Tuesday, March 17, 2009
Star Bulk Carriers Corp. Reports Financial Results for the Year Ended December 31, 2008
Tuesday, 17 March 2009
Star Bulk Carriers Corp., a global shipping company focusing on transportation of dry bulk cargoes, yesterday announced its operating results for the fourth quarter and the year ended December 31, 2008. We commenced operations on December 3, 2007. Included in this earnings release are our unaudited consolidated condensed income statements for the three and twelve month periods ended December 31, 2007 and 2008, unaudited condensed balance sheets as at December 31, 2007 and 2008 and unaudited consolidated condensed cash flow statements for the twelve month periods ended December 31, 2007 and 2008. During the period from the Company's inception (May 13, 2005) to the date it commenced operations (December 3, 2007), the Company was a development stage enterprise.
The unaudited consolidated condensed income statements, balance sheets, and cash flow statements presented herein include the accounts of Star Bulk Carriers Corp. and its wholly owned subsidiaries and of its predecessor Star Maritime Acquisition Corp. ("Star Maritime").
Akis Tsirigakis, President and CEO of Star Bulk commented:
"We are pleased to report strong results for the first full year of our operations, which were accomplished despite the fact that since the last quarter of 2008 we have been operating in an environment of unprecedented volatility.
"Since our inception as an operating company we formulated and executed a clear and focused strategy, adapting it to the changing market conditions without, however, compromising its basic principles. These principles are to seek visible cash flows through the employment of our vessels predominantly under time charters, to minimize the risk of our charter portfolio through diversification in counterparties and maturities, to follow prudent fleet expansion and to make conservative use of debt.
"During the first year of our operations, Star Bulk's fleet expanded by 50% in number of vessels and 62% in terms of carrying capacity. Our current fleet includes 12 vessels with an average age of 9.9 years, well below the industry average, and with a carrying capacity of 1.1 million tons. We have avoided the temptation of entering into new building contracts and we presently have no such exposure.
"Our growth was achieved without compromising our leverage which remains at a relatively modest level for our industry. As of today, our cash reserves have grown to about $60 million and we expect them to continue growing given the high charter cover of our fleet at profitable rates. Furthermore, as announced, Star Bulk obtained covenant waivers from all of our lenders until February 2010 thereby enhancing our operational and financial flexibility. I wish to clarify that our recent Shelf Registration, soon after the company became eligible, for up to $250 million, was not put in place out of financial necessity but rather, to serve as a flexibility instrument.
"The experience of our management team tested in previous market downturns enabled us to deal with the challenges of the current market environment enhancing our fleet contract coverage and cash flow visibility. As of today, we have secured a total of $400 million in contracted revenue under time charters. 93% of our fleet operating days in 2009 and 66% in 2010 are covered by contracts, with several of them extending to 2012 and 2014. Overall, we seek to diversify our charter portfolio in terms of counterparties with no more than two vessels per charterer, and in terms of maturities with staggered time charter expiration dates minimizing our market exposure at any particular point of time.
"Shipping is a vital link to the global economy and we are in this business for the long term. Today, the world is in a state of flux without clear visibility as to when the current turmoil will end. However, we believe that the developing economies particularly of China and India will remain the driving force for the dry bulk market for the foreseeable future. Even if their economies temporarily grow at a slower pace, urbanization and industrialization are irreversible trends and will necessitate continued infrastructure development which translates into demand for dry bulk shipping. The concerted efforts of governments around the world to inject liquidity in the financial markets and to implement economic stimulus programs mainly aimed at infrastructure development will ultimately produce results. Finally, due to the credit crunch, scrapping accelerates and the order book of new buildings is expected to shrink significantly due to cancellations and delays, thereby reducing fleet supply and helping to restore a healthier balance between supply and demand for ships.
"We believe that with the strong foundation we built so far and with our rapid response to the shifting market conditions, Star Bulk is today properly positioned not only to weather the current storm but also to benefit from opportunities which are traditionally presented in periods of weak markets."
George Syllantavos, Chief Financial Offer of Star Bulk commented:
"Star Bulk is today in a solid financial condition to deal with current market challenges and to take advantage of opportunities. Our senior debt at the end of December 2008 stood at approximately $296 million, today stands at approximately $284 million and the remaining principal debt repayments in 2009 are about $38 million. As of today, our cash reserves have grown to about $60 million.
"We are pleased to have signed with all our lenders to receive waivers on certain covenants including minimum asset coverage covenants in our loan agreements. Under the terms of these agreements with our lenders, we suspended our cash dividends and our share repurchase program, actions which further reinforce our liquidity and balance sheet.
"While we remain vigilant to safeguard our company from current market volatility, we also remain alert to opportunities. We believe that our modest leverage, strong liquidity, visible cash flows and high time charter overage, are significant competitive advantages especially in today's market environment."
We commenced operations during the fourth quarter of 2007 (December 3, 2007) and therefore in certain cases such as in EBITDA, we are unable to present a meaningful comparison of full year and/or fourth quarter of 2008 and 2007 results.
Fourth Quarter 2008 Results
For the quarter ended December 31, 2008, Voyage Revenues amounted to $72.8 million as compared to $3.6 million for the quarter ended December 31, 2007. Operating Income amounted to $54.3 million for the quarter ended December 31, 2008 compared to operating loss amounted to $3.9 million for the quarter ended December 31, 2007. Net Income for the fourth quarter of 2008 was $50.2 million representing $0.89 earnings per share calculated on 56,278,511 weighted average number of shares, basic and diluted as compared to $1.6 million representing $0.05 earnings per share calculated on 30,065,923 weighted average number of shares, basic and $0.04 earnings per share calculated on 36,817,616 weighted average number of shares, diluted, for the fourth quarter of 2007
EBITDA for the fourth quarter of 2008 was $70.3 million. Adjusted EBITDA for the same period excluding all the above items was $42.9 million. Please refer to a reconciliation of EBITDA and adjusted EBITDA to net cash provided by cash flows from operating activities.
An average of 12.1 and 0.84 vessels were owned and operated during the fourth quarter of 2008 and 2007, respectively, earning an average Time Charter Equivalent, or TCE rate of $41,521 per day and $31,316 per day, respectively. We refer you to the information under the heading "Summary of Selected Data" later in this release for further information regarding our calculation of TCE rate.
Year ended December 31, 2008 Results
For the year ended December 31, 2008, Voyage Revenues amounted to $238.9 million as compared to $3.6 million for the year ended December 31, 2007. Operating Income amounted to $142.8 million for the year ended December 31, 2008 compared to operating loss amounted to $5.6 million for the year ended December 31, 2007. Net Income for the year ended December 31, 2008 was $133.7 million representing $2.55 earnings per share calculated on 52,477,947 weighted average number of shares, basic and $2.46 earnings per share calculated on 54,280,472 weighted average number of shares, diluted as compared to $3.4 million representing $0.11 earnings per share calculated on 30,065,923 weighted average number of shares, basic and $0.09 earnings per share calculated on 36,817,616 weighted average number of shares, diluted, for the year ended December 31, 2007
Excluding all the above items for the year ended December 31, 2008, Net Income would have amounted to $60.8 million, or $1.16 earnings per share calculated on 52,477,947 weighted average number of shares, basic and $1.12 earnings per share calculated on 54,280,472 weighted average number of shares, diluted.
EBITDA for the year ended December 31, 2008 was $193.8 million. Adjusted EBITDA for the same period excluding all the above items was $120.9 million. Please refer to a reconciliation of EBITDA and adjusted EBITDA to net cash provided by cash flows from operating activities.
An average of 10.8 and 0.21 vessels were owned and operated during the year ended December 31, 2008 and 2007, respectively, earning an average TCE rate of $42,824 per day and $31,316 per day, respectively. We refer you to the information under the heading "Summary of Selected Data" later in this release for further information regarding our calculation of TCE rate.
Share Buyback Program update
The Company, under the share and warrant repurchase program announced on January 24, 2008 has repurchased as of March 16, 2009 a total of 1,247,000 shares of common stock for $8.0 million (average of $6.4 per share) and a total of 1,362,500 warrants for $5.5 million (average of $4.02 per warrant). During the fourth quarter, the Company has repurchased 495,000 shares of common stock for $1.7 million (average of $3.52 per share).
The Company has paid an aggregate of $13.5 million for the repurchased securities leaving $36.5 million of repurchasing capacity in Star Bulk's $50,000,000 share and warrant buyback program. In February 2009 the Company agreed with its lenders to temporarily suspend its Share Buyback program, after obtaining waivers regarding certain clauses of its loans.
Source: Star Bulk Carriers
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