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Category: Star Bulk (SBLK)
Date: 24 May 2021 Stock price of Star Bulk (SBLK): $21.59 Market Capital of Star Bulk (SBLK): $2.14 billion We take a look at the 1st quarter 2021 earnings report of Star Bulk Carriers (SBLK) a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Star Bulk’s vessels transport major bulks, which include iron ore, minerals and grain. For the quarter the group reported revenues of $200 million and net income of $35.7 million
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Our outlook for the market remains positive due to the reopening of the global economy and consequent increased demand across all key dry bulk commodities. The record low orderbook coupled with upcoming environmental regulations that limit new vessel orders, also create favorable long term dynamics for our industry, which our Company is well positioned to enjoy"
More About Star Bulk (SBLK)
Star Bulk is a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Star Bulk’s vessels transport major bulks, which include iron ore, minerals and grain, and minor bulks, which include bauxite, fertilizers and steel products. Star Bulk was incorporated in the Marshall Islands on December 13, 2006 and maintains executive offices in Athens, Oslo, New York, Limassol and Singapore. Its common stock trades on the Nasdaq Global Select Market under the symbol “SBLK”. Star Bulk will operate on a fully delivered basis a fleet of 128 vessels, with an aggregate capacity of 14.1 million dwt, consisting of 17 Newcastlemax, 22 Capesize, 2 Mini Capesize, 7 Post Panamax, 41 Kamsarmax, 2 Panamax, 20 Ultramax and 17 Supramax vessels with carrying capacities between 52,425 dwt and 209,537 dwt.
Overview of Star Bulk (SBLK) 1st quarter 2021 earnings
- For the first quarter of 2021, we had a net income of $35.8 million, or $0.36 earnings per share. Net income for the first quarter of 2020 was $2.8 million, or $0.03 earnings per share.
- Adjusted net income, which excludes certain non-cash items, was $35.7 million, or $0.36 earnings per share for the first quarter of 2021, compared to an adjusted net loss for the first quarter of 2020 of $22.3 million, or $0.23 loss per share.
- Net cash provided by operating activities for the first quarter of 2021 was $79.2 million, compared to net cash provided by operating activities of $32.1 million for the first quarter of 2020. Adjusted EBITDA, which excludes certain non-cash items, was $84.7 million for the first quarter of 2021, compared to adjusted EBITDA of $32.6 million for the first quarter of 2020.
- Voyage revenues for the first quarter of 2021 increased to $200.5 million from $160.9 million in the first quarter of 2020. Time charter equivalent revenues (“TCE Revenues”) (please see the table at the end of this release for the calculation of the TCE Revenues) were $156.4 million for the first quarter of 2021, compared to $99.8 million for the first quarter of 2020. TCE rate for the first quarter of 2021 was $15,461 compared to $10,949 for the first quarter of 2020.
- For the first quarters of 2021 and 2020, vessel operating expenses were $47.4 million and $42.7 million, respectively. Vessel operating expenses for the first quarter of 2021 included pre-delivery and pre-joining expenses of $0.5 million and additional crew expenses related to the increased number of crew changes performed during the period as a result of COVID-19 restrictions imposed during 2020 of $1.3 million. Our average daily operating expenses per vessel for the first quarters of 2021 and 2020 were $4,410 and $4,047, respectively. Excluding non-recurring expenses such as pre-delivery and pre-joining expenses and the increased costs due to the COVID-19 pandemic in 2021, our average daily operating expenses per vessel for the first quarter of 2021 were $4,251.
- General and administrative expenses for the first quarters of 2021 and 2020 were $7.3 million and $6.0 million, respectively. The increase is mainly attributable to the reversal, in the first quarter of 2020, of the previously recognized stock based compensation expense of $1.2 million following the reassessment of the probability of achieving the performance conditions for some of our outstanding awards. Vessel management fees for the first quarters of 2021 and 2020 were $4.7 million and $4.6 million, respectively. Our average daily net cash general and administrative expenses per vessel (including management fees and excluding stock-based compensation and other non-cash charges) for the first quarters of 2021 and 2020 were $1,087 and $1,064, respectively.
- Interest and finance costs net of interest and other income/(loss) for the first quarters of 2021 and 2020 were $12.7 million and $20.1 million, respectively. Despite the increase in the weighted average balance of our outstanding indebtedness to $1,604.5 million during the first quarter of 2021, from $1,593.2 million for the same period in 2020, the interest and finance costs net of interest and other income/ (loss) decreased due to the decrease in the average interest rate on our outstanding indebtedness, mainly driven by the refinancing of certain of our debt agreements, the interest rate swap agreements that we entered into in 2020 and 2021 and the lower LIBOR rates during the first quarter of 2021 compared to the same period in 2020
Star Bulk management commentary on their 1st quarter 2021 earnings
ATHENS, GREECE, May 19, 2021 – Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (Nasdaq: SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the first quarter of 2021.
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“Star Bulk reported a strong first quarter of 2021, earning net income of $35.8 million, on TCE Revenues of $156.4 million, with daily TCE per vessel for the fleet increasing to $15,461. The majority of the fleet remains exposed to the spot market for Q3 and following, with current forward coverage at $21,168 for 82% of available days in Q2. The Board of Directors has amended the Company’s dividend policy to substantially increase return of capital to our shareholders. As a result, the Company will be paying a dividend for Q1 of $0.30 / share for the first quarter. Over the past months we have continued increasing our fleet with the acquisition of twelve vessels, on average younger than our current fleet, nine of which were delivered within Q1. We expect to take delivery of the remaining three vessels during Q2. Our outlook for the market remains positive due to the reopening of the global economy and consequent increased demand across all key dry bulk commodities. The record low orderbook coupled with upcoming environmental regulations that limit new vessel orders, also create favorable long term dynamics for our industry, which our Company is well positioned to enjoy.”
Petros Pappas, Chief Executive Officer of Star Bulk, commented:
“Star Bulk reported a strong first quarter of 2021, earning net income of $35.8 million, on TCE Revenues of $156.4 million, with daily TCE per vessel for the fleet increasing to $15,461. The majority of the fleet remains exposed to the spot market for Q3 and following, with current forward coverage at $21,168 for 82% of available days in Q2. The Board of Directors has amended the Company’s dividend policy to substantially increase return of capital to our shareholders. As a result, the Company will be paying a dividend for Q1 of $0.30 / share for the first quarter. Over the past months we have continued increasing our fleet with the acquisition of twelve vessels, on average younger than our current fleet, nine of which were delivered within Q1. We expect to take delivery of the remaining three vessels during Q2. Our outlook for the market remains positive due to the reopening of the global economy and consequent increased demand across all key dry bulk commodities. The record low orderbook coupled with upcoming environmental regulations that limit new vessel orders, also create favorable long term dynamics for our industry, which our Company is well positioned to enjoy.”
Fleet Update:
On May 19, 2021 we took delivery of SBI Pegasus, the seventh and final vessel, pursuant to the previously announced transaction with ENETI INC (formerly known as Scorpio Bulkers Inc.). We issued to the relevant ENETI affiliates 350,797 common shares representing the share consideration for the seventh vessel and we assumed the outstanding lease obligations associated with the vessel. Following the issuance of these shares the Company has 102,239,716 common shares issued and outstanding.
COVID-19 and Our Proactive Measures:
Despite the global gradual recovery from COVID-19, we continue to take proactive measures to ensure the health and wellness of our crew and onshore employees while maintaining effective business continuity and uninterrupted service to our customers. The overall impact of COVID-19 on our business, and the efficacy of any measures we take in response to the challenges presented by the COVID-19 pandemic, will depend on how the outbreak further develops, the duration and extent of the restrictive measures that are associated with the pandemic and their impact on global economy and trade, which is still uncertain.
On May 19, 2021 we took delivery of SBI Pegasus, the seventh and final vessel, pursuant to the previously announced transaction with ENETI INC (formerly known as Scorpio Bulkers Inc.). We issued to the relevant ENETI affiliates 350,797 common shares representing the share consideration for the seventh vessel and we assumed the outstanding lease obligations associated with the vessel. Following the issuance of these shares the Company has 102,239,716 common shares issued and outstanding.
COVID-19 and Our Proactive Measures:
Despite the global gradual recovery from COVID-19, we continue to take proactive measures to ensure the health and wellness of our crew and onshore employees while maintaining effective business continuity and uninterrupted service to our customers. The overall impact of COVID-19 on our business, and the efficacy of any measures we take in response to the challenges presented by the COVID-19 pandemic, will depend on how the outbreak further develops, the duration and extent of the restrictive measures that are associated with the pandemic and their impact on global economy and trade, which is still uncertain.
Start Bulk (SBLK) stock price chart over the last 5 years
The image below shows the stock price history of Star Bulk (SBLK) over the last 5 years. And its been a good time for Start Bulk stockholders with the stock increasing by 28.9% over the last 5 years.
The stock of Star Bulk is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Flower Foods stock is positive at this point in time.
The stock of Star Bulk is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Flower Foods stock is positive at this point in time.
Start Bulk (SBLK) stock price chart over the last 5 years
Latest stock valuation of Star Bulk
So what is Star Bulk (SBLK) stock worth based on their 1st quarter 2021 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Star Bulk at $25.70 a stock
We therefore believe the stock of Star Bulk is is undervalued at its current price of $21.59
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $25.70, thus a good entry point into Star Bulk would be at $23.10 or below.
We expect the stock of Star Bulk to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued.
We therefore rate the stock of Star Bulk as as a buy
We therefore believe the stock of Star Bulk is is undervalued at its current price of $21.59
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $25.70, thus a good entry point into Star Bulk would be at $23.10 or below.
We expect the stock of Star Bulk to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued.
We therefore rate the stock of Star Bulk as as a buy
Next earnings release of Star Bulk
It is expected that Star Bulk will release their 2nd quarter 2021 earnings report in late August 2021
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