Star Bulk(SBLK) - 2025 Q4 - Earnings Call Transcript

Financial Performance - For Q4 2025, the company reported a net income of $65.2 million and an adjusted net income of $74.5 million, translating to an adjusted EPS of $0.16 [4] - Adjusted EBITDA was $126.4 million, indicating strong cash generation capacity even in a moderate rate environment [4] - The company repurchased 1.2 million shares for $22.7 million during Q4 and approximately 1.9 million shares for $37.9 million year-to-date in Q1 2026 [4][5] - A dividend of $0.37 per share was declared for Q4, payable on March 19, 2026 [4] Capital Allocation and Balance Sheet - Total cash and cash equivalents stood at approximately $459 million, with outstanding debt around $1 billion [5] - The company has an undrawn revolving capacity of $110 million and 27 debt-free vessels valued at approximately $630 million [5] - The capital allocation strategy includes distributing 100% of free cash flow while maintaining a minimum cash balance of $2.1 million per vessel and a minimum quarterly dividend of $0.05 per share [5][6] Operational Performance - Daily operating expenses for Q4 were $5,045 per vessel, with net cash G&A at $1,399 per vessel, both among the lowest in the peer group [12] - The company continues to invest in fleet upgrades, with 13 vessels fitted with energy-saving devices and 55 out of 80 installations completed [13] - The fleet consists of 141 vessels with an average age of approximately 12.1 years [16] Market and Industry Outlook - The dry bulk trade grew by 1.3% in volume and 2.1% in ton-miles during 2025, driven by strong exports and recovery in key commodities [22] - The company anticipates a 0.6% growth in dry bulk demand in tons and 1.9% in ton-miles for 2026, supported by a favorable economic outlook [24] - Geopolitical risks and environmental regulations are expected to influence market dynamics, with a focus on managing an ECO-rated fleet [28] Management Commentary - Management expressed confidence in the company's cash flow visibility and commitment to maintaining a competitive capital return profile [7] - The operational efficiency and disciplined capital allocation framework position the company well to navigate market volatility [10] - The company remains focused on enhancing energy efficiency and compliance with environmental regulations [17] Q&A Session Summary Question: Insights on iron ore market dynamics - The company noted strong trade in grains, with expected ton-mile increases from Brazil and West Africa, alongside potential increases in coal ton-miles due to export cuts from Indonesia [31][32] Question: Capital return policy details - Management indicated that the decision to boost the dividend payout was influenced by strong share performance, with a preference for dividends over share repurchases in such scenarios [41] Question: Free cash flow representation - It was clarified that while earnings provide a rough approximation of free cash flow, factors like depreciation, debt repayment, and changes in working capital must also be considered [42][45]