter 2012 Financial Results. We have with us 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, Wednesday, August 29, 2012.

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

Spyros Capralos

Thank you, operator. I’m Spyros Capralos, President and Chief Executive Officer of Star Bulk Carriers, and I would like to welcome you to the Star Bulk Carriers’ first half and second 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 on slide number two of our presentation.

Let us now turn to slide number three of the presentation for a preview of our second quarter 2012 financial highlights in comparison to last year. In the three months ended June 30, 2012, gross revenues amounted to $21.8 million, representing a 4% reduction versus the same period of 2011. General and administrative expenses were reduced by 25% to $2.1 million in Q2 2012 versus $2.9 million in Q2 2011.

Overall, during the second quarter of 2012, the company had a net loss of $4.6 million compared to a net income of $1.7 million in Q2 2011. Excluding non-cash items, our net loss for the second quarter amounted to $2.9 million compared to an adjusted net income of $2.3 million in Q2 2011.

Adjusted EBITDA for the second quarter of 2012 was $8.4 million compared to $15.1 million last year. Our time charter equivalent during this quarter was $14,628 per day compared to $18,664 last year, representing mainly the low freight rate environment and as well as the lost off-hire due to the grounding of the Star Polaris.

Our average daily operating expenses were $5,241 per vessel, 11% lower than the same period last year despite the fact that our average vessel size increased by 39% due to the higher number of Capes in our fleet.

The adjusted net loss of $2.7 million represents $0.04 loss per share basic and diluted.

Please turn to slide number four of the presentation for a preview of our first half 2012 highlights. In the six months ended June 30, 2012, gross revenues amounted to $49.8 million representing a 5% reduction versus the same period of 2011. G&A expenses amounted to $5.3 million and overall during the first half of 2012 the company had a net loss of $4.5 million.

Excluding non-cash items, our net income for the first half amounted to $3.2 million while our adjusted EBITDA stood at $26.4 million. Our time charter equivalent during this period was $15,724 per day, while our average daily operating expenses amounted to $5,416 per vessel. The adjusted net income of $3.2 million represents $0.04 earnings per share basic and diluted.

Please turn now to slide five to discuss our balance sheet profile. First of all, I’d like to point out that we currently have zero capital expense commitments related to the newbuilding as well as no exposure to interest rate swaps. So we continue to take advantage of the prevailing low interest rate environment.

As of today, total debt stands at $235.1 million and our current cash position stands at $38.6 million. Our net debt stands at around 3.7 times 2012 EBITDA. For this calculation, we have annualized our first half 2012 EBITDA and we have adjusted it for non-recurring and non-cash items. We feel comfortable regarding our ability to service our loans as our remaining principal repayment obligations for 2012 stand at $8.9 million. As you can see in the graph, our debt amortization profile for 2013, 2014 and 2015 stands at $32 million, $33 million and $28 million respectively.

Please turn to slide six for an overview of our fleet employment and our charter counterparties. This information is also available on our website in a very transparent manner and is updated regularly. Currently, we have secured 86% of our operating days in 2012, 35% in 2013 and 19% for 2014, with most of the open days in the Supermax category. Specifically, our time charter coverage in the Capesize segment is 97% for 2012, 73% for 2013, and 43% for 2014.

We refer especially to the Capes as this segment has been the most volatile and the most negatively affected so far. Supermax raise have been less volatile and have maintained healthier margins. We plan to opportunistically employ our vessels with upcoming contract expirations on period or for charters as the freight rate environment improves.

Our total contracted revenue amounts to approximately $152 million, while it’s worth noting that we no longer have legacy charters from the highs of 2008 that would be extremely difficult for our charters service. Moreover, I would like to highlight the high quality credit profile of our charters with blue-chip companies like RioTinto, Cargill and Louis Dreyfus among our counterparts.

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