In an Oaktree Capital-related thread, I mentioned Star Bulk Carriers (SBLK).
The company just released a new corporate presentation. Company made some useful and helpful data-points (but with caveats).
Slide 3: “Solid Balance Sheet” subsection
Pt 1: Total Cash of ~$457M. True, but the footnote says per Aug 2023. We do know that a subsequent event is SBLK buying back a chunk (10M shares) of its shares from Oaktree Capital
Pt 2: ~40% reduction in net debt in the last two years. Excellent development
Pt 3: Since 2021, dividend distribution of $10.50/share. Also, very nice. But, the big year was 2022, when $6.50/sh of dividends was paid
The scrubbers comment.
- 94% of the fleet having scrubbers is very impressive. That the activity was mostly accomplished pre-Covid pandemic is also a plus.
a. For existing vessels, the yard time (non operational) is significantly longer for scrubber install today.
b. With newbuilds, the scrubber option is usually factored into the vessel cost.
- On the smaller vessels, definite advantage. On the larger vessels, lesser advantage (cost-benefit dynamics is/was easier with larger vessels)
- Do the newbuilds skew the ~11 year avg?
- Hidden in the aggregate fleet data is the breakdown by vessel category. SBLK has a lot of older Kamsarmax vessels - 17 of 40 vessels were built in 2006 or 2007. FWIW, 15 years old is the typical cut-off for “modern” vessel. Maintenance costs are typically higher after 15 years, and associated financing is more expensive (the latter item might not be a major issue for SBLK because they can take advatage of their fleet size e.g. bundle 8 newer vessels with 1 or 2 older vessels in a financing deal). Both Panamax vessels are quite old.
Helpful data for what SBLK has accomplished in the last few years. But that buyback transaction announced last week will have a large impact on one or more of these items - cash, debt, liquidity. But helpful in other areas - ROE, ROA
Q3 2023 had not been a great quarter for the dry bulk shipping market or ship owners. All that changed this past week. Four straight days of improvement for the Baltic Cape Index (the largest component of the Baltic Dry Index (BDI)), saw the BDI rise to its highest level in the last 11 months. Too late for a Q3 impact, but bodes well for Q4 2023 (at least, in theory)
The fleet age item I mentioned earlier is also helped in improved BDI conditions. SBLK could opt to sell older vessels in an improving market environment. In theory and depending on the length of these improved conditions, for better prices than prior to the BDI bounce. A good source of candidates would be the vessels headed to the yards in Q1 or Q2 2024 (Slide 5)