Star Bulk Carriers Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: The company reported Q2 adjusted net income of $13.2 million (or $0.11 per share) and $69 million in adjusted EBITDA, while repurchasing 3.3 million shares for $54 million and declaring a $0.05 per share dividend.
  • Positive Sentiment: Since 2021, Starbulk has returned $2.75 billion to shareholders through dividends, buybacks, and debt repayment, cutting average net debt by 46% and net debt per vessel by over 53%.
  • Positive Sentiment: Integration of the Eagle fleet has delivered over $53 million in cumulative cost synergies, including $13 million in Q2, with full crew-platform conversion targeted by Q3 2025.
  • Positive Sentiment: Starbulk has completed 47 energy-saving technology retrofits and plans 13 more by year-end to improve fuel efficiency, reduce emissions, and comply with upcoming IMO carbon regulations.
  • Positive Sentiment: Management expects H2 seasonality tailwinds and an aging global fleet to support freight rates, with moderate fleet growth of 1.5% YTD and favorable demand trends into 2026.
AI Generated. May Contain Errors.
Earnings Conference Call
Star Bulk Carriers Q2 2025
00:00 / 00:00

There are 9 speakers on the call.

Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Starbulk Carriers Conference Call on the Second Quarter twenty twenty five Financial Results. With us today, Mr. Petros Papas, Chief Executive Officer Mr. Hamish Norton, President Mr. Simos Spiru and Mr.

Operator

Christos Begleires, Co Chief Financial Officers Mr. Nikos Rescos, Chief Operating Officer Mrs. Charis Placantonaki, Chief Strategy Officer of the company and Constantino Cimentiras, Head of Market Analysis 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

I must advise you that this conference is being recorded today. We now pass the floor to one of our speakers, Mr. Spiel. Please go ahead.

Speaker 1

Thank you, operator. I am Simo Spiro, Co Chief Financial Officer of Starbulk Carriers. And I would like to welcome you to our conference call regarding our financial results for the 2025. Before we begin, I kindly ask you to take a moment to read the Safe Harbor statement on Slide number two of our presentation. In today's presentation, we will go through our Q2 highlights results, actions taken to create value for our shareholders, cash evolution during the quarter, a short update on the merger synergies, vessel operations, fleet update, the latest on the regulatory front and our views on the industry fundamentals before opening up for questions.

Speaker 1

Let us now turn to slide number three of the presentation for a summary of our second quarter twenty twenty five highlights. The company reported the following. Net income amounted to $40,000 with adjusted net income of $13,200,000 or $0.11 per share adjusted net income. Adjusted EBITDA was $69,000,000 for the quarter. During the second quarter, we repurchased 3,300,000.0 shares for a total of $54,000,000 Our Board of Directors decided to continue prioritizing returns to shareholders given the company's strong position, declaring a dividend of $05 per share for the quarter payable on September 10.

Speaker 1

Our total cash today stands at $4.00 $7,000,000 Meanwhile, our total debt stands at $1,120,000,000 Through undrawn revolver facilities, we have additional liquidity of $115,000,000 resulting to pro form a liquidity of more than 5,000,000,000 Finally, we currently have 12 debt free vessels with an aggregate market value of $246,000,000 On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was $13,624 per vessel per day. Our combined daily operating expenses and net cash G and A expenses per vessel per day amounted to $6,277 per vessel. Therefore, our time charter equivalent less OpEx less G and A is approximately 7,350 per day per vessel. Slide four provides an overview of the company's capital allocation policy over the last three years and the various levers we have used to strengthen the company, increase the intrinsic value for our shares and return capital to our shareholders.

Speaker 1

In total, since 2021, we have taken actions totaling 2,750,000,000.00 in dividends, share buybacks and debt repayment to create value for our shareholders. At the same time, Starbulk has been growing the platform at opportune times through consecutive flip buyouts by issuing shares at or above NAV. On the bottom of the page, we show our net debt evolution. Since 2021, our average net debt has been reduced by 46%, reaching a level where it is covered by the fleet scrap value. Given the fleet growth on a per vessel basis, it has decreased from $11,200,000 per vessel to $5,300,000 per vessel, a reduction of more than 53%.

Speaker 1

Slide five graphically illustrates the changes in the company's cash balance during the second quarter. We started the quarter with $437,000,000 in cash. We generated positive cash flow from operating activities of $55,000,000 After including debt proceeds and repayments, CapEx payments for energy saving devices and ballast water treatment systems installations, vessel sale proceeds, share buybacks and the first quarter dividend payment, we arrived at a cash balance of $431,000,000 at the end of the quarter. I will now pass the floor to our Chief Operating Officer, Nikos Rescos for an update on synergies and our operational performance.

Speaker 2

Thank you, Simo. Slide six provides an update on the Eagle integration and synergies. We're now closing the first year mark since the Eagle acquisition, near completion of our strategy in realizing significant cost savings in the operating and general and administrative expenses. Over

Speaker 3

$53,000,000

Speaker 2

of cumulative cost synergies have been achieved since April 2024. Cost synergies achieved during Q2 twenty twenty five stand at approximately 13,000,000 with operating expense and G and A savings for the Eagle fleet at approximately $19.90 dollars per vessel per day. We expect to complete the phase out of third party crew margins by Q3 twenty twenty five and replacing with our crew platform, hence meeting our targeted cost optimization. Please turn to Slide seven, where we provide an operational update. Operating expenses for Q2 twenty twenty five started $4,928 Net cash G and A expenses were $13.49 dollars per vessel per day for the same period.

Speaker 2

In addition, we continue to rate at the top amongst our listed peers in terms of rideshift safety score. Slide eight provides a fleet update and some guidance around our future drydock and the relevant total of hire days. On the bottom of the page, we provide our expected dry dock expense schedule, which for the remaining of the year is estimated at $33,000,000 for the dry docking of 30 vessels. In total, we expect to have approximately 1,000 off hire days for the same period. On the top right of the page, we have our CapEx schedule, illustrating our new building CapEx and vessel energy efficiency upgrade expenses.

Speaker 2

Based on our latest construction schedule, our five CarSalax newbuilding vessels constructed at Kingdal Shipyard are expected to be delivered during 2026. For these vessels, we have secured 130,000,000 of debt financing against the new building installments. In line with IMO carbon tax regulations, we will continue investing and upgrading our fleet with the latest operational technologies available aimed in improving our fuel consumption, reducing our environmental footprint, enhancing the commercial attractiveness of the Starbulk fleet. Regarding our energy saving technologies retrofit program, we have so far completed 47 installations with another 13 planned for 2025. Please turn to Slide nine for an update on our fleet.

Speaker 2

On the vessel sales front, we continue disposing non ECO vessels opportunistically, reducing our average age and improving overall fleet efficiency. During the second quarter, we agreed to sell and deliver to the new owners some of our less efficient Supramax and Capsamax vessels, Tuckle Bulk, Star Canari, Star Patrol, Oriole and Star Georgia. Furthermore, during the second quarter, we have further agreed to sell Star Nighthawk, Star Runner, Falcon I, Star Gold, Star Sapiper and Star O, which are expected to be delivered to the new owners by the end of the year. We expect to receive on aggregate net sales proceeds of $104,000,000 during Q3 and Q4 twenty twenty five. Following the rollover of VEGO Bulk existing chartering contracts, we now have a total of eight chartering vessels.

Speaker 2

Considering the aforementioned changes in our fleet mix, we operate one of the largest dry bulk fleets amongst U. S. And European listed peers with 142 vessels on a fully delivered basis with an average age of eleven point nine years. I'll now pass the floor to our Chief Strategy Officer, Harish Placadonaki, for an update on recent global environmental regulation developments.

Speaker 3

Thank you, Nico. Please turn to Slide 10, where we highlight progress on our ESG priorities. In anticipation of the eighty four session of the IMOGEN efficacy in October 2025, we continue to assess the impact of the draft central framework approved by the IMO last April, and we research future strategies to ensure timing and efficient compliance with the forthcoming global regulations expected to take effect in January 2028. On the tuning and maritime front, we have reviewed compliance options and selected growth of our strategy for twenty twenty five-twenty twenty six, entering a pooling agreement with an external party to cover 100% of tons yield to debt fees for '25 and partially for '26, given the cost effectiveness of purchasing surplus units. Sarvo remains committed to supporting the professional development of the next generation in the shipping industry.

Speaker 3

A total of 32 universities students from Vision of Growth are carriers that are taking internships across various departments of our company. During Q2 twenty twenty five, the company renewed its total responsibility of the team, including the sponsorship of athletes from Cricket Nationals Kitsuki team and our continued support of the Union of Cricket Owners Scholarship Program. In preparation for the company's annual listing report to be published in the 2025, we are conducting a new impact analysis of our ESG material topics, engaging our internal stakeholders in accordance with the global reporting initiative standards. We continue to invest in digitalization and cybersecurity, including the rollout of Starlink and onboard firewall across our fleet, while actively exploring applications of AI technology in our operations. I will now hand the floor to our Head of Market Analysis, Constantino Simatidas, for a market update and his closing remarks.

Speaker 4

Thank you, Harris. Please turn to Slide 11 for a brief update of supply. During the 2025, total of 18,100,000 deadweight was delivered and 2,200,000 deadweight was sent to demolition. That brings net fleet growth to 15,900,000 deadweight or 1.5% year to date and 2.9 over the last twelve months. The newbuilding order book remains modest at 10.8% of the existing fleet.

Speaker 4

Contracting activity was soft in the first half falling to a nine year low of just $9,700,000 deadweight. Limited CPL capacity up to second half twenty twenty seven, high civilian costs and uncertainty over future green propulsion have kept new orders under control. At the same time, the fleet is aging and by the 2027, approximately 50% of the current fleet will be over 15 years old. Moreover, the increasing number of vessels undergoing their third special survey is estimated to reduce effective capacity by approximately 05% per annum between 2025 and 2027. The average steaming speed of the fleet has slightly rebounded from Q1 record low supported by firmer freight rates and a relatively stable bunker environment.

Speaker 4

However, speeds remain below last year levels and have stabilized at around 11 knots. Furthermore, new IMO carbon regulations are expected to continue to incentivize slow steaming and moderate effective sunlight in the medium term. Finally, global port congestion after experiencing a brief recovery in Q1 has now returned to long term averages. For the remainder of 2025 and 2026, we expect congestion to follow seasonal trends and to have a neutral or slightly positive impact on the supply and demand balance. Let us now turn to Slide 12 for a brief update of demand.

Speaker 4

According to Clarksons, total dry bulk trade during 2025 is projected to contract by 0.9%, while ton miles are expected to expand by 0.2%. For 2026, trade growth is estimated at 0.3% in tons and 0.6% in ton miles. President Trump's aggressive tariff negotiations and policy shifts have added uncertainty to traditional forecasting models. Nevertheless, the global economy showed considerable resilience in the first half of the year. In its latest report, the IMF upgraded global GDP forecast following easing trade tensions and recent U.

Speaker 4

S. Deals with the EU, Japan and other nations. World growth was revised up by 0.2 percentage points to 3% for 2025 and three point one percent for 2026, while U. S. And China GDP forecast for 2025 were upgraded by 0.20.8% respectively.

Speaker 4

Similar upward revisions in trade forecast should be expected over the next coming months, especially the trade through between The U. S. And China is extended over the next few over the next quarter. During the 2025, total drybulk volumes underperformed due to strong declines in coal and grain shipments. Iron ore trade was stable, while bauxite and minor bulk flows increased significantly.

Speaker 4

During the second half, miles during the second quarter, ton miles found support by stronger Atlantic exports, longer Pacific trade distances and the ongoing Red Sea rerouting. Chinese dry bulk imports contracted by 4.2% year over year in the first half, following two years of strong expansion in domestic output, imports and rising stockpiles. However, China's GDP growth has exceeded expectations on the back of aggressive stimulus measures that began in September with a name to revive domestic consumption, stabilize the housing market and offset the impact of tariffs. Dry bulk demand from the rest of the world has experienced a strong recovery over the last seven quarters, a trend that is expected to continue supported by lower commodity prices and a weaker U. S.

Speaker 4

Dollar. During the 2025, imports rose by 2.8% year over year, driven by Southeast Asia, India and Middle East demand. Iron projected to contract by 1.2% in tons and by 0.7% in ton miles during 2025. Chinese steel production fell 2.2% year on year during the first half driven by Q2 output reductions to address overcapacity. However, iron ore imports are expected to gain support as port stockpiles have declined in recent months and domestic iron ore production contracted by 8.4% year to date.

Speaker 4

Furthermore, record high steel exports have partially offset weaker domestic demand, while steel production in the rest of the world was stable year over year. By late twenty twenty five, iron ore ton miles will receive support from new high grade Atlantic iron ore mines that are expected to gradually replace lower quality imports and Chinese domestic production. Coal trade is projected to construct by 5.8% in tons and by 7.6% in ton miles during 2025. Export volumes grew back during the first half after reaching new record highs during the 2024. Chinese and Indian thermal electricity production declined, domestic coal production increased and stockpiles reached all time highs.

Speaker 4

Weak coal fundamentals and rising renewable energy production in China create downside risks. However, global focus on energy security, strong demand from Southeast Asian economies and the recovery of Australia coal ton mines should gradually provide support on coal trade. Grain trade is projected to contract marginally by 0.1% in tons, but to expand by 1.9 in ton miles during 2025. During the first half, total grain volumes dropped by 3.7% year over year, driven by a sharp decline in Black Sea and European exports and weaker Chinese demand. Latin America exports remained relatively flat at elevated levels, following a strong Brazilian soybean season and increased volumes from Argentina.

Speaker 4

Moreover, falling commodity prices, a weaker U. S. Dollar and pent up demand are expected to boost grain trade activity during the rest of 2025 and 2026. Minor pulp trade is projected to expand by 2.1 in tons and by 3.6% in ton miles during 2025. Minor bulk trade is closely tied to global GDP growth and has benefited from improving outlook across major economies.

Speaker 4

The favorable price arbitrage continues to fuel Chinese steel exports and backhaul trades, while bauxite exports from West Africa expanded by 31% in the first half, generating strong ton miles for the Capesize fleet. As a final comment, despite ongoing global geopolitical uncertainties, we remain optimistic about the medium to long term outlook for the drybulk market, supported by favorable supply outlook, stricter IMO environmental regulations and China's accumulating stimulus measures. We remain focused on actively managing our diverse scrubber fitted fleet to capitalize on market opportunities and deliver value to our shareholders. Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have.

Operator

Thank you.

Speaker 4

You.

Operator

And your first question will be from Chris Robertson at Deutsche Bank.

Speaker 5

Good morning, Good morning, Guys, just given the recent strengthening in the midsized segment in terms of the rates, do you have any expectations around further divestment of older tonnage in kind of the smaller segments? Or do you expect to target maybe one particular segment or another or just particular age profiles going forward?

Speaker 4

Disposables of smaller ships.

Speaker 2

Chris,

Speaker 6

the intention is to continue disposing of smaller vessels, smaller, older and inefficient vessels going forward. And that is also a kind of a hedge in case the market does not go the way we think it will.

Speaker 5

Got you. I guess as a follow-up to that, when you think about investing in the fleet on the vessels that you do decide to keep, there's obviously the current technologies out there, like different paints and whole treatment and things like that. But what other technology options are you guys looking into or you expect to maybe come onto the scene over the next few years that will help continue to improve efficiency of the current fleet without having to invest in alternative fuel technologies and other more expensive options?

Speaker 2

Chris. This is Nicolas. We are looking at various technologies and testing all sorts of from hot cleaning robots to testing carbon capture technology. We think this is going to be a long tailing until we are able to replace engines to our new fuels. So we are looking at various options of how to optimize performance.

Speaker 2

We are lately changing propellers on the bigger ships. We're dealing with efficiency devices, ASPs. We're able to reduce consumption by about 10%. So there are measures, there are investments to be made with our short return on investment horizon. And we see this as being the trend for the next, let's say, five to seven years.

Speaker 5

Great. That's helpful. Thank you for taking my questions. I'll turn it over.

Operator

Thank you. And next question will be from Omar Nokta at Jefferies. Please go ahead, Omar.

Speaker 7

Hey, guys. Good afternoon. Just wanted to ask about the market, and you touched on it a little bit. But we have seen a bit of a resurgence here, perhaps not maybe substantially, but definitely an improvement from the first half, which maybe seems a bit unexpected, I would say, for this

Speaker 4

time of year. Can you give us just a

Speaker 7

sense of what's behind this move from your angle? And especially given that we're seeing it across all segments, what's it telling us about seasonality And perhaps maybe your outlook as a result of what we're seeing today?

Speaker 6

Hi, Omar. Yes, seasonality is a factor. But also keep in mind that June exports actually reached an all time high. So that actually was the beginning of the better market that we saw. We think that part of it is expediting import exports prior to potential effects of the tariffs.

Speaker 6

And we also have another theory in this office, which we call option imbalance. We realized at some point a couple of months ago that there were many vessels in The Pacific, many more than usual and lesser vessels in The Atlantic. And that actually started an upturn in the Atlantic. And also think about it physically, when there are less vessels than what's required, they need to ballast. And therefore, that adds into the inefficiencies.

Speaker 6

Also, we saw some extra grain exports from Brazil and that helped as well. Now, as far as the future is concerned, we're pretty positive about Q4. As we've said in the past, the second half of the year, there's more trade than the first half of the year with the well known 54%, 6646% ratio between the two halves, 54 for the second half. That of course changes over time. Then we see a number of iron ore shipments coming from Brazil and Australia in the second half, the weather is better as well.

Speaker 6

The U. S. Soybean season is starting. Coal seems to be doing a bit better than previously. Of course, the auction imbalance is going to remain.

Speaker 6

This is not something that is amended immediately. One question we have about Q4 is the tariffs. What effect they will have and what is going to happen there, but that's something nobody can tell. And if you want to go further for 2026, I could talk to you for the next ten minutes. But we generally are looking forward to a relatively good year for 2026.

Speaker 6

If you want me to expand, I could.

Speaker 7

Thank you, Patrick. That's helpful. No, I appreciate the detail there. And maybe just for a point of clarity, you mentioned at the beginning of your remark, to my answer to my question, that June exports hit a high. Was that just you're referring to a specific commodity?

Speaker 7

Or was that just naturally kind of seaborne trade?

Speaker 6

I'm referring to Tom stated.

Speaker 7

Okay. Okay. And then maybe just a bit more of like a financial question. Given, obviously, the stock has done well this year and recently, and you've been fairly active buying back the stock you just recharged with the $100,000,000 buyback. How do you view kind of the use of the buyback here in the second half?

Speaker 7

You obviously, again, you're fairly active the past few months. The stock has reacted favorably. Do you continue this path? Or do you kind of maybe go back to the idea of the dividend taking up a bigger percentage of the free cash flow?

Speaker 8

Well, so Omar, it's Hamish Norton. We are basically going to try to do what's the right thing for the shareholders. That's basically how we think. If our stock gets cheaper, we'll probably use cash flow to or at least cash from ship sales to buy back stock and maybe some cash flow as well. If our stock does well, we'll probably use cash to basically build up a reserve on our balance sheet for opportunities that we think may get quite good later on.

Speaker 8

At this point, we're probably not going to buy ships because we think that the pricing is a little high for building up the fleet. But we do think there will be some opportunities in the foreseeable future. Probably, we will not increase our dividend above roughly 60% of cash flow, and it may not be that much.

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