SBLK Star Bulk Carriers Corporation

Exhibit 99.1

The following is a discussion of the financial condition and results of operations of Star Bulk Carriers Corp. (“Star Bulk”) for the three-month periods ended March 31, 2023 and 2024. Unless otherwise specified herein, references to the “Company,” “we,” “us” or “our” shall include Star Bulk and its subsidiaries. You should read the following discussion and analysis together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere herein. For additional information relating to our management’s discussion and analysis of financial conditions and results of operations, please see our Annual Report on Form 20‑F for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 13, 2024 (the “2023 Annual Report”). Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2023 Annual Report. This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements.

Overview

We are a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Our vessels transport major bulks, which include iron ore, coal and grain, and minor bulks which include bauxite, fertilizers and steel products. We were incorporated in the Marshall Islands on December 13, 2006 and, on December 3, 2007, we commenced operations when we took delivery of our first vessel. We maintain offices in Athens, New York, Limassol, Singapore, Germany and Denmark. Our common shares trade on the Nasdaq Global Select Market under the symbol “SBLK.” On April 9, 2024, the previously announced Eagle Merger (as defined below) was completed following the approval of shareholders of Eagle Bulk Shipping Inc. (NYSE: EGLE) (“Eagle”) and receipt of applicable regulatory approvals and satisfaction of customary closing conditions.

 

Eagle Merger

On December 11, 2023, we entered into a definitive agreement with Eagle (the “Eagle Merger Agreement”) to combine in an all-stock merger (the “Eagle Merger”). The Eagle Merger was completed on April 9, 2024 following Eagle shareholders’ approval and receipt of applicable regulatory approvals and satisfaction of customary closing conditions. Each Eagle shareholder received 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned. As a result of the Eagle Merger, a total number of 29,017,999 shares of Star Bulk common stock were issued on April 9, 2024. Eagle common stock has ceased trading and is no longer listed on the New York Stock Exchange.

Our Fleet

During the first quarter of 2024, the previously announced sold vessels Star Glory, Big Fish, Pantagruel, Star Bovarius and Big Bang were delivered to their new owners while Star Dorado was delivered to her new owners in late April 2024.

Following the closing of the Eagle Merger, we acquired Eagle’s fleet which consisted of 52 dry bulk Supramax/Ultramax vessels. Prior to the closing of the Eagle Merger, Eagle had agreed to sell the vessels Crested Eagle, which was delivered to her new owners on April 18, 2024, and Stellar Eagle, which is expected to be delivered to her new owners by June 2024.

In addition, in February, March and April 2024, we agreed to sell vessels Star Audrey, Star Pyxis, Star Paola and Crowned Eagle. Star Paola was delivered to her new owners on April 29, 2024 and the remaining three vessels are expected to be delivered to their new owners by June 2024.

Overall, in connection with the sales that completed or will be completed during the second quarter of 2024, we expect to collect total proceeds of $129.6 million and to make debt prepayments in connection with these sales of approximately $22.6 million.

On a fully delivered basis, taking into account the delivery of the vessels agreed to be sold or constructed as of May 21, 2024 as further discussed above, our owned fleet consists of 161 operating vessels with an aggregate carrying capacity of approximately 15.4 million dwt, 97% of which are fitted with Exhaust Gas Cleaning Systems (“scrubbers”) consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels.

The following tables present summary information relating to our fleet as of May 21, 2024:

Operating Fleet:

Operating Fleet - Continued:

Operating Fleet - Continued:

Operating Fleet - Continued:

Operating Fleet - Continued:

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Time charter-in vessels and time charter-in newbuilding vessels:

In addition, we have entered into long-term charter-in arrangements, the details of which are described in the below table.

Vessels Under Construction:

In 2023, we entered into firm shipbuilding contracts for the construction of five 82,000 dwt Kamsarmax newbuilding vessels with expected deliveries between September 2025 and July 2026.

Liquidity and Capital Resources

Our principal sources of funds have been cash flow from operations, equity offerings, borrowings under secured credit facilities, debt securities or bareboat lease financings and proceeds from vessel sales. Our principal uses of funds have been capital expenditures to establish and grow our fleet, maintain the quality of our dry bulk carriers, comply with international shipping standards, environmental laws and regulations, fund working capital requirements, make principal and interest payments on outstanding indebtedness and make dividend payments when approved by our Board of Directors.

Our short-term liquidity requirements include paying operating costs, funding working capital requirements and the short-term equity portion of the cost of vessel acquisitions, our newbuilding program and vessel upgrades, interest and principal payments on outstanding indebtedness and maintaining cash reserves to strengthen our position against adverse fluctuations in operating cash flows. Our primary source of short-term liquidity is cash generated from operating activities, available cash balances and portions from new debt and refinancings as well as equity financings.

Our medium- and long-term liquidity requirements are funding the equity portion of our newbuilding vessel installments and secondhand vessel acquisitions, if any, funding required payments under our vessel financing and other financing agreements and paying cash dividends when declared. Sources of funding for our medium- and long-term liquidity requirements include cash flows from operations, new debt and refinancings or bareboat lease financings, sale and lease back arrangements, equity issuances and vessel sales. Please also refer to Note 12 to our unaudited interim condensed consolidated financial statements, included herein, for further discussion on our commitments as of March 31, 2024.

Our debt agreements contain financial covenants and undertakings requiring us to maintain various ratios. A summary of these terms is included in Note 8 of the Company’s consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.

We believe that our current cash balance and our operating cash flows to be generated over the short-term period will be sufficient to meet our liquidity needs for the foreseeable future (and at least through the end of the second quarter of 2025), including funding the operations of our fleet, capital expenditure requirements and any other present financial requirements, including the cost of our newbuilding program as well as the cost for the installation of Energy Saving Devices (“ESD”). In addition, we may sell and issue shares under our two effective At-the-Market offering programs of up to $150.0 million at any time and from time to time. As of May 21, 2024, cumulative gross proceeds under our At-the-Market offering programs were $33.6 million. We may seek additional indebtedness to finance future vessel acquisitions and our newbuilding program in order to maintain our cash position or to refinance our existing debt on more favorable terms. Our practice has been to fund the cash portion of the acquisition and construction cost of dry bulk carriers using a combination of funds from operations and bank debt or lease financing secured by mortgages or title of ownership on our dry bulk carriers held by the relevant lenders, respectively. We may also use the proceeds from potential equity or debt offerings to finance future vessel acquisitions. Our business is capital-intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition and construction of newer dry bulk carriers and the selective sale of older dry bulk carriers. These acquisitions and newbuilding contracts will be principally subject to management’s expectation of future market conditions as well as our ability to acquire dry bulk carriers on favorable terms. However our ability to obtain bank or lease financing, to refinance our existing debt or to access the capital markets for offerings in the future, may be limited by our financial condition at the time of any such financing or offering, including the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, prevailing interest rates, weakness in the financial and equity markets and contingencies and uncertainties that are beyond our control. Our liquidity is also impacted by our dividend policy, as discussed below.

Dividend Policy

Our dividend policy is described in Item 8. Financial Information—A. Consolidated statements and other financial information—Dividend Policy of our 2023 Annual Report.

As of March 31, 2024, the aggregate amount of cash on our balance sheet was $268.5 million. Taking into account the Minimum Cash Balance per Vessel, as defined in our 2023 Annual Report, on May 22, 2024, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.75 per share, payable on or about June 20, 2024 to all shareholders of record as of June 6, 2024.

Since Star Bulk is a holding company with no material assets other than the shares of its subsidiaries through which it conducts its operations, Star Bulk’s ability to pay dividends in the future will depend on its subsidiaries’ ability to distribute funds to it. Any future dividends declared will be at the discretion and remain subject to approval of our Board of Directors each quarter after its review of our financial condition and other factors, including but not limited to our earnings, the prevailing charter market conditions, capital requirements, limitations under our debt agreements and applicable provisions of Marshall Islands law, which generally prohibits the payment of dividends other than from operating surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend. Star Bulk’s dividend policy and declaration and payment of dividends may be changed at any time and are subject to available funds and our Board of Directors’ determination that each declaration and payment is at the time in the best interests of Star Bulk and its shareholders after its review of our financial performance. There can be no assurance that our Board of Directors will continue to declare or pay any dividend in the future.

Other Recent Developments

Please refer to Note 15 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for developments that took place after March 31, 2024.

Operating Results

Factors Affecting Our Results of Operations

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The following table reflects the calculation of our TCE rates as discussed in footnote (7) above. The table presents reconciliation of TCE Revenues to voyage revenues as reflected in the unaudited interim condensed consolidated income statements.

Voyage Revenues

Voyage Expenses

Voyage expenses may include port and canal charges, agency fees, fuel (bunker) expenses and brokerage commissions payable to related and third parties. Voyage expenses are incurred for our owned and chartered-in vessels during voyage charters or when the vessel is unemployed. Bunker expenses, port and canal charges primarily increase in periods during which vessels are employed on voyage charters because these expenses are paid by the owners.

Charter-in Hire Expenses

Vessel Operating Expenses

Vessel operating expenses include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes, regulatory fees, maintenance expenses, lubricants and other miscellaneous expenses. Other factors beyond our control, some of which may affect the shipping industry in general, including for instance, developments relating to market prices for crew wages, lubricants and insurance, may also cause these expenses to increase.

Dry Docking Expenses

Dry docking expenses relate to regularly scheduled intermediate survey or special survey dry docking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Dry docking expenses can vary according to the age of the vessel and its condition, the location where the dry docking takes place, shipyard availability and the number of days the vessel is under dry dock. We utilize the direct expense method, under which we expense all dry docking costs as incurred.

Depreciation

Management Fees

Management fees include fees paid to third parties as well as related parties providing certain procurement services to our fleet.

General and Administrative Expenses

We incur general and administrative expenses, including our onshore personnel related expenses, directors’ and executives’ compensation, share based compensation, legal, consulting, audit and accounting expenses.

(Gain) / Loss on Forward Freight Agreements and Bunker Swaps, net

Impairment loss

When indicators of impairment are present for the Company’s vessels and the undiscounted cash flows estimated to be generated by those vessels are less than their carrying value, the carrying value is reduced to its estimated fair value and the difference is recorded under “Impairment loss”. Furthermore, vessels agreed to be sold or actively marketed as of reporting day are measured at the lower of their carrying amount or fair value less cost to sell and the difference, if any, is recorded under “Impairment loss” in the unaudited interim consolidated income statements.

Other operational gain

Other operational gain includes gain from all other operating activities which are not related to the principal activities of the Company, such as gain from insurance claims.

Gain on sale of vessels

Loss on Write-Down of Inventory

Loss on write-down of inventory results from the valuation of the bunkers remaining onboard our vessels following the decrease of bunkers’ net realizable value compared to their historical cost as of each period end.

Interest and Finance Costs

We incur interest expense and financing costs in connection with our outstanding indebtedness under our existing loan facilities (including sale and leaseback financing transactions). We also incur financing costs in connection with establishing those facilities, which are presented as a direct deduction from the carrying amount of the relevant debt liability and amortize them to interest and financing costs over the term of the underlying obligation using the effective interest method.

We earn interest income on our cash deposits with our lenders and other financial institutions.

Results of Operations

The three-month period ended March 31, 2024 compared to the three-month period ended March 31, 2023

Voyage revenues net of Voyage expenses: Voyage revenues for the three months ended March 31, 2024 increased to $259.4 million from $224.0 million in the corresponding period in 2023. Time charter equivalent revenues (“TCE Revenues”) (as defined above) were $195.7 million compared to $156.1 million for the corresponding period in 2023. As a result, the TCE rate for the first three months of 2024 increased to $19,627 compared to $14,199 for the corresponding period in 2023 which is indicative of the stronger market conditions prevailing during the recent quarter. Please refer to the table above for the calculation of the TCE Revenues and TCE rate and their reconciliation with Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Charter-in hire expenses: Charter-in hire expenses for the three months ended March 31, 2024 and 2023 were $3.9 million and $6.6 million, respectively. This decrease is attributable to the decreased rates for the charter-in vessels during the first quarter of 2024 compared to the rates for the corresponding period in 2023.

Vessel operating expenses: For the three months ended March 31, 2024 and 2023, vessel operating expenses were $51.2 million and $55.8 million, respectively. The decrease in our operating expenses was primarily driven by the decrease in average number of vessels in our fleet to 113.3 from 127.6.

Dry docking expenses: Dry docking expenses for the three months ended March 31, 2024 and 2023 were $10.0 million and $8.0 million, respectively. In each of the first quarters of 2024 and 2023, five vessels completed their periodic dry docking surveys, but the vessels that completed their dry docking surveys in the first quarter of 2024 were of greater deadweight ton (“dwt”) scale which resulted in increased drydocking expenses.

Depreciation: Depreciation expense decreased to $32.0 million for the three -month period ended March 31, 2024 compared to $35.1 million for the corresponding period in 2023. The fluctuation is primarily driven by the decrease in the average number of vessels in our fleet to 113.3 from 127.6.

General and administrative expenses and Management fees: General and administrative expenses for the three-month period ended March 31, 2024 were $10.7 million compared to $11.7 million in the corresponding period in 2023, primarily due to the decrease in the stock-based compensation expense to $2.2 million from $3.4 million. Management fees for the three months ended March 31, 2024 and 2023 were $4.4 million and $4.2 million, respectively.

(Gain)/Loss on forward freight agreements and bunker swaps, net: For the three-month period ended March 31, 2024, we incurred a loss on FFAs and bunker swaps of $5.9 million, consisting of an unrealized loss of $3.2 million and a realized loss of $2.7 million. For the three-month period ended March 31, 2023, we incurred a net gain on FFAs and bunker swaps of $1.3 million, consisting of an unrealized loss of $4.9 million and a realized gain of $6.2 million.

Impairment loss: During the three months ended March 31, 2023, an impairment loss of $7.7 million was incurred in connection with the agreement to sell two vessels. During the three months ended March 31, 2024, no impairment loss was incurred.

Other operational gain: Other operational gain for the three-month period ended March 31, 2024, decreased to $1.6 million from $33.2 million in the three-month period ended March 31, 2023. In the first quarter of 2023, other gains from insurance claims relating to various vessels also included an aggregate gain of $30.9 million from insurance proceeds and daily detention compensation relating to Star Pavlina which became a constructive total loss due to its prolonged detainment in Ukraine following the ongoing conflict between Russia and Ukraine.

Gain on sale of vessels: Our results for the three-month period ended March 31, 2024, include an aggregate net gain of $8.8 million which resulted from the completion of the sale of certain vessels (Star Glory, Pantagruel, Big Bang and Star Bovarius). No such case existed in the three months ended March 31, 2023.

Loss on write-down of inventory: Our results for the three months ended March 31, 2023 include a loss on write-down of inventories of $2.2 million resulting from the valuation of the bunkers remaining on board our vessels as a result of the bunkers’ lower net realizable value compared to their historical cost. No such loss was incurred in the first quarter of 2024.

Cash Flows

Net cash provided by operating activities for the three months ended March 31, 2024 and 2023 was $114.3 million and $83.2 million, respectively. This increase was primarily driven by the higher charter rates due to the stronger market conditions prevailing during the recent period compared to the corresponding period in 2023 partly offset by the increase in our interest payments for the reasons outlined above under “Interest and finance costs”.

Net cash provided by investing activities for the three months ended March 31, 2024 was $72.6 million and net cash used in investing activities for the three months ended March 31, 2023 was $5.0 million, respectively. The increase was attributable to the vessel sale proceeds of $94.0 million that we received during the three-month period ended March 31, 2024, partially offset by the greater amount of cash paid in 2024 in connection with the advances for vessels under construction and vessel upgrades.

Net cash used in financing activities for the three months ended March 31, 2024 and 2023 was $180.0 million and $109.9 million, respectively. The increase was primarily driven by greater net debt outflows of $141.9 million in the first quarter of 2024 compared to $40.3 million in the same period in 2023, partially offset by both the lower dividend payments of $38.0 million in 2024 compared to $62.1 million in the corresponding period in 2023 and the $7.0 million paid in connection with the repurchase of our common shares that took place in the three-month period ended March 31, 2023.

Significant Accounting Policies and Critical Accounting Estimates

For a description of all our significant accounting policies and our critical accounting estimates, see Note 2 to our audited financial statements and “Item 5 - Operating and Financial Review and Prospects,” included in our 2023 Annual Report. There have been no material changes from the “Critical Accounting Estimates” previously disclosed in our 2023 Annual Report.

Index to Unaudited Interim Condensed Consolidated Financial Statements	F-1
Unaudited Consolidated Balance Sheets as of December 31, 2023 and March 31, 2024	F-2
Unaudited Interim Condensed Consolidated Income Statements for the three-month periods ended March 31, 2023 and 2024	F-3
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income/(Loss) for the three-month periods ended March 31, 2023 and 2024	F-4
Unaudited Interim Condensed Consolidated Statements of Shareholders’ Equity for the three-month periods ended March 31, 2023 and 2024	F-5
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2023 and 2024	F-6
Notes to Unaudited Interim Condensed Consolidated Financial Statements	F-7

(1)

The amounts represent the minimum contractual charter revenues to be generated from the existing, as of March 31, 2024, non-cancellable time charter agreements, until their expiration, net of address commission, assuming no off-hire days, other than those related to scheduled interim and special surveys of the vessels. Future inflows also include revenues deriving from index linked charter agreements using i) the index rates at the commencement date of each agreement, in compliance with ASC 842, and do not reflect relevant index charter rate information prevailing as of March 31, 2024 and ii) the remaining minimum duration of each non-cancellable time charter agreement.

		Twelve month periods ending March 31,
+ inflows/ - outflows		Total				2025				2026				2027				2028				2029				2030 and thereafter
Charter-in expense newbuilding vessels (1)		$	(98,560	)		$	(15,102	)		$	(15,102	)		$	(15,143	)		$	(15,102	)		$	(38,111	)		$	-
Vessel BWTS upgrades and ESD (2)			(11,134	)			(10,620	)			(514	)			-				-				-				-
Total		$	(109,694	)		$	(25,722	)		$	(15,616	)		$	(15,143	)		$	(15,102	)		$	(38,111	)		$	-

(1)

The amounts represent minimum contractual charter-in payments, to be made from the delivery date of the six charter-in newbuilding vessels (Note 1) until the end of their lease term.

(2)

The amounts represent the Company’s commitments as of March 31, 2024 for installation of BWTS upgrades and ESD on its vessels to comply with environmental regulations.