Q2 2024 Star Bulk Carriers Corp Earnings Call

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Operator: Ladies and gentlemen, please stand by. Our conference will begin momentarily. Thank you again. Ladies and gentlemen, please stand by. Our conference will begin momentarily.

Speaker Change: Ladies and gentlemen, please stand by. Our conference will begin momentarily.

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Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers conference call on the second quarter 2024 financial results. We have with us Mr. Petros Pappas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Simos Spyrou, and Mr. Christos Begleris, Co-Chief Financial Officers, Mr. Nicos Rescos, Chief Operating Officer, and Mrs. Charis Plakantonaki, Chief Strategy Officer of the company.

Speaker Change: Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers conference call on the second quarter 2024 financial results.

Speaker Change: We have with us, Mr. Petros Pappas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Simos Spyrou.

and Mr. Christos Begleris.

Speaker Change: Co-Chief Financial Officers.

Speaker Change: Mr. Nicos Rescos, Chief Operating Officer, and Mrs. Charis Plakantonaki, Chief Strategy Officer of the company.

Operator: At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, please press Star 1 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. We now pass the floor to one of your speakers today. Mr. Spyrou, please go ahead, si

Speaker Change: At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question and answer session, at which time, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced.

I must advise you that this conference is being recorded today. We now pass the floor to one of your speakers today. Mr. Spyrou, please go ahead, sir.

Simos Spyrou: Thank you, Operator. I'm Simos Spyrou, Co-Chief Financial Officer of Star Bulk Carriers, and I would like to welcome you to our conference call regarding our financial results for the second quarter of 2024. Before we begin, I kindly ask you to take a moment to read the Safe Harbor Statement on slide number 2 of our presentation. In today's presentation, we will go through our second quarter results, cash evolution during the quarter, actions taken to create value for our shareholders, an update on our Eagle Bulk integration, vessel operations, fleet update, the latest on the ESG front, and our views on industry fundamentals before we open up for questions.

Thank you, Operator. I'm Simos Spyrou, Co-Chief Financial Officer of Star Bulk Carriers, and I would like to welcome you to our conference call regarding our financial results for the second quarter of 2024.

Simos Spyrou: Let us now turn to slide number three of the presentation for a summary of our second quarter 2024 highlights. For the second quarter 2024, the company reported the following. Net income amounted to $106 million, with adjusted net income of $89 million or $0.81 per share adjusted earnings. Adjusted EBITDA was at $153 million for the quarter.

Speaker Change: Before we begin I kindly ask you to take a moment to read the safe harbor statement on slide number two of our presentation.

Simos Spyrou: For the second quarter, as per our existing dividend policy, we declare a dividend per share of 70 cents payable on September 6, 2024. Since 2021, dividend distributions have been over $1.25 billion, or $12.20 per share, and share buybacks of over $420 million. Our total liquidity today stands strong at 516 million. Meanwhile, our total debt stands at $1.38 billion.

Speaker Change: In today's presentation, we will go through our second quarter results.

Simos Spyrou: On the right side of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was $19,268 per vessel per day. Our combined daily OPEX and net cash G&A expenses per vessel per day amounted to $6,690. Therefore, our TCE, less OPEX, and less Cas-GNA is around $12,578 per day per vessel.

Speaker Change: cash evolution during the quarter, actions taken to create value for our shareholders, an update on our Eagle Bulk integration, vessel operations, fleet update, the latest on the ESG front, and our views on industry fundamentals, before we open up for questions.

Simos Spyrou: The Eagle Bulk transaction was completed on April 9th, and the Eagle Bulk vessels contributed 83 days each during the second quarter. Costs received from the Eagle Bulk merger amounted to $104.3 million. Eagle Bulk's convertible notes, which matured on August 1st, 2024, converted to 5,971,290 shares of Star Bulk common stock. 1,341,584 shares of Star Bulk have been loaned out as part of a share lending agreement with Jefferies Capital Services in connection with the Eagle Bulk convertible notes and have been returned to Star Bulk and Cancer. The fully diluted share count, as of today, stands at 118,825,307 shares.

Speaker Change: Let us now turn to slide number three of the presentation for a summary of our second quarter 2024 highlights.

Speaker Change: For the second quarter 2024, the company reported the following.

Speaker Change: Net income amounted to $106 million with adjusted net income of $89 million or $0.81 per share adjusted earnings.

Speaker Change: Adjusted EBITDA was at $153 million for the quarter.

Speaker Change: For the second quarter, as per our existing dividend policy, we declared a dividend per share of 70 cents payable on September 6, 2024.

Speaker Change: Since 2021, dividend distributions are over $1.25 billion, or $12.20 per share, and share buybacks of over $420 million.

Speaker Change: Our total liquidity today stands strong at 516 million.

Speaker Change: Meanwhile, our total debt stands at $1.38 billion.

Speaker Change: On the top right of the page you will see our daily figures per vessel for the quarter.

Speaker Change: Our time charter equivalent rate was $19,268 per vessel per day.

Speaker Change: Our combined daily OPEX and Net Cash G&A expenses per vessel per day amounted to $6,690.

Speaker Change: Therefore, our TCE, less OPEX, and less Cas-GNA is around $12,578 per day per vessel.

Speaker Change: The Eagle Bulk transaction was completed on April 9th and the Eagle Bulk vessels contributed 83 days each during the second quarter.

Speaker Change: Cost received from the Eagle Bulk merger amounted to $104.3 million.

Speaker Change: Eagle Bulk's convertible notes, which matured on August 1st, 2024, converted to 5,971,290 shares of Star Bulk common stock.

Speaker Change: 1,341,584 shares of Star Bulk have been loaned out as part of a share lending agreement with Jefferies Capital Services.

Speaker Change: in connection with the Eagle Bulk Convertible nodes and have been returned to Star Bulk and cancelled.

Speaker Change: the fully diluted share count us of today sts at the hundred and eighteen million eight hundred and twenty-five thousand three hundred and seven shares

Simos Spyrou: Currently, we have 159 vessels on a fully-delivered basis, including the five new-building Comsormax vessels we have announced. During 2024, we sold 10 vessels for a total gross proceeds of 180 million. Two of these vessels, namely Star Iris and Star Hydrus, are expected to be delivered during the third quarter to their new owners.

Speaker Change: Currently, we have 159 vessels on a fully-delivered basis, including the five new-building Comsormax vessels we have announced.

Speaker Change: During 2024, we have sold 10 vessels for a total gross proceeds of $180 million.

Speaker Change: Two of these vessels, namely Star Iris and Star Hydrus, are expected to be delivered during the third quarter to their new owners.

Simos Spyrou: As of June 30th, 2024, the equity left aside from vessel sales and the ATM after the share buyback and 18 million in new building installments stands at $74 million. During the third quarter, the above equity will increase by $24 million from the sale of the two sold vessels and will be reduced by 8 million for new buildings, down payment. Slide number four graphically illustrates the changes in the company's cash balance during the second quarter. We started the quarter with $373 million in cash, out of which $104 million was received from the Eagle Bulk transaction. We generated positive cash flow from operating activities of 143 million.

Speaker Change: As of June 30th, 2024, the equity left aside from vessel sales and the ATM, after the share buybacks and 18 million of new building installments, stands at 74 million.

Speaker Change: During the third quarter, the above equity will increase by $24 million from the sale of the two sold vessels, and will be reduced by $8 million of new building costs.

Speaker Change: downpayments

Speaker Change: Slide number 4 graphically illustrates the changes in the company's cash balance during the second quarter.

Speaker Change: We started the quarter with $373 million in cash, out of which $104 million were received from the Eagle Bulk transaction. We generated positive cash flow from operating activities of $143 million.

Simos Spyrou: After including debt proceeds and repayments, CAPEX payments for ESD and ballast water treatment installations, and the first quarter dividend payment, we arrived at a cash balance of $486 million at the end of the second quarter. Slide number five provides an overview of the company's capital allocation policy over the last three years and the various levels we have used to create shareholder value. On the top left, we show our net debt evolution.

Speaker Change: After including debt proceeds and repayments, CAPEX payments for ESD and ballast water treatment installations.

Speaker Change: and the first quarter dividend payment, we arrived at a cash balance of $486 million at the end of the second quarter.

Speaker Change: Slide number five provides an overview of the company's capital allocation policy over the last three years and the various levels we have used to create shareholder value.

Speaker Change: yeah

Simos Spyrou: Since 2021, we have reduced leverage in the company by approximately 34%. Our average net debt per vessel has decreased from $11 million to $6 million per vessel. Star Bulk has been creating value for its shareholders through consecutive fleet buyouts by issuing shares at or above NAV. During the same period, we have declared consecutive quarterly dividends of over $1.25 billion.

Speaker Change: On the top left, we show our net debt evolution.

Speaker Change: Since 2021, we have reduced leverage in the company by approximately 34%.

Speaker Change: Our average net debt per vessel has decreased from $11 million to $6 million per vessel.

Speaker Change: Star Bulk has been creating value for its shareholders through consecutive fleet buyouts by issuing shares at or above an EV.

Speaker Change: Over the same period, we have declared consecutive quarterly dividends of over $1.25 billion.

Simos Spyrou: We have taken advantage of historically elevated S&P values to sell some of our older and less efficient vessels using equity proceeds to buy back our shares at attractive valuations. Since 2022, we have bought back $423 million worth of Star Bulk stock. Combining all of the above, we see that we have focused on returning capital to our shareholders while at the same time deleveraging the balance sheet and buying back shares when there are opportunities to do so accretively. In total,

Speaker Change: We have taken advantage of historically elevated S&P values to sell some of our older and less efficient vessels using equity proceeds to buy back our shares at attractive valuations.

Speaker Change: Since 2022, we have bought back $423 million worth of Star Bulk stock.

Speaker Change: Combining all of the above, we see that we have focused on returning capital to our shareholders while at the same time deleveraging the balance sheet and buying back shares when there are opportunities to do so accretively.

Simos Spyrou: Since 2021, we have taken actions of $2.3 billion to create value for our shareholders. I will now pass the floor to our COO, Nicos Rescos, for an update on Eagle Bulk's transaction, integration, and our operational performance. Thank you, Simos.

Speaker Change: In total, since 2021, we have taken actions of $2.3 billion to create value for our shareholders.

Nicos Rescos: I will now pass the floor to our COO, Nicos Rescos, for an update on EagleBulk's transaction, integration and our operational performance.

Nicos Rescos: Slide 6 illustrates a summary of the EGO-BAT transaction integration. The integration with Eagle Bulk is underway, and upon completion, it will allow us to leverage our strong global presence of the combined entity with offices in Singapore, the U.S., Greece, Denmark, and Cyprus. The respective Singapore offices' operations have merged into one entity and continue as a commercial and technical management hub, aligning ship management practices covering the Asia-Pacific. The Stanford office continues operations both on commercial and technical management covering the Atlantic and the U.S. Together with the Athens Corporate Headquarters in Europe, we maintain a presence in Copenhagen for chartering operations covering the Atlantic and the Caribbean.

Nicos Rescos: Thank you, Simos.

Nicos Rescos: Slide 6 illustrates a summary of the EGO-BAT transaction integration.

Nicos Rescos: The integration with Eagle Bulk is underway and upon completion it will allow us to leverage our strong global presence of the combined entity with offices in Singapore, the US, Greece, Denmark and Cyprus.

Speaker Change: The respective Singapore offices' operations have merged into one entity and continue as a commercial and technical management hub, aligning ship management practices covering the Asia-Pacific.

Nicos Rescos: The Stanford office continues operations both on commercial and technical management covering the Atlantic and the U.S.

Nicos Rescos: Together with the Athens Corporate Headquarters in Europe , we maintain presence in Copenhagen for chartering operations covering the Atlantic and the continent.

Nicos Rescos: We are nearing completion of the integration of our commercial teams for the Supramax and Ultramax vessels, managing the second largest Ultramax-Supramax fleet globally, combining our trading capabilities, aiming to improve our TCE performance. We are further rebalancing our sector employment strategy to include the vogate business and optimizing our fleet distribution between the Atlantic and the Pacific base. We have introduced our planned maintenance, procurement, and cost control processes across the Singapore and Stanford offices and toward realizing operational and cost reduction synergies. Significant synergies are expected from the centralization of the procurement of all stores, spare parts, bunkers, and lubricants for the combined fleet.

Nicos Rescos: We are nearing completion of the integration of our commercial teams for the Supramax and Ultramax vessels, managing the second largest Ultramax Supramax fleet globally, combining our trading capabilities, aiming to improve our TCE performance.

Nicos Rescos: we are further rebalancing our sector employment strategy to include vget business and optimizing our fleet distribution between the atlantic and the pacific basins

Speaker Change: We have introduced our planned maintenance, procurement and cost control processes across the Singapore and Stanford offices and towards realizing operational and cost reduction synergies.

Speaker Change: Significant synergies are expected from the centralization of the procurement of all stores, spare parts, bunkers and lubricants for the combined fleet.

Nicos Rescos: Crewing is gradually taken in-house, with the expected cost reduction of $600 per vessel per day to be realized by Q2 2025. Dry docks of 12 Ex-Eagle Back Vessels are planned following the merger and benefiting from Star Bulk Competitive Pricing Agreements, Service Providers, and CPRs globally.

Nicos Rescos: Crewing is gradually taken in-house, with the expected cost reduction of $600 per vessel per day to be realized by Q2 2025.

Nicos Rescos: Dry docks of 12 ex-Eagle Bulk vessels are planned following the merger and benefiting from Star Bulk competitive pricing agreements with service providers and shipyards globally.

Nicos Rescos: Marine Safety Quality and Technical Maintenance Standards, Processes, Policies, and Systems are being applied across the combined fleet, aligning with the Star Bulk Rideship Safety Score and Port State Control Performance. Please turn to slide 7, where we provide an operational update. Operating expenses were at $5,319 for Q2 2024, and net gas GNA expenses were $1,371 per vessel per day for the same period. In addition, we continue to rate at the top amongst our listed peers in terms of ride shape safety.

Speaker Change: Marine safety, quality, and technical maintenance standards, processes, policies, and systems are being applied across the combined fleet, aligning with the Star Bulk Rideship Safety Score and Port State Control performance.

Nicos Rescos: Please turn to slide 7, where we provide an operational update.

Speaker Change: Operating expenses was at $5,319 for Q2 2024. Net cash G&A expenses at $1,371 per vessel per day for the same period.

Speaker Change: In addition, we will continue to raise at the top amongst our listed peers in terms of ridership safety score.

Nicos Rescos: Sly Day provides a fleet update and some guidance around our future dry dock and the relevant total of hire days. On the top right of the page, we provide our expected dry dock expense schedule, which for the remaining 2024 is estimated at $34.8 million for the dry docking of 38 vessels. In total, we expect to have approximately 966 off-high days for the same period.

Speaker Change: Slide 8

Speaker Change: provides a fleet update and some guidance around our future dry dock and the relevant total of hired days. On the top right of the page, we provide our expected dry dock expense schedule, which for the remaining 2024 is estimated at $34.8 million for the dry docking of 38 vessels.

Speaker Change: In total, we expect to have approximately 966 off-high days for the same period.

Nicos Rescos: On the bottom of the page, we have our CAPEX schedule, illustrating our new building CAPEX and vessel energy efficiency upgrade expenses, with 100% of our fleet by now being ballast water treatment fixed. Based on our latest construction schedule, our new building vests are expected to be delivered in Q4 2025, Q2 and Q3 2026. In line with EXI and CII regulations, we continue investing in and upgrading our fleet with the latest operational technologies available, aimed at improving our fuel consumption and reducing our environmental footprint, further enhancing the commercial attractiveness of the Star Bulk fleet.

Speaker Change: On the bottom of the page we have our CAPEX schedule, illustrating our new building CAPEX investment energy efficiency upgrade expenses, with 100% of our fleet by now being ballast water treatment fitted.

Speaker Change: Based on our latest construction schedule, our new building vessels are expected to be delivered in Q4 2025, Q2 and Q3 2026.

Speaker Change: what

Speaker Change: In line with EXI and CII regulations, we continue investing and upgrading our fleet with the latest operational technologies available, aimed in improving our fuel consumption and reducing our environmental footprint, further enhancing the commercial attractiveness of the Star Bulk fleet.

Nicos Rescos: Regarding our Energy Saving Devices Program, we have completed 36 installations with 11 more vessels planned for retrofit by the end of the year. The above numbers are based on current estimates around dry dock, retrofit planning, vessel employment, and yard capacity. Please turn to slide 9 for an update on our fleet sales. On the vessel sales front, we'll continue disposing of vessels opportunistically at historically attractive levels, having agreed during Q2 to sell two vessels for a total gross proceeds of $30 million, reducing our average fleet age and improving overall fleet efficiency.

Speaker Change: Regarding our Energy Saving Devices Program, we have completed 36 installations with 11 more vessels planned for retrofit by the end of the year.

Speaker Change: The above numbers are based on current estimates around dry dock, retrofit planning, vessel employment and yard capacity.

Speaker Change: Please turn to slide 9 for an update on our fleet sales.

Speaker Change: On the vessel sales front, we'll continue disposing of vessels opportunistically at historically attractive levels, having agreed during Q2 to sell two vessels for total gross proceeds of $30 million, reducing our average fleet age and improving overall fleet efficiency.

Nicos Rescos: Following the rollover of the Eagle Bug's existing chartering contracts, we now have a total of 10 chartering vessels. We have five firm shipbuilding contracts with Kingdao Shipyard, with the construction of 82,000 Kamsa Mats new building vessels and with the first vessel delivered during Q4 next year. Considering the aforementioned changes in our fleet mix, we operate one of the largest drive-out fleets amongst U.S. and European listed peers, with 159 vessels on a fully delivered basis and an average age of 11.3 years. I will now pass the floor to our Chief Strategy Officer, Charis Plakantonaki, for an ESG update.

Speaker Change: Following the rollover of the Eagle Bug existing chartering contracts, we now have a total of 10 chartering vessels.

Speaker Change: We have five firm shipbuilding contracts with Kingdao Shipyard, with the construction of 82,000 Kamsa Max New Building Vessels, and with the first vessel delivering during Q4 next year.

Speaker Change: Considering the aforementioned changes in our fleet mix, we operate one of the largest dry bulk fleet amongst US and European listed peers with 159 vessels on a fully delivered basis and an average age of 11.3 years.

Speaker Change: I will now pass the floor to our Chief Strategy Officer, Charis Plakantonaki, for an ESG update.

Charis Plakantonaki: Please turn to slide 10, where we highlight our continuous leadership on the ESG front. During the second quarter of 2024, we completed the measurement of the company's 2023 greenhouse gas emissions. Scope 1, greenhouse gas emissions were reduced by approximately 4% while the respective CII of our fleet was reduced by approximately 5.7% compared to 2012. Scope 3 emissions, measured for consecutive years, were approximately 9.5% lower than the previous year.

Charis Plakantonaki: Thank you Nicole.

Charis Plakantonaki: Please turn to slide 10, where we highlight our continued leadership on the ESG front.

Charis Plakantonaki: During the second quarter of 2024, we completed the measurement of the company's 2023 greenhouse gas emissions.

Charis Plakantonaki: Scope 1, Greenhouse gas emissions were reduced by approximately 4% while the respective CII of our fleet reduced by approximately 5.7% compared to 2020.

Charis Plakantonaki: Scope 3 emissions, measured for consecutive years, were approximately 9.5% lower than the previous year. This performance will be published in our new ESG report during the third quarter of 2024.

Charis Plakantonaki: This performance will be published in our new ESG report during the third quarter of 2024. Moving forward, we're working on setting science-based targets for the company to help clearly define the path to further reduce our bleach carbon footprint in line with the Paris Agreement goals. On the regulatory front, we are preparing for compliance with the fueling to maritime regulation, coming into force on 1st January 2025, and the Mediterranean Key Emission Control Area for sulfur oxide and particulate matter, taking effect on 1st May 2025.

Charis Plakantonaki: Moving forward, we're working on setting science-based targets for the company to help clearly define the paths to further reduce our fleet's carbon footprint in line with the Paris Agreement goals.

Speaker Change: On the regulatory front, we are preparing for compliance with the Fueling to Maritime Regulation coming into force on 1st January 2025 and the Mediterranean Sea Emission Control Area for Sulphur Oxide and Particular Matters taking effect from 1st May 2025.

Charis Plakantonaki: A gap analysis related to the EU's Corporate Sustainability Reporting Directive is underway to identify and address differences between the directive and the company's ESG reporting process. In July 2024, Star Bulk systems both in the office and on the vessels were affected by the CrowdStrike worldwide incident caused by a bug during an unprovided shuffle. Immediate action by the company restored the systems in the office a few hours later and on the vessels two days later.

Speaker Change: A GAAP analysis related to the EU's Corporate Sustainability Reporting Directive is underway to identify and address differences between the directive and the company's ESG reporting processes.

Speaker Change: In July 2024, Star Bulk systems both in the office and on the vessels were affected by the CrowdStrike worldwide incident caused by a bug during an antivirus shuffling.

Speaker Change: You need the attaction by the company. Restore the systems in the office a few hours later and on the vessels from two days later.

Charis Plakantonaki: On the society front, the employment of female cadets on our vessels continues, along with the deployment of Starling on board and the implementation of the CyberRoute technology, which monitors vessel systems' performance and security. Star Bulk was awarded the Sustainable Development in the Maritime Industry credit award, recognizing the company's continuous efforts to lead by example in sustainable development in the shipping industry. I will now pass the floor to our CEO, Petros Pappas, for a market update and to close the meeting.

Speaker Change: On the society front, the employment of female cadets on our vessels continues, along with the deployment of starlings on board, and the implementation of the CyberRoute technology, which monitors vessel systems' performance and security.

Speaker Change: Star Bulk was awarded Sustainable Development in the Maritime Industry Accredits Award, recognizing the company's continuous efforts to lead by example in sustainable development in the shipping industry.

Speaker Change: I will now pass the floor to our CEO , Petros Pappas, for a market update and to close the meeting. Thank you, Charis.

Petros Pappas: Please turn to slide 11 for a brief update on supply. During the first half of 2024, a total of 18.8 million deadweight was delivered, and 2.1 million deadweight were sent to demolition for a net flip growth of 16.7 million deadweight, or 1.7% year-to-date, and 3% over the last 12 months. Uncertainty on future green propulsion, high shipbuilding costs, and limited CPR capacity until late 2026 due to increased competition from other vessel types have helped keep new orders under relatively control.

Petros Pappas: Please turn to slide 11 for a brief update of supply.

Petros Pappas: During the first half of 2024, a total of 18.8 million dead weight was delivered.

Petros Pappas: in two point one million then weight was sentered the millition for a net flip growth of sixteen point seven million did weight or one point seven percent year-to date and three percent over the last twelve months

Speaker Change: Uncertainty on future green propulsion, high shipbuilding costs and limited CPR capacity until late 2026.

Speaker Change: Due to increased competition from other vessel types, have helped keep new orders under relative control.

Petros Pappas: The order book has slightly increased during the last two years but still stands at a comparatively low level of 9.8% of the fleet. Furthermore, vessels above 20-15 years of age stand at 9% and 21.9% of the fleet, respectively, while scrap prices have stabilized at elevated levels and should induce demolition of over-aged and energy-inefficient tonnage during seasonal downturns over the next years. The average steaming speed of the dryback fleet has stabilized at low levels, between 11.1 and 11.2 knots, during the last six months due to inflated bunker costs and environmental regulations, including EXI and CII, that increasingly incentivize slow steaming and retrofits and should moderate supply over the next several years. During the first half of 2024, global pork concessions fully normalized on all sides, following a strong reduction over the last two years that gradually inflated available supply by approximately 6%.

Unknown Executive: Ladies and gentlemen, please stand by our conference, we'll begin momentarily. Thank you again, ladies and gentlemen, please stand by our conference, we'll begin momentarily.

Speaker Change: the order book has slightly increased during the last two years but still stands at the comparatively low level of nine point eight percent over the fleet

Speaker Change: furthermore vessels above thousand and fifteen years of aids stand at nine percent and twenty one point nine percent of the flip respectively

Speaker Change: while scapp prices have stabilized the elevated levels and should induce themmomallition of overred and energy inefficient tonnets during seasonal doubt turn over the next years

Speaker Change: the average steaming speed of the drirybug fleet has stabulized that lower levels between eleven when one and eleven point two nots during the last six months due to inflated bunkger cost

Speaker Change: and environmental regulations, including EXI and CII, that increasingly incentivize slow steaming and retrofits and should moderate supply over the next several years.

Unknown Executive: Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Crirs conference call on the second quarter, 2024 financial results. We have with us Mr. Petros Pappas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Simos Spyrou and Mr. Christos Belgeris. Belgeris, Co-Chief Financial Officers, Mr. Nicos Rescos, Chief Operating Officer, and Mrs. Charis Plakanton-Tonaki, Chief Strategy Officer of the company.

Speaker Change: During the first half of 2024, global pork concession has fully normalized on all sizes.

Speaker Change: following a strong reduction over the last two years that gradually inflated available supply by approximately six percent

Petros Pappas: Recent trends of global supramax congestion, as well as dry bulk tonnage at Chinese ports, indicate that there is a high probability for congestion to increase year over year during the second half of 2024, with a positive effect on the supply and demand balance. Moreover, rising tensions in the Red Sea since late 2023 continue to cause strong inefficiencies for trade despite the partial recovery of dry bulk crossings in the Panama Canal that are expected to fully recover by the end of the year.

Speaker Change: recent trends of global superits transgestion as well as dul ton' at chinese sports

Speaker Change: indicate that there is a high probability for congestion to increase year over year during the second half of 2024 with a positive effect on the supply and demand balance.

Unknown Executive: At this time, our participants finally listen only mode, there will be a presentation followed by a question and answer session, at which time if you wish to ask a question, please press star one on your telephone feedback and wait for your need to be announced.

Speaker Change: Moreover, rising tensions in the Red Sea since late 2023 continue to cause strong inefficiencies for trade despite the partial recovery of dry bulk crossings in the Panama Canal that are expected to fully recover by the end of the year.

Unknown Executive: I must advise you that this process may be recorded today, we now pass the floor to one of your speakers today.

Simos Spyrou: Mr. Spyrou, please go ahead, sir. Thank you, operator.

Petros Pappas: As a result of the above trends, nominal fleet growth is unlikely to exceed 3% per annum over the next couple of years, even under the assumption that demolition activity remains at current low levels. Let us now turn to slide 12 for a brief update on demand.

Simos Spyrou: I'm Simos Spyrou, Co-Chief Financial Officer of Star Bulk Crirs, and I would like to welcome you to our conference call regarding our financial results for the second quarter of 2024. 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 second quarter results, CASA pollution during the quarter, action taken to create value for our shareholders, an update on our equal bulk integration, vessel operations, fleet update, the latest on the ESG front and our views on industry fundamentals before we open up for questions.

Speaker Change: As a result of the above trends, nominal fleet growth is unlikely to exceed 3% per annum over the next couple of years, even under the assumption that demolition activity remains at current low levels.

Petros Pappas: According to Clarkson, total dry bulk trade during 2024 and 2025 is projected to expand by 2.6% and 0.7% in tons and by 4.4% and 0.5% in ton miles, respectively. During the first half of 2024, total dry bag volumes increased by 5.8% year-on-year, on the back of record iron ore, coal, and mine ore bulk exports, while tonne mileage increased at a faster pace, supported by canal and geopolitical inefficiencies and strong exports from Latin America, West Africa, and the U.S.

Speaker Change: Let us now turn to slide 12 for a brief update of demand. According to Clarkson's, total dry bulk trade during 2024 and 2025 is projected to expand by 2.6% and 0.7% in tons and by 4.4% and 0.5% in ton-miles, respectively.

Speaker Change: During the first half of 2024, total dry bulk volumes increased by 5.8% year-on-year, on the back of record iron ore, coal, and minor bulk exports.

Simos Spyrou: Let us now turn to slide number three of the presentation for a summary of our second quarter 2024 highlights. For the second quarter 2024, the company reported the following. Net income amounted to 106 million with adjusted net income of 89 million or 81 cents per share adjusted earnings. Ajust a debita was at 153 million for the quarter. For the second quarter, as per our existing dividend policy, we declared a dividend per share of 70 cents payable on September 6, 2024.

Speaker Change: while tonnemile is increased at a faster pace, supported by canal and geopolitical inefficiencies and strong exports from Latin America, West Africa and the U.S.

Petros Pappas: The IMF is projecting global GDP growth of 3.2% for 2024 and 3.3% for 2025, at the same pace as in 2023, and upgraded its forecast for China to 5% and 4.5%, respectively. Chinese GDP increased by 4.7% in Q2, missing initial expectations due to the struggling property market and a slowdown of household spending.

Speaker Change: The IMF is projecting global GDP growth of 3.2% for 2024 and 3.3% for 2025, at the same pace as in 2023, and upgraded its forecast for China to 5% and 4.5% respectively.

Speaker Change: Chinese GDP increased by 4.7% in Q2, missing initial expectations due to the struggling property market and a slowdown of household spending.

Petros Pappas: Nevertheless, recent comments from government officials highlighted that the country has the ability and confidence to achieve its full-year growth target of around 5%, supported by strength in infrastructure, manufacturing, and exports, while demand for drivable commodities remains strong as import volumes increase by 7.5% year over year during the first half of 2024. Dry bulk demand from the rest of the world has experienced a recovery over the last three-quarters that is expected to continue amid lower commodity prices and expectations of easing monetary policies.

Simos Spyrou: Since 2021, dividend distributions are over 1.25 billion or $12.20 per share and share buybacks of over 420 million. Our total liquidity today stands strong at 516 million. Meanwhile, our total debt stands at 1.38 billion. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was $19,268 per vessel per day. Our combined daily OPEX and net cost GNA expenses per vessel per day amounted to $6,690.

Speaker Change: Nevertheless...

Speaker Change: Recent comments from government officials highlighted that the country has the ability and confidence

Speaker Change: to achieve its full-year growth target of around 5%, supported by strength in infrastructure, manufacturing and exports, while demand for drivable commodities remains strong as import volumes increase by 7.5%.

Speaker Change: he had over year during the first half of twenty twenty four

Speaker Change: Tribal demand from the rest of the world is experiencing a recovery over the last three quarters that is expected to continue amid lower commodity prices and expectations of easing monetary policy.

Petros Pappas: During the first half, imports were up by 4.3% year over year, with the increase coming mainly from India, the Middle East, and Southeast Asia. Meanwhile, Western economies are also moving higher, following two years of contraction and geopolitically related disruptions. Iron ore trade is expected to expand by 3.1% in tons and by 5.6% in ton miles during 2024. China's steel production declined by 2.2% year-over-year during the first half, while domestic production and imports of iron ore increased by 15.3% and 6.1%, respectively, increasing port stockpiles by approximately 30 million tons versus last year. Weak domestic consumption has forced China's steel makers to export excess output and has prompted some economies to raise tariffs as a response.

Speaker Change: dueuring to the first half inputs were up by four point three percent year-over- year withve increased coming mainly from medindia the middle east and southeast asia

Speaker Change: Meanwhile, Western economies are also moving higher, following two years of contraction and geopolitically related disruptions.

Simos Spyrou: Therefore, our TC less OPEX and less cost GNA is around $12,578 per day per vessel. The Eagle Bulk transaction was completed on April 9 and the Eagle Bulk vessels contributed 83 days each during the second quarter. Cast received from the Eagle Bulk merger amounted to $104.3 million. Eagle Bulk's convertible notes, which matured on August 1, 2024, converted to $5,971,290 shares of StarBulk Common Stock. $1,341,584 shares of StarBulk have been loaned out as part of a share lending agreement with Jeffice Capital Services, in connection with Eagle Bulk convertible notes, and have been returned to StarBulk and cancelled.

Speaker Change: Iron ore trade is expected to expand by 3.1% in tons and by 5.6% in ton miles.

Speaker Change: during two thousand and twenty four

Speaker Change: China's steel production declined by 2.2% year-over-year during the first half, while domestic production and imports of iron ore increased by 15.3% and 6.1% respectively, increasing port stockpiles by approximately 30 million tons versus last year.

Speaker Change: Weak domestic consumption has forced China's steel makers to export excess output and has prompted some economies to raise tariffs as a response.

Petros Pappas: On the other hand, steel production from the rest of the world has been on a strong upward trend since September and increased by 4.4% during the first half, driven by strong demand in India and a gradual recovery of Atlantic production. It is worth highlighting that the medium-term outlook for Atlantic iron ore exports is promising, as Vale is expected to achieve the upper end of its 2024 production guidance that was set at 310 to 320 million tons. Furthermore... Vale is expected to ramp up production to 340 to 360 million tons by 2026, while the Simandou iron ore project in Guinea will deliver the first quantities by the end of 2025.

Speaker Change: On the other hand, steel production from the rest of the world has been on a strong upward trend since September and increased by 4.4% during the first half, driven by strong demand in India and a gradual recovery of Atlantic production.

Simos Spyrou: The fully diluted share count as of today stands at $118,825,307 shares. Currently, we have 159 vessels on a fully delivered basis, including the five new building Camser Max vessels we have announced. During 2024, we have sold 10 vessels for a total gross proceeds of $180 million. Two of these vessels, namely Star Iris and Star Hydrus, are expected to be delivered during the third quarter to their new owners. As of June 30, 2024, the equity left aside from vessel sales and the ATM after the share buybacks and 18 million of new building installments stands at $74 million. During the third quarter, the above equity will increase by $24 million from the sale of the two sold vessels and will be reduced by $8 million of new building. Down Payments.

Speaker Change: It is worth highlighting that the medium-term outlook of Atlantic iron ore exports is promising, as Vale is expected to achieve the upper end of their 2024 production guidance that was set at 310 to 320 million tons.

Speaker Change: Morever...

Speaker Change: Vale is expected to ramp up production to 340 to 360 million tons by 2026, while the Simandou Iron Ore Project in Guinea will deliver the first quantities by the end of 2025.

Petros Pappas: Coal trade is expected to marginally expand by 0.6% in tons but contract by 0.5% in ton-miles during 2024. Global focus on energy security during the last years has inflated coal trade, but most of the growth has come from short-haul Indonesian exports. Chinese imports increased further during the first half and stand at record levels, supported by a 1.9% year-on-year decline in domestic coal production and a 2.2% year-on-year increase in thermal electricity generation.

Speaker Change: Coal trade is expected to marginally expand by 0.6% in tons, but contract by 0.5% in ton-miles.

Speaker Change: Global focus on energy security during the last years has inflated coal trade, but most of the growth has come from short-haul Indonesian exports.

Speaker Change: Chinese imports increased further during the first half and stand at record levels, supported by a 1.9% year-on-year decline in domestic coal production and a 2.2% year-on-year increase in thermal electricity generation.

Petros Pappas: Nevertheless, during the last two months, a reversal of this trend is taking place, following the seasonal strength of hydropower, a directive from Profits to Increase Production and Stabilization of Prices. In the last quarters, India is emerging as a leading buyer of coal as domestic consumption has outpaced production growth and, along with inland infrastructure constraints, has led to a strong increase in import requirements. Grains trade is expected to expand by 4.4% in tons and by 10% in ton miles per year during 2024.

Speaker Change: Nevertheless, during the last two months, a reversal of this trend is taking place, following the seasonal strength of hydropower, a directive from provinces to increase production and stabilization of prices.

Simos Spyrou: Slide number four, graphically illustrates the changes in the company's cash balance during the second quarter. We started the quarter with 373 million in cash, out of which 104 million were received from the Eagle bulk transaction. We generated positive cash flow from operating activities of 143 million. After including debt proceeds and repayments, cap experiments for ESD and ballast water treatment installations, and the first quarter dividend payment, we arrived at a cash balance of 486 million at the end of the second quarter.

Speaker Change: During the last quarters, India is emerging as a leading buyer of coal as domestic consumption has outpaced production growth and along with inland infrastructure constraints has led to a strong increase in import requirements.

Speaker Change: Grains trade is expected to expand by 4.4% in tons and by 10% in ton miles during 2024. Exports from Latin America increased by approximately 12% during the first half, as Argentinian volumes experienced a strong recovery. Moreover, Ukraine raised exports to the highest level since the start of the war.

Petros Pappas: Exports from Latin America increased by approximately 12% during the first half, as Argentinian volumes experienced a strong recovery. Moreover, Ukraine raised exports to the highest level since the start of the war. But at the same time, Russian wheat exports have been affected by frost, droughts, and heat waves at key production areas.

Simos Spyrou: Slide number five provides an overview of the company's capital allocation policy over the last three years and the various levels we have used to create shareholder value. On the top left, we saw our net debt evolution. Since 2021, we have reduced leverage in the company by approximately 34%. Our average net debt per vessel has decreased from 11 million to 6 million per vessel. Star Bulk has been creating value for its shareholders through consecutive fleet buyouts by issuing shares at or above an AV.

Speaker Change: But at the same time, Russian wheat exports have been affected by frost, droughts and heatwaves at key production areas. Total grain trade was flat year over year during the first half of 2024.

Petros Pappas: Total grain trade was flat year over year during the first half of 2024, but export volumes growth is expected to increase during the second half of 2024. Lower grain prices, an improved outlook for the forthcoming U.S. crop, and increased focus on food security are expected to support grain trade in the medium term. Minor bulk trade is expected to expand by 3% in tons and by 4.1% in ton miles during 2024. Minor bulk trade has the highest correlation to global GDP growth, and the recent strength in the container market provides a positive indicator for short-term prospects for smaller sizes.

Speaker Change: But export volume's growth is expected to increase during the second half of 2024.

Speaker Change: Lower grain prices, improved outlook for the forthcoming U.S. crop, and increased focus on food security are expected to support grain trade in the medium term.

Speaker Change: weknow

Speaker Change: Minor bulk trade is expected to expand by 3% in tons and by 4.1% in ton miles.

Speaker Change: during 2024. Minor bulk trade has the highest correlation to global GDP growth and the recent strength in the container market provides a positive indicator for short-term prospects of smaller sizes.

Simos Spyrou: Over the same period, we have declared consecutive quarterly dividends of over 1.25 billion. We have taken advantage of historically elevated SNP values to sell some of our older and less efficient vessels using equity proceeds to buy back our shares at attractive valuations. Since 2022, we have bought back 423 million worth of Star Bulk stock. Combining all of the above, we see that we have focused on returning capital to our shareholders while at the same time, delivering the balance and buying back shares when there are opportunities to do so, accretively. In total, since 2021, we have taken actions of 2.3 billion to create value for our shareholders.

Petros Pappas: The positive price arbitrage continues to incentivize Chinese steel exports and backhaul trades, while bauxite exports out of West Africa continue to expand at a high pace that generates strong toll miles for the capesize sector. As a final comment, despite the global geopolitical uncertainties, we are constructive about the medium-term prospects of our industry, given the favorable order book, an aging fleet, and upcoming rigorous environmental regulations. Star Bulk has built a diverse, scrubber-fitted fleet that is well-positioned to operate efficiently and take advantage of attractive opportunities to create value for its shareholders. Without taking any more of your time, I will now pass the floor over to Dr. Redner to answer any questions you may have.

Speaker Change: The positive price arbitrage continues to incentivize Chinese steel exports and backhaul trades, while bauxite exports out of West Africa continue to expand at a high pace that generates strong toll miles for the capesize sector.

Speaker Change: As a final comment, despite the global geopolitical uncertainties, we are constructive about the medium-term prospects of our industry, given the favorable order book, an aging fleet and upcoming rigorous environmental regulations.

Star Bulk: Star Bulk has built a diverse scrubber fitted fleet that is well positioned to operate efficiently and take advantage of attractive opportunities to create value for its shareholders.

Nicos Rescos: I will now pass the floor to our COO Nikos Rescos for an update on NIGLBAL transaction integration and our operational performance. Thank you Simo. Slide 6 illustrates a summary of the EGLEBAC transaction integration. The integration with EGLEBAC is underway and upon completion, it will allow us to leverage our strong global presence of the combined entity with offices in Singapore, the US, Greece, Denmark and Cyprus. The respective Singapore offices operations have merged into one entity and continue as a commercial and technical management hub, aligning ship management practices covering the Asia-Pacific.

Speaker Change: 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. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Once again, that's Star 1 at this time. One moment while we poll for the first question. The first question comes from Omar Nokta with Jeffreys. Please proceed.

Speaker Change: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Once again, that's star one at this time. One moment while we poll for the first question.

Speaker Change: The first question comes from Omar Nokta with Jeffreys. Please proceed.

Omar Nokta: Hi guys, good afternoon. Thanks for the update. Hi, Hamish.

Nicos Rescos: The Stanford Office continues operations both on commercial and technical management, covering the Atlantic and the US. Together with the Athens Corporate Headquarters in Europe, we maintain prices in Copenhagen for charging operations covering the Atlantic and the continent. We are nearing completion of the integration of our commercial teams for the Supermax and Ultramax vessels, managing the second largest Ultramax Supermax fleet globally, combining our trading capabilities aiming to improve our TC performance. We are further rebalancing our sector employment strategy to include targets business and optimizing our fleet distribution between the Atlantic and the Pacific Basins.

Omar Nokta: Yeah, just a couple questions for me I wanted to ask, perhaps maybe just market-related. And Petros, you just gave an overview of the different markets, and I just wanted to touch on that a bit more. You know, clearly, as we're looking in the market today, dry bulk rates are, you know, they've been holding up quite well, and your real-life figures thus far into the third quarter show continued steady earnings, I would say.

Speaker Change: thank you i guys good afternoon thanks for the the update and

Hamish Norton: Hi, Hamish. Yeah, just a couple of questions for me I wanted to ask, perhaps maybe just market-related. And Petros, you just gave an overview of the different markets, and just wanted to touch a bit more on that. Clearly, as we were looking in the market today, dry bulk rates have been holding up quite well, and your real-life figures thus far into the third quarter show continued.

Omar Nokta: Obviously, there's volatility, but it looks like things aren't too crazy different. But this is happening in somewhat of a softer steel environment, at least in terms of steel prices when we look at where they are globally. And so just wanted to ask, you know, given the steel backdrop and how it looks a bit softer, are you seeing this having any effect on the dry bulk market at the moment? And also, are you a bit surprised perhaps that capes are earning north of 20 in this type of environment?

Speaker Change: Study Earnings.

Speaker Change: I would say. Obviously, there's volatility, but it looks like things aren't too crazy different. But this is happening somewhat of a softer steel environment, at least in terms of steel prices when we look at where they are globally. And so I just wanted to ask, you know, given the steel backdrop and how it looks a bit softer, are you seeing this having any effect?

Nicos Rescos: We have introduced our plant maintenance procurement at cost control processes across the Singapore and Stanford offices and towards realizing operational and cost reduction synergies. Significant synergies are expected from the centralization of the procurement of all stores, spare parts, bunkers and lubricants for the combined fleet. Crueing is gradually taken in-house with the expected cost reduction of $600 per vessel per day to be realized by Q2 2025. Dry docks of 12 x-igle-bat vessels are planned following the merger and benefiting from starball competitive pricing agreements with service providers and CPRs globally. Marine safety, quality and technical maintenance standards, processes, policies and systems are being applied across the combined fleet, aligning with the starball's right-shift safety score and port state control performance.

Speaker Change: on the dry bulk market at the moment and also are you a bit surprised perhaps that capes are earning north of 20 in this type of environment?

Petros Pappas: Hi Omar, thanks for the question. Well, we're actually positive about the second half of 2024 for a number of reasons. First of all, we see that the Red Sea and the Ukrainian war are not ending any time soon, so this will continue to create inefficiency, and this has an effect on the market. Then environmental regulations are starting to bite, and you see that the fleet is basically slow steaming at around 11.1 knots, so this is going to get worse going forward.

Speaker Change: Hi Omar, thanks for the question.

Speaker Change: Well, we are actually positive for the second half of 2024 for a number of reasons.

Speaker Change: First of all, we see that the Red Sea and the Ukrainian war

Speaker Change: are not finishing any time soon, so this will continue to create inefficiencies.

Speaker Change: and this has an effect in the market.

Speaker Change: Then the environmental regulations are starting to bite.

Speaker Change: and you see that the fleet is basically slow-steaming at around 11.1 knots, so this is going to get worse going forward.

Nicos Rescos: Please turn to slide 7 where we provide an operational update. Operating expenses was at $5,319 for Q2 2024. That net cash DNA expenses at $1,371 per vessel per day for the same period.

Petros Pappas: Then we see Vale increasing their exports, their iron ore exports. And we see Guinea increasing or keeping at a high level their bauxite exports. We think we will see much stronger grain trade. We believe that China will not let up and will try to keep the 5% GDP growth going forward. We also see new building delivery slowing down.

Speaker Change: Then we see Valle increasing their exports, their iron ore exports, and we see Guinea increasing or keeping at a high level their bauxite exports.

Nicos Rescos: In addition, we continue to rate at the top amongst our listed peers in terms of right-shift safety score.

Speaker Change: We think we will see much stronger grain trade.

Nicos Rescos: Slide date provides a fleet update and some guidance around our future dry docks and the relevant total of hard days. On the top right of the page, we provide our expected dry docks spent schedule which for the remaining 2024 is estimated at $34.8 million for the dry docking of 38 vessels. In total, we expect to have approximately 966 of hard days for the same period.

Speaker Change: um

Speaker Change: We believe that China will not let up and will try to keep the 5% GDP growth going forward.

Petros Pappas: So, and judging from the past, um, the second half of every year is much stronger than the first half, with much more export. So overall, we think that the decent market will remain for the next six months, at least. And it's not just related to whether there is going to be more or less production of steel in China, where we think that it will remain strong going forward, especially because of manufacturing reasons and because they will continue to export for as long as they can. So from all respects, we expect to be seeing a decent market for the second half of the year.

Petros Pappas: Got it. Okay, that's helpful, Petros. Thank you.

Speaker Change: The second half of every year is much longer than the first half.

Nicos Rescos: On the bottom of the page, we have our capex schedule, illustrating our new building capex and vessel energy efficiency upgrade expenses with 100% of our fleet by now being ballast water treatment fitted. Based on our latest construction schedule, our new building vessels are expected to be delivering Q4 2025, Q2 and Q3 2026. In line with the EXI and CIA regulations, we continue investing and updating our fleet with the latest operation technologies available aimed in improving our fuel consumption and reducing our environmental footprint, further enhancing the commercial attractiveness of the start-up fleet.

Speaker Change: There's much more exports. So overall...

Speaker Change: We think that the decent market will remain for the next six months.

Speaker Change: at least

Speaker Change: And it's not just related to whether there's going to be more production of steel or less production of steel in China, where we think that it will remain strong going forward.

Speaker Change: especially because of the manufacturing reasons and because they will continue to export for as long as they can. So from all respects, we expect...

Speaker Change: To be seeing a decent market for the second half of the year

Nicos Rescos: Regarding our energy saving devices program, we have completed 36 installations with 11 more vessels planned for retrofit by the end of the year. The above numbers are based on current estimates around dry-dook, rate of it planning, vessel employment, and yard capacity.

Omar Nokta: And maybe just kind of a follow-up and thinking more about the mid-size segment this time. I think one of the themes, say, late last year and coming into this year had been the expectation that CAPES would outperform, you know, the Ultra and Cancer Max segments. And that, I think, was the case earlier. But it feels like, or it looks like, the mid-size segments have done quite well here, somewhat under the radar, perhaps. What's driving that sort of, you know, stronger performance on the mid-size, would you say?

Speaker Change: Got it. Okay, that's helpful Petros. Thank you. And maybe just kind of a follow-up and thinking more about the mid-size segment this time.

Speaker Change: I think one of the themes, say, late last year and coming into this year, had been the expectation that CAPES would outperform, you know, the Ultra and Cancer Max segments. And that, I think, was the case earlier, but it feels like, or it looks like, the mid-size segments have done quite

Nicos Rescos: Please start to slide nine for an update on our fleet sales. On the vessel sales front, we'll continue disposing of vessels opportunistically, at historically attractive levels, having agreed during Q2 to sell two vessels for total gross proceeds of 30 million, full fleet efficiency. Following the roll over of the Eagle Buck existing chartering contracts, we now have a total of 10 chartering vessels.

Speaker Change: well here somewhat under the radar perhaps what's driving that sort of stronger performance on the midsize would you say

Petros Pappas: Well, all sizes are interconnected, actually. So it's not like one size will go up and the rest will lag behind. So I would say that if we see very strong Capes, charters will try to cover by splitting cargoes, for example, or the other way around, from supramaxes to midsize ships. So actually, whenever the two edges, the capesize and the supramax, are doing better, you will see cargo flowing into the middle sector, the panamax, and the capsamax.

Speaker Change: Well, all sizes are interconnected, actually.

Speaker Change: So, it's not like one size will go up and the rest will lag.

Nicos Rescos: We have five firm shipbuilding contracts with King Dow Shipyard, with the construction of 82,000, come so much new building vessels, and with the first vessel delivering during Q4 next year. Considering the aforementioned changes in our fleet mix, we operate one of the largest dry bulk fleet amongst U.S, and European listed peers, with 159 vessels on a fully delivered basis, and an average age of 11.3 years.

Speaker Change: So, I would say that if we see strong capes, very strong capes...

Speaker Change: Charters will try to cover by splitting cargoes, for example.

Speaker Change: or the other way around from supramaxes to the midsize.

Speaker Change: So, actually, whenever the two edges, the capesize and the supramax,

Charis Plakantonaki: I will now pass the floor to our chief strategy officer, Charis Plakantonaki, for an ESG update. Thank you, Nicole. Please turn to slide 10, where we highlight our continued leadership on the ESG Pro. During the second quarter of 2024, we completed the measurement of the company's 2023 greenhouse gas emissions. SCO-1 greenhouse gas emissions were used by approximately 4%, while the respective CIA of our fleet were used by approximately 5.7% compared to 2020.

Petros Pappas: In any case, I mean, I think all types of vessels with strong capes have remained on average, I think, above $25,000, which is pretty strong. Supras have done well because the containership sector is doing pretty well, and I have to admit that I'm pretty surprised that our caps and maxes have been fixed for the next quarter a bit above $18,000 on average, probably because coal trade in the first half of the year was relatively strong, maybe because there's cargoes from the other two types of vessels, but we also expect they will be doing pretty well going forward because we foresee higher trade on the grain side.

Speaker Change: I mean, I think all types of vessels with strong capes have remained, on average, I think above $25,000, which is pretty strong.

Speaker Change: Supra's have done well because the containership sector is doing pretty well.

Speaker Change: and um

Speaker Change: I have to admit that I'm pretty surprised that...

Charis Plakantonaki: SCO-3 emissions measured for consecutive years were approximately 9.5% lower than the previous year. This performance was developed in our new ESG report during the third quarter of 2024. Moving forward, we are working on setting science-based targets for the company to help clearly define the path to further reduce our fleet's carbon footprint in line with the powers of living homes. On the regular ground, we are preparing for compliance with the fueling of my return regulation, coming into force on 1 January 2025.

Speaker Change: Our caps and maxes have been fixed for the next quarter, a bit above $18,000 on average.

Speaker Change: Probably, probably because coal trade in the first half of the year was relatively strong. Maybe because there's cargoes from the other two types of vessels.

Speaker Change: But we also expect they will be doing pretty well going forward because we foresee higher trade on the grain side.

Petros Pappas: Okay. Well, Petros, thank you for the color. That's it for me. I'll turn it over.

Speaker Change: Petros, thank you for the color. That's it for me. I'll turn it over.

Operator: Thank you. Our next question comes from Big Dick with Clarkson Securities. Please proceed.

Charis Plakantonaki: And the Mediterranean key emissions control area for sulfur oxide and particular matter taking effect on first May 2025. A gap analysis related to the EU's corporate and ability reporting directive is underway to identify and address differences between the directive and the company's ESG reporting processes. In July 2024, Starbucks systems, both in the office and on the vessels, were affected by the crowd-striped worldwide incident, caused by a bad during the night of viral shopping.

Speaker Change: Thank you Omar. Thank you. Our next question comes from Big <expletive> with Clarkson Securities. Please proceed.

Unknown Caller: Hey guys, just want to touch upon capital allocation. You have quite a significant portion of cash now. How are you looking at shared buybacks going forward?

Big <expletive>: Hey guys, I just want to touch upon capital allocation. You have quite a significant portion of cash now. How are you looking at shared buybacks going forward?

Hamish Norton: Well, you know, it's Hamish Norton here. We spent $380 million in the fall, buying back 20 million shares of stock. Oaktree was the seller, but, frankly, from the shareholders' point of view, it doesn't matter who the seller was but what the price was. And you know, it was substantially below net asset value and below today's market value, so it was a big benefit to the shareholders. And we pretty much feel like we're exhausted by the effort of buying back those shares. You know, at that time, let's, let's, let us recover our breath and figure out, you know, what to do.

Speaker Change: wellyou know it's hangnation payish norton here

Speaker Change: We spent $380 million in the fall buying back 20 million shares of stock. You know, Oaktree was the seller, but frankly, from the shareholder's point of view, it doesn't matter who the seller was but what the price was.

Charis Plakantonaki: In the detection by the company, we stored the systems in the office a few hours later and on the vessels from today's later. On the side of the front, the inflowments of female cadets on our vessels continue along with the deflowments of sarlene and gold and the deventation of the cyber-out technology, with monitors, registrations, performance, and security.

Speaker Change: And, you know, it was substantially below net asset value and below today's market value. So it was a big benefit to the shareholders.

Speaker Change: And we pretty much feel like we're exhausted by the effort of buying back those shares, you know, at that time. You know, let us recover our breath.

Charis Plakantonaki: Star Bulk was awarded obtainable development in the maritime industry of credit awards, well-organizing the company's continuous efforts to lead by example, obtainable development in the city industry.

Hamish Norton: You know, we were paying out a big dividend, and you know, we do have a bunch of cash after that. We, as you might recall, have a policy of keeping $2.1 million of cash per vessel on the balance sheet, you know, permanently. And, you know, we've got some cash in excess of that, but it's not a huge amount. So I don't think we're under pressure to figure out what to do with that cash, you know, for the moment, not until it builds up to something more substantial.

Speaker Change: and figure out what to do we're paying out a big dividend and

Petros Pappas: I will not pass the floor to CEO Petros Pappas for a market update. Thank you, Harry. Please turn to slide 11 for a brief update of supply. During the first half of 2024, a total of 18.8 million deadweight was delivered, and 2.1 million deadweight was sent to demolition for a net-flip growth of 16.7 million deadweight, or 1.7% year-to-date, and 3% over the last 12 months. Uncertainty on future green propulsion, high-speed building costs and limited CBR capacity until late 2026 due to increased competition from other vessel types have helped keep new orders under relative control.

Speaker Change: We do have a bunch of cash after that. We, as you might recall, have a policy of keeping 2.1 million of cash per vessel on the balance sheet, you know, permanently.

Speaker Change: and we've got some cash in excess of that but it's not a huge amount

Speaker Change: So I don't think we're under pressure to figure out what to do with that cash, you know, for the moment, not until it builds up to something more substantial.

Unknown Caller: That's a great color and maybe just to follow up on that, how are you looking at growth, and if you were sort of forced to choose a segment to grow in, which one would it be? What we really like

Speaker Change: That's a great color. And maybe just to follow up on that, how are you looking at growth and if you were sort of forced to choose a segment to grow in, which one would it be?

Hamish Norton: We really like being diversified, and we just bought, you know, a bunch of super maxes and ultra maxes, so, you know, ideally, if we find a merger partner, we would like to find a merger partner who's got capes and, you know, larger ships generally. So, you can't always get what you want. But hopefully, we get what we need.

Speaker Change: What we really like being diversified

Speaker Change: And we've just bought, you know, a bunch of super maxes and ultra maxes. So, you know, ideally, if we find a merger partner,

Petros Pappas: The older book has slightly increased during the last two years, but still stands at the comparatively low level of 9.8% over the fleet. Furthermore, vessels above 2015 years of age stand at 9% and 21.9% of the fleet respectively, while scrap prices have stabilized at elevated levels and should induce demolition of overraged and energy inefficient tonnets during seasonal downturns over the next years. The average steaming speed of the dry-back fleet has tabulated at low levels between 11.1 and 11.2 knots during the last six months due to inflated bunker costs and environmental regulations, including EXI and CIA, that increasingly incentivize slow steaming and retrofits and should moderate supply over the next several years.

Speaker Change: We would like to find a merger partner, you know, who's got capes and, you know, larger ships generally. So, you know, you can't always get what you want.

Speaker Change: But hopefully we get what we need.

Operator: Okay, that's perfect. Thank you. Our next question comes from Ben Nolan with Stifel. Please proceed. Hi, this is actually Camila.

Speaker Change: Thank you.

Operator: Our next question comes from Ben Nolan with Stifel. Please proceed.

Speaker Change: Okay, that's perfect. Thank you.

Speaker Change: Our next question comes from Ben Nolan with Stifel. Please proceed.

Penella: Hi, this is actually Penella, I'm on for Ben, but wanted to ask, since second-hand asset values have been sort of plateauing recently, what direction do you see this moving forward?

Operator: Ship values. Konstanthin Simanteris, do you want to talk about ship values?

Konstantin Simanteris: Ship's Age, Konstantin Simanteris, do you want to talk about Ship's Age?

Unknown Executive: Well, ship values have increased substantially during the first half of this year, but we are seeing a stabilization over the last one, two months. We believe that ship values should, as you mentioned, plateau and probably remain at these levels, but a lot will depend on how the market performs towards the end of the year, when we expect the freight market to be stronger.

Konstantin Simanteris: Thank you. Thank you.

Petros Pappas: During the first half of 2024, global port congestion has fully normalized on all sizes, following a strong reduction over the last two years that gradually inflated available supply by approximately 6%. Recent trends of global super-match congestion, as well as dry-back tonnets at Chinese ports, indicate that there is a high probability for congestion to increase year over year during the second half of 2024, with a positive effect on the supply and demand balance.

Konstantin Simanteris: Well, ship values have increased substantially during the first half of this year.

Konstantin Simanteris: We are seeing a stabilisation over the last 1-2 months. We believe that the situation should, as you mentioned, plateau and probably remain at these levels, but a lot will depend on how the market performs towards the end of the year, when we expect the freight market to be stronger.

Unknown Executive: And I guess the shipyards are still quite full.

Speaker Change: Yeah, and I guess the shipyards are still quite full.

Unknown Executive: Yeah, shipyard capacity for 2026 is actually almost all gone, and we, especially for the larger sizes, and we are now starting to see 2027 slowly being filled. So this is definitely something that will be a supporting crisis for modern vessels since we haven't seen such conditions for a few decades. Yeah, but overall, we believe that prices have actually gone up.

Speaker Change: Yeah, shipyard capacity for 2026 is actually almost all gone.

Petros Pappas: Moreover, rise in tensions in the Red Sea since late 2023, continued to cause strong inefficiencies for trade despite the partial recovery of dry-bulk crossings in the Panama Canal that are expected to fully recover by the end of the year.

Speaker Change: and we especially for the larger sizes and we are now are starting to see 2027 slowly being filled.

Speaker Change: So this is definitely something that will be a supporting crisis of modern vessels since we haven't seen such conditions for a few decades actually.

Petros Pappas: As a result of the above trends, nominal fleet growth is unlikely to exceed 3% per annum over the next couple of years, even under the assumption that the molation activity remains at current low level.

Unknown Executive: Yes, but overall, we believe that prices have actually reached a pretty high price, and they will plateau from here unless, of course, there is a huge upside in the market at some point. Otherwise, if the market remains where it is, we think this is – we're very close to the highs of the VESA.

Speaker Change: Yeah, but overall we believe that prices have actually reached a pretty high price and they will plateau from here.

Petros Pappas: Let us now turn to Slide 12 for a brief update of demand. According to Clarkson's, Tondon Dryback trade during 2024 and 2025 is projected to expand by 2.6 and 0.7% in tons and by 4.4 and 0.5% in tonn miles respectively. During the first half of 2024, Tondon Dryback volume was increased by 5.8% here and here on the back of record, iron ore, coal and minor bulk exports, while tonn miles increased at the faster pace supported by canal and geopolitical inefficiencies and strong exports from Latin America, West Africa and the US.

Konstantin Simanteris: unless of course there is a huge

Konstantin Simanteris: Upside in the market at some point, otherwise if the market remains where it is, we think this is, we're very close to the highs of, the high values.

Konstantin Simanteris: All the best. Bye.

Operator: Once again, ladies and gentlemen, to ask a question at this time, please press star 1 on your telephone keypad. That's star 1 to ask a question at this time. There are no questions in queue. I would like to turn the call back to management for closing comments.

Speaker Change: All right, appreciate the color. Thank you.

Speaker Change: for than ever thank you

Speaker Change: Once again, ladies and gentlemen, to ask a question at this time, please press star 1 on your telephone keypad. That's star 1 to ask a question at this time.

Speaker Change: There are no questions in queue. I would like to turn the call back to management for closing comments.

Unknown Executive: No further comments, Operator. Thank you very much and have a great summer, everybody.

Petros Pappas: The IMF is projecting global GDP growth of 3.2% for 2024 and 3.3% for 2025. At the same pace as in 2023 and upgraded its focus for China to 5% and 4.5% respectively. Chinese GDP increased by 4.7% in Q2, missing initial expectations due to the striving property market and a slowdown of household spending. Nevertheless, recent comments from government officials highlighted that the country has the ability and confidence to achieve its full year growth target of around 5%.

Speaker Change: No further comments, Operator. Thank you very much, and have a great summer, everybody.

Operator: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

unknown: A.C.E. L crib Heaven I frequencies My right hand I can hear the heart beat I can feel the grave In- di- son [music] Thank you for watching!

Petros Pappas: Supported by strength and infrastructure, manufacturing and exports, while demand for dribble commodities remains strong as import volumes increased by 7.5% year over year during the first half of 2024. Tribal demand from the rest of the world is experiencing a recovery over the last three quarters that is expected to continue amid lower commodity prices and expectations of easing monetary policy. During the first half, inputs were up by 4.3% year over year with increase coming mainly from India, the Middle East and Southeast Asia.

Speaker Change: Thank You for Watching.

Petros Pappas: Meanwhile, Western economies are also moving higher, falling to years of contraction and geopolitical related disruptions. Iron or trade is expected to expand by 3.1% in tons and by 5.6% in tonn miles during 2024. China's still production declined by 2.2% year over year during the first half, while domestic production in imports of iron ore increased by 15.3% and 6.1% respectively, increasing port stockpiles by approximately 30 million tons versus last year. Week domestic consumption has hordesine and still mark makers to export excess output and has prompted some economies to raise tariffs as a response.

Petros Pappas: On the other hand, still production from the rest of the world has been on a strong upward trend since September and increased by 4.4% during the first half driven by strong demand in India and a gradual recovery of Atlantic production. It is worth highlighting that the medium-term outlook of Atlantic iron ore exports is promising as Vale is expected to achieve the upper end of their 2024 production guidance Forever, Vale is expected to ramp up production to 340 to 360 million tons by 2026, while the Simmandu Iron-O-Project in Guinea will deliver the first quantities by the end of 2025.

Petros Pappas: Contrary is expected to marginally expand by 0.6% in tons but contracts by 0.5% in tonn miles during 2024. Global focus on energy security during the last years has inflated coal drain but most of the growth has come from short-haul Indonesian exports. Chinese imports increased further during the first half and stand at record levels, support by a 1.9% year-in-year decline in domestic coal production and a 2.2% year-in-year increase in thermal electricity generation.

Petros Pappas: Nevertheless, during the last two months a reversal of this trend is taking place following the seasonal trend of hydro power, a directive from promises to increase production and stabilization of prices. During the last quarters India is emerging as a leading buyer of coal as domestic consumption has outpaced production growth and along with inland infrastructure constraints has led to a strong increase in import requirements. Grainscreen is expected to expand by 4.4% in tons and by 10% in tonn miles during 2024.

Petros Pappas: Exports from Latin America increased by approximately 12% during the first half as Argentinian volumes experience a strong recovery. However, Ukraine raised exports to the highest levels since the start of the war. But at the same time, Russian with exports have been affected by frost, droughts and heat waves at key production areas. Total grain trade was flood here over here during the first half of 2024 but export volumes growth is expected to increase during the second half of 2024.

Petros Pappas: Lower grain prices improved outlook for the forthcoming US crop and increased focus on food security are expected to support grain trade in the medium term. Minor bulk trade is expected to expand by 3% in tons and by 4.1% in tonn miles during 2024. Minor bulk trade has the highest correlation to global GDP growth and the recent trend in the container market provides a positive indicator for certain prospects for smaller sizes. The positive price arbitrage continues to incentivize Chinese still exports and bulk hold rates while both side exports out of West Africa continue to expand at the high pace that generates strong tonn miles for the capeside sector.

Petros Pappas: As a final comment despite the global geopolitical uncertainties were constructive about the medium term prospects of our industry, given the favorable order book, an age in fleet and upcoming rigorous environmental regulations. Starbucks has it built a diverse trapper-fitted fleet that is well positioned to operate efficiently and take advantage of attractive opportunities to create value for its shareholders.

Unknown Executive: Without taking any more of your time, we will now pass the floor over to the operator to answer any information you may have. Thank you.

Unknown Executive: We will now conduct a question and a session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that star one at this time.

Unknown Executive: One moment are we poll for the first question.

Omar Nokta: The first question comes from Omar Nokta with Jeffries. Please proceed. Thank you. Hi guys, good afternoon. Thanks for the update. A couple of questions for me. I wanted to ask, perhaps maybe just market related and pet trust. You just gave an overview of the different markets. Just want to touch up a bit more on that. Clearly as we are looking in the market today, dry bull crates are holding up quite well.

Omar Nokta: You realize figures thus far into the third quarter show continued study earnings. I would say obviously there is volatility, but it looks like things aren't too crazy different. But this is happening somewhat of a softer steel environment, at least in terms of steel prices when we look at where they are globally. And so just wanted to ask, given the steel backdrop and how it looks a bit softer, are you seeing this having any effect on the dry bull market at the moment? And also, are you a bit surprised perhaps that capes are earning north of 20 in this type of environment? Hi Omar, thanks for the question.

Petros Pappas: Well, we are actually positive for the second half of 2024. For a number of reasons. First of all, we see that the Red Sea and the Ukrainian War are not finishing anytime soon. So this will continue to create inefficiencies. And this has an effect in the market. Then the environmental regulations are starting to bite and you see that the fleet is basically slow steaming at around 11.1 knots. So this is going to get worse going forward.

Petros Pappas: Then we see Vale increasing their exports, their iron ore exports. And we see Guinea increasing or keeping at a high level their box height exports. We think we will see much stronger grain trade. We believe that China will not let up and will try to keep the 5% as a big growth going forward. We also see new building deliveries slowing down. So judging from the past, the second half of every year is much stronger than the first half.

Petros Pappas: There's much more exports. So overall, we think that the decent market will remain for the next six months at least and it's not just related to whether there's going to be more production of steel or less production of steel in China, where we think that it will remain strong going forward, especially because of the manufacturing reasons and because they will continue to export for as long as they can.

Omar Nokta: So from all respects, we expect to be seeing a decent market for the second half of the year. Got it. Okay, that's that's helpful, Petros. Thank you.

Omar Nokta: And maybe just kind of a follow up and thinking more about the mid-size segment this time. I think one of the themes say late last year and coming into this year had been the expectation that capes would outperform the ultra and cancer max segments and that I think was the case to earlier, but it feels like or it looks like the mid-size segment has done quite well here somewhat under the radar perhaps.

Omar Nokta: What's driving that sort of stronger performance on the mid-size, would you say? Well, all sizes are interconnected actually. So it's not like one size will go up and the rest will lag. So I would say that if we see very strong capes, charters will try to cover by splitting cargos, for example, or the other way around from super maxes to the mid-size. So actually, whenever the two edges, the capes and the super max are doing better, you will see cargos flowing into the middle sector, the panomax, the capes and max.

Omar Nokta: In any case, I think all types of vessels were strong capes have remained on average. I think above $25,000, which is pretty strong. Supras have done well because the container ship sector is doing pretty well. And I have to admit that I'm pretty surprised that Alcams and Maxis have been fixed for the next quarter, a bit above $18,000 on average, probably because cold trade in the first half of the year was relatively strong, maybe because these cargos from the other two types of vessels.

Omar Nokta: But we also expect that they will be doing pretty well going forward because we foresee higher trade on the grain site. Understood. Well, Petra, thank you for the color. That's it for me. I'll turn it over. Thank you, Maureen. Thank you.

Big Dick: Our next question comes from Big Dick with Clarkson Securities. Please proceed. Just want to touch upon on the capital allocation. You have quite the significant portion of cash now. How are you looking at share by the backs going forward? Well, you know, Hamish Norton oak tree was the seller, but frankly, from the shareholders point of view, it doesn't matter who the seller was, but what the price was. And you know, it was substantially below that asset value and below today's market value. So it was a big benefit to the shareholders. And we pretty much feel like we're exhausted by the effort of buying back those shares.

Hamish Norton: You know, at that time, let's let us recover our breath and figure out, you know, what to do. You know, we're paying out a big dividend and you know, we do have a bunch of cash after that. We, as you might recall, have a policy of keeping 2.1 million of cash per vessel on the balance sheet, you know, permanently. And you know, we've got some cash in excess of that, but it's not a huge amount. So I don't think we're under pressure to figure out what to do with that cash, you know, for the moment it's not until it builds up to something more substantial.

Big Dick: That's great color. And maybe just to follow up on that, how are you looking at growth and if you were sort of forced to choose a segment to grow in which which one would it be? What we really like being diversified and we've just thought, you know, a bunch of supermax is an ultramax. So, you know, ideally if we find a merger partner, we would like to find a merger partner, you know, who's got cash and you know, larger shifts generally. So you can't always get what you want, but hopefully we get what we need.

Big Dick: Okay, that's perfect. Thank you.

Ben Nolan: Our next question comes from Ben Nolan with B-Full, please proceed. Hi, this is actually vanilla on for Ben. But wanted to ask since secondhand asset values have been sort of plateauing recently. What direction do you see this moving forward? Ships are constantly in the interest. Do you want to talk about ship value? Well, six ship values have increased substantially during the first half of this year. We are seeing a stabilization over the last one to two months.

Ben Nolan: We believe that the ship value should as you mentioned plateau and probably remain at its levels. But a lot will depend on how the market performs towards the end of the year when we expect the freight market to be strong. Yeah, and I guess the shipyards are still quite full. Yeah, shipyard capacity for 2026 is actually almost all gone and we especially for the larger sizes and we are now are starting to see 2027 slowly being filled.

Ben Nolan: This is definitely something that is not supporting prices of modern vessels since we haven't seen such conditions for two decades actually. Yeah, but overall we believe that prices have actually reached a pretty high price and they will plateau from here. Unless of course there is a huge upside in the market at some point otherwise the market remains where it is we think this is we're very close to the highs of the high values for the vessel.

Ben Nolan: All right, appreciate the color.

Unknown Executive: Thank you. Once again, ladies and gentlemen to ask a question at this time, please press star one on your telephone keypad that star one to ask a question at this time.

Unknown Executive: There are no questions in queue.

Unknown Executive: I would like to turn the call back to management for closing comments. No further comments operator.

Unknown Executive: Thank you very much and have a great summer everybody. Thank you. This does conclude today's teleconference. You may disconnect your line to this time.

Unknown Executive: Thank you for your participation and have a great day. Thank you very much.