SOURCE: Star Bulk Carriers Corp.

Star Bulk Carriers Corp.

November 17, 2015 18:22 ET

Star Bulk Carriers Corp. Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2015

ATHENS, GREECE--(Marketwired - Nov 17, 2015) - Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (NASDAQ: SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the third quarter and nine months ended September 30, 2015.

Financial Highlights

         
(Expressed in thousands of U.S. dollars,
except for daily rates and per share data)
  Three months ended   Nine months ended
September 30, 2015   September 30, 2014   September 30, 2015   September 30, 2014
Total Revenues   $68,814   $36,812   $170,132   $81,737
EBITDA (1)   ($9,367)   $13,433   ($54,328)   $25,526
Adjusted EBITDA (1)   $6,128   $9,668   $6,752   $27,061
Net income/(loss)   ($41,973)   $221   ($147,170)   ($3,649)
Adjusted Net income / (loss)   ($24,525)   ($2,164)   ($77,066)   $2,416
Earnings / (loss) per share basic and diluted   ($0.19)   $0.003   ($0.78)   ($0.08)
Adjusted earnings / (loss) per share basic and diluted   ($0.11)   ($0.03)   ($0.41)   $0.05
Average Number of Vessels   71.2   31.5   68.7   21.5
Time Charter Equivalent Rate ("TCE")   $8,702   $11,159   $8,130   $12,813
Average daily OPEX per vessel   $4,484   $5,192   $4,602   $5,302
Average daily OPEX per vessel (excl. pre-delivery expenses)   $4,237   $4,816   $4,325   $5,046
Average daily Net Cash G&A expenses per vessel(2)   $1,097   $1,596   $1,112   $1,485
                 
(1)   See the table at the back of this release for a reconciliation of EBITDA and Adjusted EBITDA to Net Cash Provided by / (Used in) Operating Activities, which is the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States ("U.S. GAAP").
(2)   Average daily Net Cash G&A expenses per vessel is calculated by deducting Management fee Income from, and adding the Management fee expense to, General and Administrative expenses (net of stock based compensation expense) and then dividing the result by ownership days.
     
     

Petros Pappas, Chief Executive Officer of Star Bulk, commented: "Today we have announced our financial results for the third quarter and nine months of 2015. Net Revenues for the third quarter of 2015 were $49.1 million and Adjusted EBITDA was $6.1 million. The weak dry bulk market conditions have impacted our top line, while our operating results were affected by dry docking costs of $6.2 million. Our bottom line has been affected by non-cash losses of $12.5 million related to the sale of three of our on-the-water vessels, as well as the reassignment of one lease agreement to a third party.

We remain committed to maintaining our financial strength in what is proving to be the most challenging dry bulk market of the last 30 years.

On the revenue side, we have taken advantage of a short term increase in the freight rates during July and have increased our charter coverage, by chartering 10 vessels for an average minimum duration of approximately 8.4 months.

On the OPEX side, we continue our efforts to remain among the lowest cost U.S. listed dry bulk operators. Our average daily operating expenses per vessel for the three months ended in September 2015, adjusted for newbuilding pre-delivery expenses, were $4,237 and our average daily net cash G&A expenses per vessel were $1,097, reduced by 12.0% and 31.3% versus the respective period in 2014. We expect further reduction in our average daily operating expenses upon completion of our newbuilding program in 2016, without compromising the high quality and safety standards of our operations.

On the capex side, we have recently come to an agreement to defer the delivery of four newbuilding vessels from the fourth quarter of 2015 to 2016, preserving our strong liquidity position and increasing their resale value. As of today, we have managed to defer $464 million of capital expenditures from 2015 to 2016 and delay vessel deliveries by a total of 105 months, or 5.2 months per vessel on average at no additional cost. Furthermore, we have recently announced the reassignment of a lease agreement to a third party, which will result in a one-time payment to us of $5.8 million in 2015. Including the effect of a similar arrangement concluded earlier this year, we have managed to reduce our expected equity capital expenditures by $23.2 million. Debt financing for all 18 remaining new building vessels is fully committed. Finally, as previously announced, we have come to an agreement to reduce the final purchase price of certain of our newbuilding vessels by an aggregate amount of $25.8 million.

Year to date we have disposed of eleven 90's built vessels that did not fit our commercial profile, as well as one modern vessel for which we could realize a relatively firm value compared to the market. During the third quarter of 2015 we have disposed of three vessels, while one more vessel was sold in October of 2015 with total net proceeds of $19.5 million after repayment of relevant debt facilities.

Under the current market environment our focus remains to maintain a strong operating platform to take us through this downturn and into recovery in the years to come. Acting always in a preemptive and prudent manner, we are taking and will continue to take, all the necessary steps to maintain a strong liquidity position, reduce our break - even levels and safeguard shareholder value."

Existing On the Water Fleet Profile

                     
    Vessel Name  
Vessel Type
  Capacity
(dwt.)
  Year Built   Date Delivered to Star Bulk
1   Goliath   Newcastlemax   209,537   2015   15-Jul-15
2   Gargantua   Newcastlemax   209,529   2015   2-Apr-15
3   Maharaj   Newcastlemax   209,472   2015   15-Jul-15
4   Deep Blue   Capesize   182,608   2015   27-May-15
5   Leviathan   Capesize   182,511   2014   19-Sep-14
6   Peloreus   Capesize   182,496   2014   22-Jul-14
7   Indomitable   Capesize   182,476   2015   8-Jan-15
8   Obelix   Capesize   181,433   2011   11-Jul-14
9   Star Martha   Capesize   180,274   2010   31-Oct-14
10   Star Pauline   Capesize   180,274   2008   29-Dec-14
11   Pantagruel   Capesize   180,181   2004   11-Jul-14
12   Star Borealis   Capesize   179,678   2011   9-Sep-11
13   Star Polaris   Capesize   179,600   2011   14-Nov-11
14   Star Angie   Capesize   177,931   2007   29-Oct-14
15   Big Fish   Capesize   177,643   2004   11-Jul-14
16   Kymopolia   Capesize   176,990   2006   11-Jul-14
17   Big Bang   Capesize   174,109   2007   11-Jul-14
18   Star Aurora   Capesize   171,199   2000   8-Sep-10
19   Star Despoina   Capesize   170,162   1999   29-Dec-14
20   Star Eleonora   Capesize   164,218   2001   3-Dec-14
21   Star Monisha   Capesize   164,218   2001   2-Feb-15
22   Amami   Post Panamax   98,681   2011   11-Jul-14
23   Madredeus   Post Panamax   98,681   2011   11-Jul-14
24   Star Sirius   Post Panamax   98,681   2011   7-Mar-14
25   Star Vega   Post Panamax   98,681   2011   13-Feb-14
26   Star Angelina   Kamsarmax   82,981   2006   5-Dec-14
27   Star Gwyneth   Kamsarmax   82,790   2006   5-Dec-14
28   Star Kamila   Kamsarmax   82,769   2005   3-Sep-14
29   Pendulum   Kamsarmax   82,619   2006   11-Jul-14
30   Star Maria   Kamsarmax   82,598   2007   5-Nov-14
31   Star Markella   Kamsarmax   82,594   2007   29-Sep-14
32   Star Danai   Kamsarmax   82,574   2006   21-Oct-14
33   Star Georgia   Kamsarmax   82,298   2006   14-Oct-14
34   Star Sophia   Kamsarmax   82,269   2007   31-Oct-14
35   Star Mariella   Kamsarmax   82,266   2006   19-Sep-14
36   Star Moira   Kamsarmax   82,257   2006   19-Nov-14
37   Star Nina   Kamsarmax   82,224   2006   5-Jan-15
38   Star Renee   Kamsarmax   82,221   2006   19-Dec-14
39   Star Nasia   Kamsarmax   82,220   2006   29-Aug-14
40   Star Laura   Kamsarmax   82,209   2006   9-Dec-14
41   Star Jennifer   Kamsarmax   82,209   2006   15-Apr-15
42   Star Helena   Kamsarmax   82,187   2006   29-Dec-14
43   Mercurial Virgo   Kamsarmax   81,545   2013   11-Jul-14
44   Magnum Opus   Kamsarmax   81,022   2014   11-Jul-14
45   Tsu Ebisu   Kamsarmax   81,001   2014   11-Jul-14
46   Star Iris   Panamax   76,466   2004   8-Sep-14
47   Star Aline   Panamax   76,429   2004   4-Sep-14
48   Star Emily   Panamax   76,417   2004   16-Sep-14
49   Star Vanessa   Panamax   72,493   1999   7-Nov-14
50   Idee Fixe (*)   Ultramax   63,458   2015   25-Mar-15
51   Roberta (*)   Ultramax   63,426   2015   31-Mar-15
52   Laura (*)   Ultramax   63,399   2015   7-Apr-15
53   Kaley (*)   Ultramax   63,283   2015   26-Jun-15
54   Star Challenger   Ultramax   61,462   2012   12-Dec-13
55   Star Fighter   Ultramax   61,455   2013   30-Dec-13
56   Honey Badger   Ultramax   61,320   2015   27-Feb-15
57   Wolverine   Ultramax   61,292   2015   27-Feb-15
58   Star Antares   Ultramax   61,258   2015   9-Oct-15
59   Star Acquarius   Ultramax   60,916   2015   22-Jul-15
60   Star Pisces   Ultramax   60,916   2015   7-Aug-15
61   Strange Attractor   Supramax   55,742   2006   11-Jul-14
62   Star Omicron   Supramax   53,489   2005   17-Apr-08
63   Star Gamma   Supramax   53,098   2002   4-Jan-08
64   Star Zeta   Supramax   52,994   2003   2-Jan-08
65   Star Delta   Supramax   52,434   2000   2-Jan-08
66   Star Theta   Supramax   52,425   2003   6-Dec-07
67   Star Epsilon   Supramax   52,402   2001   3-Dec-07
68   Star Cosmo   Supramax   52,246   2005   1-Jul-08
69   Star Kappa   Supramax   52,055   2001   14-Dec-07
70   Star Michele   Handymax   45,588   1998   14-Oct-14
        Total dwt:   7,362,579        
                     

(*) Subject to a bareboat charter that is accounted for as a capital lease.

Chartered In Vessel

Vessel Name   Type   Capacity (dwt.)   Year Built   Redelivery Date
Astakos   Supramax   58,722   2012   September 2017
    Total dwt:   58,722        
                 

Newbuilding Vessels

    Vessel Name  
Vessel Type
  Capacity
(dwt.)
  Shipyard   Expected Delivery
 Date
1   HN NE 198 (tbn Star Poseidon)   Newcastlemax   209,000   NACKS, China   March 2016
2   HN 1359 (tbn Star Marisa) (*)   Newcastlemax   208,000   SWS, China   January 2016
3   HN 1372 (tbn Star Libra) (*)   Newcastlemax   208,000   SWS, China   March 2016
4   HN 1360 (tbn Star Ariadne) (*)   Newcastlemax   208,000   SWS, China   July 2016
5   HN 1342 (tbn Star Gemini)   Newcastlemax   208,000   SWS, China   May 2016
6   HN 1371 (tbn Star Virgo) (*)   Newcastlemax   208,000   SWS, China   July 2016
7   HN 1361 (tbn Star Magnanimus) (*)   Newcastlemax   208,000   SWS, China   August 2016
8   HN 1343 (tbn Star Leo) (**)   Newcastlemax   208,000   SWS, China   June 2016
9   HN 5055 (tbn Behemoth)   Capesize   182,000   JMU, Japan   January 2016
10   HN 5056 (tbn Megalodon)   Capesize   182,000   JMU, Japan   January 2016
11   HN 1312 (tbn Bruno Marks)   Capesize   180,000   SWS, China   January 2016
12   HN 1313 (tbn Jenmark)   Capesize   180,000   SWS, China   January 2016
13   HN 1338 (tbn Star Aries)   Capesize   180,000   SWS, China   January 2016
14   HN 1339 (tbn Star Taurus)   Capesize   180,000   SWS, China   May 2016
15   HN 1080 (tbn Kennadi)   Ultramax   64,000   New Yangzijiang, China   January 2016
16   HN 1081 (tbn Mackenzie)   Ultramax   64,000   New Yangzijiang, China   February 2016
17   HN 1082 (tbn Night Owl)   Ultramax   64,000   New Yangzijiang, China   March 2016
18   HN 1083 (tbn Early Bird)   Ultramax   64,000   New Yangzijiang, China   April 2016
19   HN NE 197 (tbn Star Lutas)   Ultramax   61,000   NACKS, China   January 2016
        Total dwt:   3,066,000        
                     

(*) Subject to a bareboat charter that will be accounted for as a capital lease.
(**)To be financed under a capital lease.

Third Party Vessel Under Management

Vessel Name   Type   DWT   Year Built
Serenity I   Supramax   53,688   2006
    Total dwt:   53,688    
             

Recent Developments (*)

  • On October 15, 2015, the vessel Star Nicole was delivered to its new owners pursuant to a sale agreement signed on September 16, 2015. Proceeds from the sale of Star Nicole were $3.8 million.
  •  On October 9, 2015, we took delivery of the Ultramax vessel Star Antares (ex-HN NE 196). The delivery installment of $19.8 million was partially financed by $16.7 million drawn down on September 29, 2015, under the Sinosure Facility.
  • In October 2015, we reassigned a lease for a newbuilding vessel back to the vessel's owner for a one-time payment to us of $5.8 million.
  • In October 2015, we agreed in principle with certain shipyards to defer the delivery of four of our newbuilding vessels to 2016. The vessels were originally due for delivery to us in the fourth quarter of 2015. The deferrals are subject to execution of definitive documentation.

Third Quarter 2015 and 2014 Results (*)
(*) Amounts relating to variations in period-on-period comparisons shown in this section are derived from the actual numbers in our books and records.

Capitalized terms used but not defined herein shall have the meaning ascribed to them in our Annual Report on Form 20-F for the fiscal year ended December 31, 2014, filed with the SEC on April 8, 2015.

For the third quarter of 2015, total voyage revenues were $68.7 million compared to $36.5 million for the third quarter of 2014. This increase was mainly due to the increase in our average number of vessels to 71.2 in the third quarter of 2015, from 31.5 vessels in the third quarter of 2014. The increase in voyage revenues from the additional vessels was partially offset by significantly lower charterhire rates prevailing in the dry bulk market during the third quarter of 2015, compared to the third quarter of 2014.

Management fee income during the third quarter of 2015 was $0.1 million compared to $0.3 million for the third quarter of 2014. This decrease was mainly due to the decrease in the average number of third-party vessels under management to 1.0 vessel in the third quarter of 2015, from 4.9 vessels in the third quarter of 2014. As a result of the acquisition of Oceanbulk, 11 Oceanbulk vessels that had been under our management became part of our fleet as of July 11, 2014, and we, therefore, stopped receiving fees for the management of these vessels.

For the third quarter of 2015, operating loss was $30.7 million, compared to operating income of $1.3 million for the third quarter of 2014, due primarily to the combination of:

  • an increase in the average number of vessels of our fleet; 
  • lower charterhire rates for dry bulk carrier vessels; 
  • respective non-cash vessel impairment loss and loss on sale of vessels of $5.4 million and $7.1 million recognized during the third quarter of 2015 that are described in more detail below; 
  • a non-cash gain from bargain purchase of $12.3 million recognized in the third quarter of 2014 as a result of the acquisition of Oceanbulk; and 
  • other operational gain of $9.4 million recognized in the third quarter of 2014, consisting of:
    • gain of $8.0 million from the sale to a third party of our claim against the previous charterer of the Star Borealis for charter party repudiation due to early redelivery of the vessel, which was collected in full in October 2014; and 
    • $1.4 million from the extinguishment of the liability to the previous charterer of Star Borealis, related to the amount of fuel and lubricants remaining on the board at the time of the charter repudiation.

Net loss for the third quarter of 2015 was $42.0 million, or $0.19 loss per basic and diluted share, calculated based on 219,120,612 weighted average number of basic and diluted shares. Net income for the third quarter of 2014 was $0.2 million, or $0.003 earnings per basic and diluted share, based on 77,233,053 and 77,437,791 weighted average number of basic and diluted shares, respectively.

Net loss for the third quarter of 2015 mainly included the following non-cash items:

  • Amortization of fair value of above market acquired time charters of $2.0 million, or $0.01 per basic and diluted share, associated with time charters attached to five vessels (Amami, Madredeus, Star Martha, Star Pauline and Star Despoina). These above market time charters are amortized over the duration of each charter as a decrease to voyage revenues;
  • Expenses of $0.6 million, or $0.003 per basic and diluted share, relating to stock-based compensation recognized in connection with shares issued to our directors and employees;
  • Loss on sale of vessels of $7.1 million, or $0.03 per basic and diluted share, relating to the sale of the vessels Star Natalie, Star Claudia and Maiden Voyage, as further discussed below;
  • Impairment loss of $5.4 million or $0.02 per basic and diluted share, in connection with (i) the agreement to sell Star Nicole, which was delivered to its new owners in October 2015 and (ii) the agreement to reassign a lease for one newbuilding vessel back to the vessel's owner for a one-time payment to the Company of $5.8 million. The impairment loss includes a $2.5 million write-off of the fair value adjustment recognized upon our merger with Oceanbulk in July 2014 in connection with the newbuilding vessel;
  • Unrealized loss on derivative instruments not designated as accounting hedges of $2.4 million, or $0.01 per basic and diluted share, and
  • Equity in income of investee of $0.1 million, or $0.0004 per basic and diluted share.

Excluding these non-cash items, net loss for the third quarter of 2015 would have been $24.5 million, or $0.11 loss per basic and diluted share, based on 219,120,612 weighted average number of basic and diluted shares.

Net income for the third quarter of 2014 mainly included the following non-cash items:

  • Amortization of fair value of above market acquired time charters of $1.4 million, or $0.02 per basic and diluted share, associated with time charters attached to four vessels (Star Big, Star Mega, Amami and Madredeus). These above market time charters are amortized over the respective charter durations as a decrease to voyage revenues;
  • Expenses of $2.9 million, or $0.04 per basic and diluted share, relating to stock-based compensation expense recognized in connection with the shares issued to our directors and employees;
  • A gain of $1.4 million, or $0.02 per basic and diluted share, in connection with the extinguishment of liability to the previous charterer of the Star Borealis, relating to the amount of fuel and lubricants remaining on board the vessel at the time of the charter's repudiation;
  • A gain from bargain purchase of $12.3 million, or $0.16 per basic and diluted share, resulting from the acquisition of Oceanbulk and the Pappas Companies.

In addition, net income for the third quarter of 2014 included non-recurring transaction costs of $7.0 million, or $0.09 per basic and diluted share, including legal and accounting costs, in connection with the acquisition of Oceanbulk, the Pappas Companies and the Heron Vessels.

Excluding these non-cash items and non-recurring transaction costs, net loss for the third quarter of 2014 would have been $2.2 million, or $0.03 loss per basic and diluted share, based on 77,233,053 and 77,437,791 weighted average number of basic and diluted shares, respectively.

Adjusted EBITDA for the third quarters of 2015 and 2014 was $6.1 million and $9.7 million, respectively. A reconciliation of EBITDA and adjusted EBITDA to net cash provided by cash flows from operating activities is set forth below.

During the third quarters of 2015 and 2014, we owned and operated an average of 71.2 and 31.5 vessels, respectively, which earned an average Time Charter Equivalent, or "TCE" of $8,702 and $11,159 per day, respectively. We refer you to footnote 8 under the heading "Summary of Selected Data" set forth below for information regarding our calculation of TCE rates.

For the third quarter of 2015, voyage expenses were $21.7 million, compared to $12.9 million for the third quarter of 2014. The increase in voyage expenses was due to the increase in the average number of vessels in the third quarter of 2015, as well as the increased level of spot market activity, which is associated with higher voyage expenses than time charters.

For the third quarters of 2015 and 2014, vessel operating expenses totalled $29.4 million and $15.1 million, respectively. The increase in operating expenses was mainly due to higher average number of vessels in the third quarter of 2015 compared to the third quarter of 2014. Our average daily operating expenses per vessel for the third quarter of 2015 were $4,484, compared to $5,192 during the third quarter of 2014, representing a 13.6% reduction as a result of synergies and economies of scale from operating a larger fleet.  In addition, vessel operating expenses for the third quarters of 2015 and 2014 respectively included $1.6 million and $1.1 million of pre-delivery expenses, which related to the initial crew manning and the initial supply of stores for our vessels upon delivery. Excluding these amounts, our average daily operating expenses per vessel for the third quarter of 2015 and 2014 were $4,237 and $4,816, respectively, representing a reduction of 12%.

Dry docking expenses for the third quarters of 2015 and 2014 were $6.2 million and $3.6 million, respectively. During the third quarter of 2015, eight of our vessels underwent periodic dry docking surveys compared to two vessels in the third quarter of 2014.

Depreciation expense increased to $21.7 million for the third quarter of 2015, compared to $10.7 million for the third quarter of 2014. The increase was due to the higher average number of vessels in the third quarter of 2015 compared to the third quarter of 2014, partially offset by an increase in the estimated scrap rate per light weight ton from $200 to $300, which became effective as of January 1, 2015, following our management's reassessment based on the historical average demolition market prices.

Management fees for the third quarter of 2015 and 2014 were $2.4 million and $0.1 million, respectively. As of January 1, 2015, we engaged Ship Procurement Services S.A. ("SPS"), an unaffiliated third party, to provide our fleet with certain procurement and remote vessel performance monitoring services at a daily fee of $295 per vessel. SPS will provide procurement and remote vessel performance monitoring services to a fleet of over 120 vessels. We expect to benefit from lower operating expenses and dry docking costs through the economies of scale that SPS will enjoy in managing such a large fleet. In addition, three of the Excel Vessels (Star Martha, Star Pauline and Star Despoina), which were acquired with attached time charter agreements, were managed by Maryville Maritime Inc. ("Maryville") until the expiration of their existing time charter agreements (two of which expired in August 2015 and one of which expired in November 2015) at a monthly fee of $17,500 per vessel.

During the third quarter of 2015, we had $5.5 million of general and administrative expenses, compared to $14.8 million during the third quarter of 2014. This decrease was mainly due to non-recurring transaction costs of $7.0 million, which were incurred during the third quarter of 2014 in connection with the acquisition of Oceanbulk, and a stock-based compensation expense of $1.8 million, also incurred in the third quarter of 2014, relating to a severance payment to our former Chief Executive Officer. Our average daily net cash general and administrative expenses per vessel for the third quarter of 2015 were $1,097, compared to $1,596 during the third quarter of 2014, representing a 31.3% reduction as a result of synergies and economies of scale from operating a larger fleet. This reduction was achieved despite an increase in wage expenses resulting from a 14% increase in our average number of employees during the third quarter of 2015 as compared to the same period in 2014.

During the third quarter of 2015, we recorded an impairment loss of an aggregate of $5.4 million in connection with the agreement to sell Star Nicole, which was delivered to its new owners in October 2015, and the agreement to reassign a lease for one newbuilding vessel back to the vessel's owner for a one-time payment to the Company of $5.8 million. Of this $5.4 million impairment loss, $2.5 million related to the write-off of the fair value adjustment recognized upon the merger with Oceanbulk in July 2014 in connection with the newbuilding vessel.

During the third quarter of 2015, we recognized an aggregate loss on a sale of vessels of $7.1 million in connection with the sale of the vessels Star Natalie, Star Claudia and Maiden Voyage. Total proceeds from these sales were $27.9 million.

Interest and finance costs for the third quarters of 2015 and 2014 were $7.7 million and $1.5 million, respectively. The increase is attributable to the higher average balance of our outstanding indebtedness of $1,000.1 million for the third quarter of 2015, including $50.0 million under the 8.00% Senior Notes and under our capital lease obligations, compared to $481.5 million for the third quarter of 2014. In addition, for the third quarter of 2015, interest and finance costs included $0.4 million of realized loss on hedging interest rate swaps compared to $0.01 million in the third quarter of 2014. Interest and finance costs incurred in the third quarters of 2015 and 2014 were set-off with interest capitalized from general debt of $3.0 million and $3.1 million, respectively, in connection with the payments made for our newbuilding vessels.

Loss on derivative financial instruments for the third quarter of 2015 was $3.6 million, compared to a gain of $0.02 million in the third quarter of 2014. Our hedge effectiveness test for the second quarter of 2015 indicated that the hedging relationship of certain of our interest rate swaps no longer qualified for special hedge accounting and therefore these were de-designated as accounting cash flow hedges as of April 1, 2015. Accordingly, realized and unrealized gains/losses from these swaps from April 1, 2015 onwards have been recorded in our statement of operations under Loss on derivative financial instruments, as opposed to interest and finance cost and equity, respectively, during the period that these swaps qualified for hedge accounting. The realized and unrealized losses from these swaps for the third quarter of 2015 were $3.6 million. Loss on derivative financial instruments during the third quarter of 2014 represents the non-cash loss from the mark to market valuation of our interest rate swaps outstanding during that period, which had not been designated as cash flow hedges.

Nine months ended September 30, 2015 and 2014 Results (*)
(*) Amounts relating to variations in period-on-period comparisons shown in this section are derived from the actual numbers in our books and records

For the nine months ended September 30, 2015, total voyage revenues were $169.9 million, compared to $79.5 million for the same period in 2014. This increase was mainly due to the increase of the average number of our vessels to 68.7 in the nine months ended September 30, 2015, from 21.5 vessels in the same period in 2014. The increase in voyage revenues from the additional vessels was partially offset by significantly lower charterhire rates prevailing in the dry bulk market during the nine months ended September 30, 2015, compared to the same period in 2014.

Management fee income during the nine months ended September 30, 2015 was $0.2 million compared to $2.2 million for the same period in 2014. This decrease was mainly due to the decrease in the average number of third-party vessels under management to 1.0 vessel in the nine months ended September 30, 2015, from 10.7 vessels in the same period in 2014. As a result of the acquisition of Oceanbulk, 11 Oceanbulk vessels that had been under our management became part of our fleet as of July 11, 2014. We, therefore, stopped receiving fees for the management of these vessels.

For the nine months ended September 30, 2015, operating loss was $121.4 million, compared to operating income of $1.3 million for the same period in 2014, primarily due to the combination of:

  • an increase in the average number of vessels in our fleet ;
  • lower charterhire rates for dry bulk carrier vessels in the nine months ended September 30, 2015;
  • a non-cash vessel impairment loss and a loss from sale of vessels of $34.3 million and $20.5 million, respectively, recognized during the nine months ended September 30, 2015, which are described in more detail below;
  • a non-cash gain from bargain purchase of $12.3 million recognized in 2014 as a result of the acquisition of Oceanbulk; and
  • other operational gain of $9.4 million in the third quarter 2014, consisting of:
    • gain of $8.0 million from the sale to a third party of our claim against the previous charterer of the Star Borealis for charter party repudiation due to early redelivery of the vessel, which was collected in full in October 2014; and
    • $1.4 million from the extinguishment of the liability to the previous charterer of Star Borealis, related to the amount of fuel and lubricants remaining on the board at the time of the charter repudiation.

Net loss for the nine months ended September 30, 2015 was $147.2 million, or $0.78 loss per basic and diluted share, calculated based on 187,704,877 weighted average number of basic and diluted shares. Net loss for the same period in 2014 was $3.6 million, or $0.08 loss per basic and diluted share, based on 45,236,873 weighted average number of basic and diluted shares.

Net loss for the nine months ended September 30, 2015 included the following non-cash items:

  • Amortization of fair value of above market acquired time charters of $9.0 million, or $0.05 per basic and diluted share, associated with time charters attached to seven vessels (Star Big, Star Mega, Amami, Madredeus, Star Martha, Star Pauline and Star Despoina). These above market time charters are amortized over the duration of each charter as a decrease to voyage revenues;
  • Expenses of $2.0 million, or $0.01 per basic and diluted share, relating to stock-based compensation expenses recognized in connection with the shares issued to our directors and employees;
  • Impairment loss of $34.3 million, or $0.18 per basic and diluted share, relating to:
    • the sale of Star Monika (which was delivered to its new owners in April 2015);
    • an agreement to sell one of our newbuilding vessels upon its delivery in 2016;
    • an agreement to sell the vessel Maiden Voyage (which was delivered to its new owners in September 2015);
    • the agreement to sell the vessel Star Nicole, which was delivered to its new owners in October 2015; and
    • two agreements to reassign the corresponding leases for two newbuilding vessels back to the vessels' owners for a one-time payment to the Company of $5.8 million each.
  • The impairment loss includes $20.7 million, which is attributed to the write-off of the fair value adjustment recognized upon our merger with Oceanbulk in July 2014, in connection with the above vessels.
  • Write-off of above market acquired time charter of $2.1 million, or $0.01 per basic and diluted share, relating to the early redelivery of the vessel Star Big, which took place in connection with the vessel's sale and delivery to its new owners on June 4, 2015;
  • Loss on sale of vessel of $20.5 million, or $0.11 per basic and diluted share, relating to the sale of the vessels Star Kim, Star Julia, Star Tatianna, Rodon, Star Big, Star Mega, Star Christianna, Star Natalie, Star Claudia and Maiden Voyage;
  • Unrealized loss of derivative instruments not designated as accounting hedges of $2.5 million, or $0.01 per basic and diluted share; and
  • Equity in income of investee of $0.3 million, or $0.002 per basic and diluted share.

Excluding these non-cash items, net loss for the nine-month period ended September 30, 2015 would have been $77.1 million, or $0.41 loss per basic and diluted share, based on 187,704,877 weighted average number of basic and diluted shares.

Net loss for the nine-month period ended September 30, 2014 included mainly the following non-cash items:

  • Amortization of fair value of above market acquired time charters of $4.5 million, or $0.10 per basic and diluted share, associated with time charters attached to four vessels (Star Big, Star Mega, Amami and Madredeus). These above market time charters are amortized over the duration of the respective charters as a decrease to voyage revenues;
  • Expenses of $4.8 million, or $0.11 per basic and diluted share, relating to stock-based compensation expenses recognized in connection with the shares issued to directors and employees;
  • Unrealized loss of $0.9 million, or $0.02 per basic and diluted share, in connection with the mark to market valuation of our derivatives, which had not been designated as cash flow hedges;
  • A loss on bad debts of $0.2 million, or $0.01 per basic and diluted share, associated with the write-off of disputed charterer balances;
  • A gain of $1.4 million, or $0.03 per basic and diluted share, in connection with the extinguishment of liability to the previous charterer of Star Borealis, relating to the amount of fuel and lubricants remaining on board the vessel at the time of the charter repudiation; and
  • A gain from bargain purchase of $12.3 million, or $0.27 per basic and diluted share, resulting from the acquisition of Oceanbulk and the Pappas Companies.

In addition, net loss for the nine months ended September 30, 2014 included non-recurring transaction costs of $9.3 million, or $0.21 per basic and diluted share, in connection with the the acquisition of Oceanbulk.

Excluding these non-cash items and the non-recurring transaction costs, net income for the nine months ended September 30, 2014 would have been $2.4 million, or $0.05 earnings per basic and diluted share, based on 45,236,873 weighted average number of basic and diluted shares.

Adjusted EBITDA for the nine months ended September 30, 2015 and 2014 was $6.8 million and $27.1 million, respectively. A reconciliation of EBITDA and adjusted EBITDA to net cash provided by cash flows from operating activities is set forth below.

During the nine months ended September 30, 2015 and 2014, we owned and operated an average of 68.7 and 21.5 vessels, respectively, earning an average TCE rate of $8,130 and $12,813 per day, respectively. We refer you to footnote 8 under the heading "Summary of Selected Data" set forth below for information regarding our calculation of TCE rates.

For the nine months ended September 30, 2015, voyage expenses were $52.3 million, compared to $20.7 million for the same period in 2014. The increase in voyage expenses was due to the increase in the average number of vessels in the nine months ended September 30, 2015, as well as the increased level of spot market activity, which is associated with higher voyage expenses than time charters.

For the nine months ended September 30, 2015 and 2014, vessel operating expenses totalled $86.3 million and $31.1 million, respectively. The increase in operating expenses was mainly due to higher average number of vessels in the nine months ended September 30, 2015 compared to the same period in 2014. Our average daily operating expenses per vessel for the nine months ended September 30, 2015 were $4,602, compared to $5,302 during the same period in 2014, representing a 13.2% reduction as a result of synergies and economies of scale from operating a larger fleet. In addition, vessel operating expenses for the nine months ended September 30, 2015 and 2014 included $5.2 million and $1.5 million of pre-delivery expenses respectively, which related to the initial crew manning and the initial supply of stores for our vessels upon delivery. Excluding these amounts, our average daily operating expenses per vessel for the nine months ended September 30, 2015 and 2014 were $4,325 and $5,046, respectively, representing an even higher reduction of 14.3%.

Dry docking expenses for the nine months ended September 30, 2015 and 2014 amounted to $13.1 million and $4.9 million, respectively. During the nine months ended September 30, 2015, 21 of our vessels underwent their periodic dry docking surveys, compared to three vessels in the same period in 2014.

Depreciation expense increased to $60.2 million for the nine months ended September 30, 2015, compared to $20.5 million for the same period in 2014. The increase was due to the higher average number of vessels in the nine months ended September 30, 2015 compared to the same period in 2014, which was partially offset by an increase in the estimated scrap rate per light weight ton from $200 to $300, which became effective as of January 1, 2015, following our management's reassessment based on the historical average demolition prices prevailing in the market.

Management fees for the nine months ended September 30, 2015 and 2014 were $6.4 million and $0.1 million, respectively. As of January 1, 2015, we engaged SPS to provide our fleet with certain procurement and remote vessel performance monitoring services at a daily fee of $295 per vessel. SPS will provide procurement and remote vessel performance monitoring services to a fleet of over 120 vessels. We expect to benefit from lower operating expenses and dry docking costs through the economies of scale that SPS will enjoy in managing such a large fleet. In addition, three of the Excel Vessels (Star Martha, Star Pauline and Star Despoina), which were acquired with attached time charter agreements, were managed by Maryville until the expiration of their existing time charter agreements (two of which expired in August and one of which expired in November 2015) at a monthly fee of $17,500 per vessel.

During the nine months ended September 30, 2015, we had $16.7 million of general and administrative expenses, compared to $25.0 million during the same period in 2014. The decrease was mainly due to non-recurring transaction costs of $9.3 million, which we incurred during the nine months ended September 30, 2014 in connection with the acquisition of Oceanbulk, and stock-based compensation expenses of $1.8 million, also incurred during the nine months ended September 30, 2014, relating to a severance payment to our former Chief Executive Officer. Our average daily net cash general and administrative expenses per vessel for the nine months ended September 30, 2015 were $1,112, compared to $1,485 during the same period in 2014. This reduction was achieved despite the increase in wage expenses resulting from a 47% increase in our number of employees during the nine months ended September 30, 2015 as compared to the same period in 2014.

During the nine months ended September 30, 2015, we recorded an impairment loss of an aggregate of $34.3 million relating to: (i) the sale of the vessel Star Monika (which was delivered to its new owners in April 2015); (ii) an agreement to sell one of our newbuilding vessels upon its delivery to us in 2016; (iii) an agreement to sell the vessel Maiden Voyage (which was delivered to its new owners in September 2015); (iv) the agreement to sell the vessel Star Nicole (which was delivered to its new owners in October 2015) and (v) two agreements to reassign the corresponding leases for two newbuilding vessels back to the vessels' owners for a one-time payment to the Company of $5.8 million each. Of this $34.3 million impairment loss, $20.7 million was due to the write-off of the fair value adjustment to the carrying value of these vessels recognized upon the merger with Oceanbulk in July 2014.

During the nine months ended September 30, 2015, we recognized a $2.1 million write-off of the unamortized fair value of the above market acquired time charter of the vessel Star Big due to its redelivery prior to the end of its time charter in connection with its sale and delivery to its new owners in June 2015.

During the nine months ended September 30, 2015 we recognized an aggregate loss on a sale of vessels of $20.5 million in connection with the sale of the vessels Star Kim, Star Julia, Star Tatianna, Rodon, Star Big, Star Mega, Star Christianna, Star Natalie, Star Claudia and Maiden Voyage. Total proceeds from these sales were $67.9 million, of which $1.1 million was received in 2014 as an advance for the sale of the vessel Star Kim.

Interest and finance costs for the nine months ended September 30, 2015 and 2014 were $21.6 million and $4.6 million, respectively. The increase is attributable to the higher average balance of our outstanding indebtedness of $940.4 million for the nine months ended September 30, 2015, including $50.0 million under the 8.00% Senior Notes and under our capital lease obligations, compared to $318.0 million for the same period in 2014. In addition, for the nine months ended September 30, 2015, interest and finance costs included $1.9 million of realized loss on hedging interest rate swaps compared to $0.01 million in the same period in 2014. Interest and finance costs incurred in the nine months ended September 30, 2015 and 2014 were set-off with interest capitalized from general debt of $9.2 million and $4.4 million, respectively, in connection with the payments made for our newbuilding vessels.

During the nine months ended September 30, 2015, we recorded $1.0 million of loss on debt extinguishment in connection with the non-cash write off of unamortized deferred finance charges due to prepayments of certain of our loan facilities.

We recorded a loss on derivative financial instruments for the nine months ended September 30, 2015 of $4.3 million, which included realized and unrealized gains/losses from swaps that were de-designated as accounting cash flow hedges from April 1, 2015 (date of de-designation). Loss on derivative financial instruments of $0.8 million during the nine months ended September 30, 2014 represented the non-cash loss from the mark to market valuation of four interest rate swaps outstanding during that period, which had not been designated as cash flow hedges.

Liquidity and Capital Resources

Cash Flows

Net cash used in operating activities for the nine months ended September 30, 2015 was $8.1 million. Net cash provided by operating activities for the nine months ended September 30, 2014 was $7.7 million. The TCE rate for the nine months ended September 30, 2015 and 2014 was $8,130 and $12,813, respectively.

Net cash used in investing activities for the nine months ended September 30, 2015 and 2014, was $403.6 million and $144.5 million, respectively.

For the nine months ended September 30, 2015, net cash used in investing activities consisted of:

  • $469.7 million paid for advances and other capitalized expenses for our newbuilding vessels and for the acquisition of the last six Excel Vessels;
  • a net increase of $1.0 million in restricted cash;
  • offset by:
  • $66.8 million of proceeds from the sale of eleven vessels; namely, Star Kim, Star Julia, Star Tatianna, Rodon, Star Big, Star Monika, Star Mega, Star Christianna, Maiden Voyage, Star Claudia, Star Natalie; and
  • $0.2 million of hull and machinery insurance proceeds.

For the nine months ended September 30, 2014, net cash used in investing activities consisted of:

  • $31.4 million paid for advances and other capitalized expenses for our newbuilding vessels;
  • $198.5 million paid for the acquisition of secondhand vessels (including certain Excel Vessels);
  • $0.4 million for the acquisition of other fixed assets;
  • $0.2 million paid to acquire 33% of the total outstanding common stock of Interchart Shipping Inc., a Liberian company that acts as a chartering broker to our fleet; and
  • a net increase of $10.8 million in restricted cash;
    offset by:
  • $0.6 million of hull and machinery insurance proceeds; and
  • $96.3 million cash assumed as part of the acquisition of Oceanbulk and the Pappas Companies.

Net cash provided by financing activities for the nine months ended September 30, 2015 and 2014 was $556.4 million and $176.8 million, respectively.

For the nine months ended September 30, 2015, net cash provided by financing activities consisted of:

  • proceeds from loan facilities for an aggregate of $291.3 million for (i) the financing of delivery installments for eight of our newbuilding vessels that were delivered during the period and one newbuilding vessel that was delivered in October 2015; (ii) cash consideration for the acquisition of the last six Excel Vessels; and (iii) the repayment in full of the $231.0 million Senior Secured Credit Agreement among Unity, as Borrower, the initial lenders named therein, as Initial Lenders, affiliates of Oaktree and Angelo, Gordon & Co. as Lenders, and Wilmington Trust, National Association, as Administrative Agent (the "Excel Vessel Bridge Facility");
  • increase in capital lease obligations of $82.7 million, relating to four newbuildings delivered during the period under bareboat charters;
  • $418.8 million of proceeds from two public offerings of our common shares, which were completed in January 2015 and May 2015, net of underwriting discounts and commissions and less offering expenses of $1.0 million;

offset by:

  • financing fees paid of $13.1 million; and
  • an aggregate of $222.3 million paid in connection with the regular amortization of outstanding vessel financings, capital lease installments and prepayments of certain of our loan facilities.

For the nine months ended September 30, 2014, net cash provided by financing activities consisted of:

  • proceeds from bank loans of $139.0 million from post-delivery financing of our newbuilding vessels and $59.8 million drawn under the Excel Vessel Bridge Facility for the financing of the acquisition of the Excel Vessels;

offset by:

  • loan installment payments of $21.2 million; and
  • $0.9 million of financing fees paid.

 

       
Summary of Selected Data      
       
(TCE rates expressed in U.S. dollars)   Three months ended  
       
    September 30, 2015     September 30, 2014  
Average number of vessels (1)     71.2       31.5  
Number of vessels (2)     70       41  
Average age of operational fleet (in years) (3)     7.4       8.1  
Ownership days (4)     6,550       2,902  
Available days (5)     6,200       2,812  
Voyage days for fleet (6)     5,634       2,232  
Fleet utilization (7)     90.9 %     79.4 %
Average per day TCE rate (8)   $ 8,702     $ 11,159  
Average daily OPEX per vessel (9)   $ 4,484     $ 5,192  
Average daily OPEX per vessel (excl. pre-delivery expenses)   $ 4,237     $ 4,816  
Average daily Net Cash G&A expenses per vessel (10)   $ 1,097     $ 1,596  
                 
    Nine months ended  
    September 30, 2015     September 30, 2014  
Average number of vessels (1)     68.7       21.5  
Number of vessels (2)     70       41  
Average age of operational fleet (in years) (3)     7.4       8.1  
Ownership days (4)     18,760       5,871  
Available days (5)     18,153       5,750  
Voyage days for fleet (6)     15,577       4,948  
Fleet utilization (7)     85.8 %     86.1 %
Average per day TCE rate (8)   $ 8,130     $ 12,813  
Average daily OPEX per vessel (9)   $ 4,602     $ 5,302  
Average daily OPEX per vessel (excl. pre-delivery expenses)   $ 4,325     $ 5,046  
Average daily Net Cash G&A expenses per vessel (10)   $ 1,112     $ 1,485  
                 
(1)   Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
(2)   As of the last day of the periods reported.
(3)   Average age of operational fleet is calculated as of September 30, 2015 and 2014, respectively.
(4)   Ownership days are the total calendar days each vessel in the fleet was owned by usfor the relevant period.
(5)   Available days for the fleet are the ownership days after subtracting off-hire days for major repairs, dry docking or special or intermediate surveys.
(6)   Voyage days are the total days the vessels were in our possession for the relevant period after subtracting off-hire days incurred for any reason (including off-hire for major repairs, dry docking, special or intermediate surveys).
(7)   Fleet utilization is calculated by dividing voyage days by available days for the relevant period. Ballast days for which a charter is not fixed are not included in the voyage days for the fleet utilization calculation.
(8)   Represents the weighted average daily TCE rates of our entire fleet. TCE rate is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE rate is determined by dividing voyage revenues (net of voyage expenses and amortization of fair value of above/below market acquired time charter agreements) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., voyage charters, time charters and bareboat charters) under its vessels may be employed between the periods. We included TCE revenues, a non- GAAP measure, as it provides additional meaningful information in conjunction with voyage revenues, the most directly comparable GAAP measure, and it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating our financial performance.
(9)   Average daily OPEX per vessel is calculated by dividing vessel operating expenses by ownership days.
(10)   Average daily Net Cash G&A expenses per vessel is calculated by deducting (1) the Management fee Income from, and (2) adding the Management fee expense to, the General and Administrative expenses (net of stock based compensation expense) and (3) then dividing with the ownership days.
     
     
 
Unaudited Consolidated Statement of Operations 
                         
(Expressed in thousands of U.S. dollars except for share and per share data)   Three months ended September 30, 2015     Three months ended September 30, 2014     Nine months ended September 30, 2015     Nine months ended September 30, 2014  
                                 
                                 
Revenues:                                
Voyage Revenues   $ 68,745     $ 36,477     $ 169,927     $ 79,541  
Management Fee Income     69       335       205       2,196  
Total revenues     68,814       36,812       170,132       81,737  
                                 
Expenses:                                
Voyage expenses     (21,673 )     (12,949 )     (52,310 )     (20,670 )
Charter in expense     (132 )     -       (132 )     -  
Vessel operating expenses     (29,373 )     (15,067 )     (86,337 )     (31,129 )
Dry docking expenses     (6,202 )     (3,615 )     (13,147 )     (4,879 )
Depreciation     (21,702 )     (10,733 )     (60,221 )     (20,510 )
Management fees     (2,362 )     (123 )     (6,425 )     (123 )
Bad debt expense     -       -       -       (215 )
General and administrative expenses     (5,533 )     (14,752 )     (16,686 )     (24,967 )
Vessel impairment loss     (5,444 )     -       (34,273 )     -  
Loss on time charter agreement termination     -       -       (2,114 )     -  
Other operational gain     -       9,377       590       9,784  
Other operational loss     -       -       -       (94 )
Loss on sale of vessel     (7,098 )     -       (20,487 )     -  
Gain from bargain purchase     -       12,318       -       12,318  
                                 
Operating income/(loss)     (30,705 )     1,268       (121,410 )     1,252  
                                 
Interest and finance costs     (7,738 )     (1,533 )     (21,609 )     (4,590 )
Interest and other income/(loss)     (26 )     434       802       455  
Loss on debt extinguishment     -       -       (974 )     -  
Gain/(Loss) on derivative financial instruments     (3,590 )     24       (4,278 )     (795 )
Total other expenses, net     (11,354 )     (1,075 )     (26,059 )     (4,930 )
                                 
Income/(Loss) before equity in investee     (42,059 )     193       (147,469 )     (3,678 )
                                 
Equity in income of investee     86       28       299       29  
                                 
Net income/(loss)   $ (41,973 )   $ 221     $ (147,170 )   $ (3,649 )
                                 
Earnings/(loss) per share, basic   $ (0.19 )   $ 0.003     $ (0.78 )   $ (0.08 )
Earnings/(loss) per share, diluted   $ (0.19 )   $ 0.003     $ (0.78 )   $ (0.08 )
Weighted average number of shares outstanding, basic     219,120,612       77,233,053       187,704,877       45,236,873  
Weighted average number of shares outstanding, diluted     219,120,612       77,437,791       187,704,877       45,236,873  
                                 
                                 
 
Unaudited Consolidated Condensed Balance Sheets
 
(Expressed in thousands of U.S. dollars)
 
ASSETS   September 30, 2015   December 31, 2014
Cash and restricted cash   $ 234,504   $ 89,352
Vessel held for sale     3,647     -
Other current assets     41,928     45,078
TOTAL CURRENT ASSETS     280,079     134,430
             
Advances for vessels under construction and acquisition of vessels and other assets*     295,328     454,612
Vessels and other fixed assets, net     1,895,674     1,441,851
Long-term investment     933     634
Restricted cash     11,128     10,620
Fair value of above market acquired time charter     770     11,908
Other non-current assets     16,748     8,029
TOTAL ASSETS   $ 2,500,660   $ 2,062,084
             
Current portion of long-term debt (including Excel Vessels Bridge Facility)*     106,049     96,485
Lease commitments current     4,420     -
Other current liabilities     37,097     43,713
TOTAL CURRENT LIABILITIES     147,566     140,198
             
Long-term debt (including Excel Vessel Bridge Facility)*     776,821     715,308
8% 2019 Senior Notes     50,000     50,000
Lease commitments non-current     76,180     -
Other non-current liabilities     6,692     2,276
TOTAL LIABILITIES     1,057,259     907,782
             
STOCKHOLDERS' EQUITY     1,443,401     1,154,302
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 2,500,660   $ 2,062,084
             

*As of September 30, 2015, we had paid the delivery installment for our newbuilding vessel Star Antares which was partially financed by $16.7 million drawn down on September 29, 2015, under the Sinosure Facility and the remaining amount was financed using existing cash. The vessel, however, was delivered to us on October 9, 2015. As a result, the entire amount paid for this vessel is included under the line "Advances for vessels under construction and acquisition of vessels and other assets".

 
Unaudited Cash Flow Data
             
(Expressed in thousands of U.S. dollars)   Nine months ended September 30, 2015     Nine months ended September 30, 2014  
                 
Net cash (used in) / provided by operating activities   $ (8,077 )   $ 7,669  
                 
Net cash used in investing activities     (403,613 )     (144,534 )
                 
Net cash provided by financing activities     556,397       176,770  
                 

EBITDA and adjusted EBITDA Reconciliation
We consider EBITDA to represent net income before interest, income taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which we assess our liquidity position, it is used by our lenders as a measure of our compliance with certain loan covenants and because we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness.

We excluded non-cash gains/losses such as those related to sale of vessels, loss on bad debt, the unrealized gains/losses on derivative instruments, stock-based compensation expense, the write off of the unamortized fair value of above market acquired time charters, vessel impairment losses, the gain from bargain purchase, the equity in income of investee and various non-recurring items, such as the transaction costs incurred in connection with the acquisition of Oceanbulk and the Pappas Companies, to derive adjusted EBITDA. We excluded the above described items to derive adjusted EBITDA, because we believe that these items do not reflect the ongoing operational cash inflows and outflows of our fleet.

The following table reconciles net cash provided by operating activities to EBITDA and adjusted EBITDA:

                         
(Expressed in thousands of U.S. dollars)   Three months ended September 30, 2015     Three months ended September 30, 2014     Nine months ended September 30, 2015     Nine months ended September 30, 2014  
Net cash provided by/(used in) operating activities   $ 1,422     $ (2,816 )   $ (8,077 )   $ 7,669  
Net decrease / (increase) in current assets     (6,081 )     18,792       (8,712 )     25,585  
Net increase / (decrease) in operating liabilities, excluding current portion of long term debt     2,641       (14,227 )     2,922       (19,465 )
Vessel impairment loss     (5,444 )     -       (34,273 )     -  
Loss on debt extinguishment     -       -       (974 )     -  
Stock - based compensation     (639 )     (2,933 )     (2,046 )     (4,836 )
Amortization of sale and operating lease back deferred gain     3       -       3       -  
Unrealized gains/losses on derivative instruments and change in accrued derivative interest     (2,403 )     (35 )     (2,462 )     (854 )
Total other expenses, net     8,146       945       21,593       3,697  
Loss on sale of vessel     (7,098 )     -       (20,487 )     -  
Write-off of unamortized fair value of above market acquired time charter     -       -       (2,114 )     -  
Loss on bad debt     -       -       -       (215 )
Gain from Hull & Machinery claim     -       -       -       237  
Gain from bargain purchase     -       12,318       -       12,318  
Write-off of liability in other operational gain (non-cash)     -       1,361       -       1,361  
Equity in income of investee     86       28       299       29  
EBITDA   $ (9,367 )   $ 13,433     $ (54,328 )   $ 25,526  
Less:                                
                                 
Gain from bargain purchase     -       (12,318 )     -       (12,318 )
Write-off of liability in other operational gain (non-cash)     -       (1,361 )     -       (1,361 )
Equity in income of investee     (86 )     (28 )     (299 )     (29 )
Amortization of sale and operating lease back deferred gain     (3 )     -       (3 )     -  
Plus:                                
Unrealized gains/losses on derivative instruments and change in accrued derivative interest     2,403       35       2,462       854  
Stock-based compensation     639       2,933       2,046       4,836  
Vessel impairment loss     5,444       -       34,273       -  
Loss on sale of vessel     7,098       -       20,487       -  
Write-off of unamortized fair value of above market acquired time charter     -       -       2,114       -  
Loss on bad debt     -       -       -       215  
Severance cash payment     -       891       -       891  
Transaction costs related to Oceanbulk acquisition     -       6,083       -       8,447  
Adjusted EBITDA   $ 6,128     $ 9,668     $ 6,752     $ 27,061  
                                 

Conference Call details:
Our management team will host a conference call to discuss our financial results on Wednesday, November 18th at 11 a.m., Eastern Time (ET).

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or + (44) (0) 1452 542 301 (from outside the US). Please quote "Star Bulk."

A replay of the conference call will be available until November 25, 2015. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 3128607#.

Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet, through the Star Bulk website (www.starbulk.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Star Bulk
Star Bulk is a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Star Bulk's vessels transport major bulks, which include iron ore, coal and grain and minor bulks which include bauxite, fertilizers and steel products. Star Bulk was incorporated in the Marshall Islands on December 13, 2006 and maintains executive offices in Athens, Greece. Its common stock trades on the Nasdaq Global Select Market under the symbol "SBLK". On a fully delivered basis, Star Bulk will have a fleet of 88 vessels, with an aggregate capacity of 10.2 million dwt, consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax, Supramax and Handymax vessels with carrying capacities between 45,588 dwt and 209,537 dwt. Our fleet currently includes 70 operating vessels and 19 newbuilding vessels under construction at shipyards in Japan and China. All of the newbuilding vessels are expected to be delivered through 2016. Additionally, the Company has one chartered-in Supramax vessel, under a time charter expiring in September 2017.

Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Company's management of historical operating trends, data contained in its records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company's control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in the Company's view, could cause actual results to differ materially from those discussed in the forward-looking statements include general dry bulk shipping market conditions, including fluctuations in charterhire rates and vessel values, the strength of world economies the stability of Europe and the Euro, fluctuations in interest rates and foreign exchange rates, changes in demand in the dry bulk shipping industry, including the market for our vessels, changes in our operating expenses, including bunker prices, dry docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, the availability of financing and refinancing, our ability to meet requirements for additional capital and financing to complete our newbuilding program and grow our business, vessel breakdowns and instances of off-hire, risks associated with vessel construction, potential exposure or loss from investment in derivative instruments, potential conflicts of interest involving our Chief Executive Officer, his family and other members of our senior management, and our ability to complete acquisition transactions as planned. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof, and the Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

Contact Information

  • Contacts
    Company:
    Simos Spyrou
    Christos Begleris
    Co ‐ Chief Financial Officers
    Star Bulk Carriers Corp.
    c/o Star Bulk Management Inc.
    40 Ag. Konstantinou Av.
    Maroussi 15124
    Athens, Greece
    Email: info@starbulk.com
    www.starbulk.com

    Investor Relations / Financial Media:
    Nicolas Bornozis
    President
    Capital Link, Inc.
    230 Park Avenue, Suite 1536
    New York, NY 10169
    Tel. (212) 661‐7566
    E‐mail: starbulk@capitallink.com
    www.capitallink.com