Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers Conference Call on the Second Quarter 2021 Financial Results. We have with us Mr. Petros Pappas, Chief Executive Officer; Mr. Hamish Norton, President; Mr. Nicos Rescos, Chief Operating Officer; Mr. Simos Spyrou and Mr. Christos Begleris, co-Chief financial Officers of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today. We now pass the floor to one of your speakers today, Mr. Christos Begleris. Please go ahead, Sir.

Thank you, operator. I’m Christos Begleris, co-CFO of Star Bulk. And I would like to welcome you to our conference call regarding our financial results for the second quarter of 2021. Before we begin, I kindly ask you to take a moment to read the Safe Harbor statement. On Slide 02 of our presentation. In today’s presentation, we will go through our second quarter results, our cash evolution during the quarter and operational update and the latest industry fundamentals before opening up for questions. Let us now turn to Slide 03 of the presentation for a summary of our second quarter 2021 financial highlights. In the three months ending June 30th, 2021, TCE revenues amounted to $254.9 million compared to $97.1 million for the same period in 2020. Adjusted EBITDA for the second quarter 2021 was at $182.5 million versus $35.2 million in the second quarter 2020. Net income for the second quarter amounted to $124.2 million or $1.22 earnings per share versus $44.1 million net loss or $0.46 loss per share in the second quarter of 2020. Our TCE rate during this quarter was at $22,927 per vessel per day. Total cash today stands at $280.3 million with total debt at approximately $1.62 billion. In addition, we have the ability to use a $30 million revolving facility which is currently undrawn. During the second quarter of 2021, we took delivery of one Ultramax, and the two remaining Kamsarmax resales reaching a total of 128 vessels on the water. As of June 30th, 2021, we owned a 128 vessels and our total cash balance pro forma for the financing proceeds for the two resale Kamsarmax was at $282.8 million, resulting in a declared dividend per share of $0.70 payable on or about 08. In Slide 04, we show a significant…

Thank you, Christos. Please turn to Slide 08 where we provide an operational update. OpEx excluding non-recurring expenses were a $4,280 for the first half of 2021. Net cost G&A expenses were at $1,087 per vessel per day for first half of 2021. Despite continued adverse COVID related restrictions which have a direct impact on OpEx. The combination of our in-house management and the scale of the group enable us to maintain very competitive costs with Star Bulk continues to remain at number one amongst our listed peers in terms of Rightship ratings. Since January 2020, Star Bulk maintains a 99.6% scrubber system availability across 120 vessels in 60,000 operating days and more than 1.2 million tons of HSFO consumed. The company has made significant progress in analyzing carbon emissions across its fleet in view of IMO 2023 decarbonization roadmap. We believe that our vessel emission profile will remain competitive within the upcoming carbon intensity index framework, which is expected to be adopted by the IMO in 2023. F Aiming to establish or require the version on measures ahead of the regulation effective date, we are estimating progress planning analysis, speaking part-to-part optimization practices, which will be adopted across our fleet as of January 2022. On the CapEx front, we're examining the long-term impact of various energy saving devices and applications and maintaining a competitive carbon intensity rating across our fleet well beyond 2023. We are actively engaged with various R&D workshops and consortium in collaboration with other stakeholders, including engine makers, classification society and pure technology innovators and carbon credit advisors in pursuit of technically and commercially viable solutions in reducing meaningfully our vessels carbon emissions footprint. Turning to Slide 99, we provide some guidance around the use of dry dock and ballast water treatment system expense for the next 12 months and the relevant total of five days. The numbers are based on current estimates around dry dock and retrofit planning, vessel employment and yard capacity. These figures incorporate our current understanding of present and future shipyards congestion. Since the beginning of the year, 33 vessels have entered dry dock and 13 have been retrofitted with ballast water treatment systems with the majority of our larger vessels scheduled for the year having completed their dry docks at the first quarter. Our expected dry dock expense for the next 12 months is estimated at $27.8 million, for the dry docking of 30 vessels with another $25.8 million of water ballast system CapEx. We expect to have 72% of our total fleet ballast water treatment by end of 2021 and 97% by end of 2022. In total, we expect to have approximately 825 offhire days for the forward 12 months period. I will now pass the floor to our CEO Petros Pappas for a market update and his closing remarks.

Thank you Nicos. Please turn to Slide 10 for a brief update of supply. During the first half of 2021, a total of 21.5 million deadweight was delivered and 4.4 million deadweight was sent to the Malaysian for a net fleet growth of 17.1 million deadweight or 3.1% year-on-year and 1.7% since the beginning of the year. The order book decreased to a record low 5.7% of the fleet with 11.1 million deadweight reported by Clarksons as firm orders between January and June. Since then, it rebounded to 23.6 million deadweight including some options that have been declared and last the order book increased to slightly above 6%. Upcoming environmental regulations and uncertainty on future propulsion has helped keep new orders under relative control with shipyard capacity is quickly filling up with container ships and other orders. Furthermore, the surge of global steel and iron ore prices has increased new building prices and boost scrap prices to new record price possibly aiding demolition and also discouraging new dry bulk orders. Average steaming speeds of the dry bulk fleet currently stand at 11.7 knots and despite the higher freight rate environment have only increased by 1% year-on-year partly due to higher bunker costs. As the global economy and oil products consumption recovers, we expect bunker prices experience upward pressures that will support higher freight rates and scrubber savings. While congestion has increased to the highest level of the last decade, when things related to COVID-19 and increased political tensions in China towards Australia and India have created strong inefficiencies for trade that have helped tighten the supply demand balance. Summarizing supply, net fleet growth is expected at 3% by the end of 2021 and should remain below 2% per annum during 2022 and 2023. Let’s now turn to Slide 11 for…

Thank you very much, Sir. [Operator Instructions] Our first question for today is from Omar Nokta from Clarksons. Please go ahead.

Hi there, thank you. Hi guys, good afternoon.

Hi, Omar.

Hi, Omar.

Hi. I just wanted to check in on the cash thresholds for the dividend. Obviously a nice dividend this quarter. But I and I know I asked this on the last call but just wanted to see if you had any more updated thoughts. I know starting in the fourth quarter, the minimum cash you want to keep goes up to $2.1 million per vessel. So, across all of your 128 ships, that gets you to $256 million and then everything above that gets paid out. But given the strong market rising asset values, obviously you're lower leverage and you really have no committed CapEx from here. Any thoughts on lowering the required cash position?

I think Omar, in the far future we might review that but I think for the with the near and medium-term, you got to count on that $2.1 million per vessel being our rainy day fund. Yes, hopefully there won't be any rainy days but you never know and just loved it. As said, essentially lowers. This gives us further support to lower the -- those thresholds. Yes -- but in not in the near or medium-term.

Okay. That's fair, I appreciate that. And then maybe just a follow-up. You've now got your full suite in hand a 128 ships, you've got a large footprint across all the different asset classes. And how are you guys doing things today, are you still on the hunt for acquisitions and obviously using your equity when possible or do you take a step back with that, so prices have been risen so much. Kind of any color there?

Well look, we're still looking to grow and at such time as we can use our equity to make acquisitions of ships that increase earnings per share, that increase net asset value per share, that increase the dividend per share, that reduce the net leverage of the company and probably also reduce the fleet age for the company. We're going to do that as much as we can because that's what is the best thing for the shareholders. And in a situation where we're trading well, we should be able to do that.

Okay. Got it Hamish, and just to be clear to that: an acquisition that reduces your net leverage. So in effect, basically buying vessels for as much cash as possible a splash lower than your current LTV will be?

Yes, probably buying the vessels without debt but if our -- if we're trading well enough, we can nevertheless increase earnings per share, dividends per share, net asset value per share, and probably also reduce the average age of the fleet. So, it's going to be a quadruple or quintuple win.

Yes. And I'd better jump on, on to line.

Okay.

Yes Hamish, thanks for the color there.

Our next question is from Ben Nolan from Stifel. Please go ahead.

Yea, thanks. I was going to ask, maybe was sort of following on Omar's question there a little bit, not really about the dividend but you guys announced an ATM program. Most of the time when you've been doing these asset transactions, it's been shared through ships but can you maybe just -- well, talk me through a little bit like when and why you would be active under that ATM program? I know that it's in the release, that you haven't done anything with it yet but just sort of maybe a little color around the rationale and how you would think about deploying it?

I mean, it's basically what I told Omar. Basically, what we want to do is use the shares at the appropriate time to buy ships in such a way that it increases our earnings per share; our net asset value per share; our dividend per share; reduces our net leverage; and reduces our average fleet age. And we think we can do that pretty straightforwardly in a market that is a little bit more friendly to dry bulks in the market we see this morning but we think it's going to be actually quite easy to do that in the right market.

Okay. So, I guess maybe the question is would you do it preemptively, right. You say okay well we think we can buy something in the future that will be a accretive to all of those other things that you talked about, so we'll go ahead and be proactive or --.

We're going to do some. We're going to do the thing that is the best thing for the shareholders, basically we want to basically add as much value to the share as possible. But I wouldn't expect that we would do something on the one hand without having an opportunity on the other hand. I think we'll be pretty synchronized.

Okay, perfect.

And Ben, this is Christos, just to clarify. The levels that we are currently trading, we will not use the ATM. Yes, that's yes, I should have said that. We have no intention of using the ATM under current conditions.

Okay, very helpful. And then, with respect to sort of the market, if some of the categories were a little bit low like for instance the Supramax, Ultramax categories and even Panamax categories were a little bit lower than what we've seen in the market. And I think that you'd said Petros that in the last quarter that you'd sort of in the first part of the year, put some of those on shorter term contracts which I would assume kept the rates a little bit below where the spot market was. Any update on sort of your coverage into the back half; in the third quarter; fourth quarter; maybe even in the next year a little bit. Are there any sort of lingering effects of some of that coverage?

Ben, actually we had covered 50%. We had covered 50% of our Supra fleet towards the end of last year, beginning of this year, at relatively low levels, and that's why you saw this effect and above 25% of our Panamax fleet. As we stand now for Q3, we only have another six Supra's and four Panamax still at relatively low levels when I'm saying that I mean below 20,000 and that's it and nothing for Q4 onwards.

Okay, perfect. And then just sort of maybe to follow-on there and I'll be done. Are you currently looking to take cover with the existing fleet and current rates are still sort of riding the spot market?

We have as we've already said, covers about 65% of the fleet for Q3 at levels above of about 28,500. We have almost no cover for Q4 onwards where we very much believe in the market in the next few months, actually in the next few years to be honest. So, right now we are not intending to hedge but during Q4 depending on how things go and if the market is really strong, we might consider as part of our fleet to be hedged for the first half of next year. But that has not been decided yet, it will depend on how the market goes.

Perfect, alright, I appreciate it. And thanks, for all the color.

Thank you, Ben.

Thank you. Our next question is from Randy Giveans from Jefferies. Please go ahead.

Hi, rejoined on the call.

Hi.

Hi, Randy.

Hi. So, after all these recent refinancing's clearly your balance sheets in great shape, good decisions there to redeem that senior notes. So, with all those moving parts, what do you expect the net change in total debt to be during the third quarter?

And when we say net change, Randy, you mean net change in the interest and debt principle amortization?

Yes, just like total debt. I think right now it was like 1.55 something like this I guess 1.58, what do you expect it to be at the end of 3Q?

So, end of 3Q, our debt should be lowered by approximately $50 million. Okay?

Sorry?

Then interest expense for this quarter --. Sorry?

Oh yes, go ahead. Interest expense?

Interest expense for this quarter should be at around $14 million dropping to $12 million from the next quarters as you essentially have the cheaper debt kicking in.

Got it. Okay, perfect. So, I guess that $50 million change in debt, maybe another, I don't know, $20 million increase in working cap. If rates obviously stay where they are now, it seems like 3Q dividend could easily exceed $1, is that fair?

Well, I guess, Randy you're the securities analyst. We just run the shipping company. And a lot of just how --.

Just mentioned.

Right, yes. An increase of $25 million in working capital seems reasonable given that we are in a continuously rising freight environment.

Got it, alright. I'll go with my assumptions from there. And then just last question from me. Speaking of good decisions for you, right, I applaud the share repurchase authorization over the last month rates, asset values going up, share price has been going down. So with that, now that your fleets fully delivered, you still have a few older vessels, so you can reduce your average fleet age by maybe selling so those. So, how do you view potential asset sales and then using those proceeds for maybe share repurchases in the near-term?

To the extent, there's an arbitrage to be done that favors the shareholders. We will look at it very seriously. But other than other than an arbitrage that favors the shareholders, we're not in the market to sell ships generally.

Sure. I think the arbitrage of a very old ship at NAV and buying shares at a 25% discount to NAV would qualify. But I'll note. Well, thank you for the time.

Thank you, Randy.

Thank you, Randy.

Thank you. The next question is from Amit Mehrotra from Deutsche Bank. Please go ahead.

Thanks. Hi, everyone. Congrats on the results in the dividend payment. I wanted to follow-up on the last line of questioning regarding the calibration of expectations for dividend payments for the third quarter. The math, I want to walk through the cash flow math if that's okay for a minute. So, first and foremost, I think you said 28,000 per day majority of days booked for the third quarter. That's basically a surplus of $17,000 per day, we've got to call it 90 days maybe a little bit under 90 days. So, you are talking about close to $200 million of incremental cash flows maybe a little bit under that in the third quarter alone. I am going to throw some numbers at you, you tell me where I am wrong. You are paying out a little over $70 million in September, you got some working capital build, but net-net you are probably looking at well over a $100 million or so of incremental cash balance on the balance sheet. So, what’s going to, what’s wrong in that math because that would imply a dividend payment of well over a $1, $1.20, $1.30 per share, well what I am missing in this, the math and the numbers?

Well, the math is the consequence of your assumptions that are raised and working capital but I don’t know that there any errors.

Yes. Because you've said working capital $25 million build, you have 65% of the days booked. So, I guess is the risk is on the 35% of the balance. But I think I would imagine that the 35% balance would be accretive to your all run rate today, it's that would you agree with that or not agree with that?

Amit, this is Christos. Yes, I think we would probably agree with that.

Okay, great. And so, the other line of question, Hamish you know you guys have embarked on this framework and strategy of deleveraging in that and you're marking all the surplus cash flows for dividends. I think the end game is really to have the equity value of the company, capitalize those dividends, which appear sustainable at a healthy premium that gives you the currency to then grow the fleet or deleverage the fleet vis-a-vis the currency that you have in the market. That's not working out as of right now and I understand there's some more --.

Not as of this morning but maybe next week.

Yes. So, I guess the question is that because the stock right now is trading like it's trading like ex-dividend, it's maybe actually even a little bit more than that. And so, if the market continues to not give credit to these payments, how steadfast are you in the management team and Petros and everybody committed to this framework, if the market over the next two three quarters continues to basically not capitalize these payments at all?

We're incredibly stubborn people. We're just unbelievably stubborn and we're going to keep at it until it works.

Okay. And then, the last point on the ATM. I understand -- like, the question I have is that you're basically telegraphing equity offerings down the road which may actually be counterproductive in capping the opportunity in the equity in the first place. So, what's the thought behind the ATM in that respect when essentially it could be counterproductive and having the market give you credit for what you guys are doing?

Well, the answer is we're not going to use the ATM in a way that's counterproductive to the share price. We're only going to use the ATM in a way that accretive to earnings per share; net asset value per share; dividends per share; reduction of the company's net leverage; and reducing the average fleet age. In what way is that going to be bad for the share price? We're not going to use the ATM in any way that will injure the share price in the slightest way. Just the opposite.

Got it, okay. And then the last question from me if I could is the asset value environment. One of the things that really moved the share price up from $10 to $20 in a relatively short period of time was obviously this asset value cycle that we had a mini cycle that we had. Where has that stalled out a little bit or if you can just tell, it's not an overly liquid market, so I'd love to get some perspective on have we taken a pause in the upside and asset values and or have they come in a little bit, what's the overall feel out there?

Well Amit, we're looking at historical levels of prices and incomes and we are seeing that prices have actually lagged incomes. So, I don't know if that is psychological and has to do with the fact that we've been not in great markets for the last several years or whether it is COVID related or I don't know what other fears people may have. But we are -- I want to repeat that we're extremely positive in this company not only for the next couple of years but for several years forward because of the environmental regulations which within our main trend because it's going to induce slow steaming; scrubbing; less ordering; delays in yards; or hires; it will affect supply in a very strong way. So, we think there's going to be a strong market, perhaps people are not yet persuaded that this good market can continue for long. We think it will and after a while if we're right, I believe that vessel prices will catch up with the rates we're seeing.

Got it. Okay, that makes sense. Thank you for taking my questions. Congrats again, I appreciate it.

Thanks, Amit.

Thank you, Amit.

Thank you, Amit.

Thank you. Our next question is from J. Mintzmyer from Value Investor's Edge. Please go ahead.

Hi, good morning. Good afternoon, gentlemen. Congrats on a fantastic quarter.

Thank you.

Thank you, J.

I think the dividend has been well covered. I appreciate the analysts in front of me asking great questions there. The only question I'd add to that is you added the $50 million repurchase authorization, how do you prioritize that in comparison to keeping net cash available for the Q3 payouts, is it based on like a function of price to NAV or how do you think about that?

No, it's actually pretty straightforward, we really have no intention of reducing the dividend as a result of share buybacks. If we are to use the share buyback authorization, it would be an arbitrage between vessel prices and share prices. And we would probably fund it by selling a vessel or two and using the cash released by that vessel to buy back the shares. We wouldn't be using cash that would otherwise go into a dividend. At least, certainly that's not the current intention.

Okay, that seems reasonable. So yes, definitely heard the other panelists, it looks like $1 is the very low end of next quarters dividend and that's good to see. Do you have any interest in acquiring potentially other equities and dry bulk firms, there's a couple firms including one major U.S. listed firm which owns exclusively midsized assets, which has high private equity ownership which trade at 70% to 80% price to NAV. Is there any interest in some sort of a stock acquisition in that way?

I mean, we always are interested in acquisitions that could be accretive to our earnings per share and our dividend per share and our net asset value per share and so on. But frankly, at this moment we haven't been looking at any of the examples that you've mentioned in an active way.

Yes, certainly makes sense. I appreciate the heavy focus on per share metrics. And I think well the whole industry will be in a better place if that focus continues. Thanks again, gentlemen.

Right, welcome.

You're welcome.

Thank you. There are no further questions that are waiting. I'll now hand the call back to the speakers for any closing comments.

No further comments, operator. Thank you very much.

Thank you, sir. Ladies and gentlemen, that does conclude the call for today. Thank you all for joining. You may now disconnect.