Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers Conference Call on the First Quarter 2023 Financial Results. We have with us Mr. Petros Pappas, Chief Executive Officer; Mr. Hamish Norton, President; Mr. Simos Spyrou and Mr. Christos Begleris, Co-Chief Financial Officers; Mr. Nicos Rescos, Chief Operating Officer; and Mrs. Charis Plakantonaki, Chief Strategy Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today. I will now pass the floor to one of your speakers for today, Mr. Spyrou, please go ahead, sir.

Thank you, operator. I'm Simos Spyrou, Co-Chief Financial Officer of Star Bulk Carriers, and I would like to welcome you to our conference call regarding our financial results for the first quarter of 2023. Before we begin, I kindly ask you to take a moment to read the Safe Harbor statement on slide number 2 of our presentation. In today's presentation, we will go through our first quarter results, cost evolution during the quarter, an update of our balance sheet, an overview of interest rate risk management, then bunker benefit and vessel operations, the latest on the ESG front and our views on the industry fundamentals before opening up for questions. Let us now turn to slide number 3 of the presentation for a summary of our first quarter 2023 highlights. For the first quarter of 2023, the Company reported the following. Net income amounted to $46 million with adjusted net income of $37 million or $0.36 per share adjusted earnings. Adjusted EBITDA was at $85 million for the quarter. For the first quarter as per our existing dividend policy, we declared the dividend per share of $0.35, payable on or about June 27, 2023. During this quarter, we have bought back 531,223 shares at a cost of $11.26 million. Since 2021, dividend distributions and share buybacks are over $1 billion. On May 16, 2023, our Board of Directors canceled the previous share repurchase program under which $8.5 million was still outstanding and authorized the new share repurchase plan of up to an aggregate of $50 million. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was at $14,199 per day per vessel. Our combined daily OpEx and net cash G&A expenses per vessel per day…

Thank you, Simos. In slide 7, we illustrate how Star Bulk continues to benefit from the fuel spread between HSFO and VLSFO. Our 118 scrubber fitted vessels have surpassed 137,000 operating days with an average system availability of 99.5%. With the current Hi5 spread, our scrubbers meaningfully contributed to our profitability. The spread secured during the first quarter stands at $185 per ton and currently hovers at around $122 per ton, based Singapore spot prices where we cater for approximately 60% of our annual fuel demand. Indicatively, our average Hi5 spread since inception stands at $170 per ton. For administrative purposes, on the top right of the slide, we present a sensitivity table that shows the impact the bunker benefit can have on our bottom line based on consumption of approximately 685,000 tons of HSFO per annum for our scrubber fitted vessels. Please turn to slide 8, where we provide an operational update. Operating expenses, excluding nonrecurring expenses were at $4,696 for Q1 2023. Net cash G&A expenses were $1,059 per vessel per day for the same period. In addition, we continue rate at the top amongst our listed peers in terms of the Rightship safety store. Slide 9 provides a fleet update and some guidance around the future dry dock and vessel efficiency upgrade expenses and the relevant total offhire days. In the first quarter, we took advantage of the increase in vessel values and agreed to opportunistically sell two 2011 built Capesize vessels, the Star Borealis and Star Polaris. We have further reached agreement on constructive total loss of Star Pavlina with the war risk insurers, given its prolonged detainment in Ukraine following the war. As part of our strategy towards fleet renewal and improving the overall fleet fuel efficiency, we have secured seven long-term charter-in latest generation eco vessels, built at first class Japanese shipyards, six of which have delivery during 2024. We have by now completed our ballast water installation program across the fleet and in line with the EEXI and CII regulations, we will continue investing and upgrading our fleet further with energy-saving devices, telemetry and other technologies, all aimed in improving our fuel consumption and reducing our environmental footprint, together with enhancing the commercial attractiveness of the cargo fleet. Our expected project expense for the 9 months for remaining 2023 is estimated at $23.7 million for the dry docking of 28 vessels, with another $9 million towards our vessel upgrade CapEx. In total, we expect to have approximately 770 offhire days for the same period. The above numbers are based on current estimates around dry dock and retrofit planning, vessel employment and yard capacity. I will now pass the floor to our Chief Strategy Officer, Charis Plakantonaki, for an ESG update.

Thank you, Nicos. Along with our ongoing efforts to continuously improve the energy efficiency of our fleet, we have now completed the first feasibility study with the Iron Ore Consortium on Green Corridor. The study has set the potential for the demand-supply in venturing of clean ammonia with the iron ore trade between West Australia and Eat Asia, and concluded that developments in vessel and fuel supply could allow bulk carriers power by clean ammonia to be deployed this trade by 2028 and reach 5% adoption by 2030. Key prerequisites for the corridor remain the acceptance of ammonia as a safe marine fuel, the development of suitable engines, policy support, and continued collaboration through the value chain. Parallel to this Green Corridor project, we continue our research and development efforts on different green fuels and technologies, including [on-boarding carbon capture storage]. And we actively participate in the industry’s dialogue to help accelerate decarbonization of the sector. We remain focused on the well-being of our people, having completed a comprehensive Employee Survey to assess our company’s strengths and weaknesses as an employer and make improvements wherever necessary. On the governance front, we are enhancing the Company’s Code of Conduct and its relevant policies to comply with the new Global Reporting Initiative standards and with our broader ESG commitments. I will now turn the floor to our CEO, Petros Pappas, for a market update and his closing remarks.

Thank you, Charis. Please turn to slide 11 for a brief update of supply. During the first four months of 2023, a total of 12.7 million deadweight was delivered and 1.9 million deadweight was sent to demolition for a net fleet growth of 10.8 million deadweight or 2.9% year-on-year. Supply outlook continues to be the best we have seen in the recent history of dry bulk shipping. Uncertainty on future propulsion, high shipbuilding costs and limited shipyard capacity until late 2025 have helped keep new orders under control. The order book has decreased to a record low of 6.9% of the fleet with just 6.3 million deadweight reported as firm orders between January and April. Furthermore, versus above 20 years of age stand at 8.1% of the fleet, while scrap prices have stabilized the elevated levels and should make demolition of overage and fuel inefficient tonnage an attractive option during seasonal downturns over the next years. The average steaming speed of the dry bulk fleet decreased to record low levels of 11.05 knots during Q1 and over the last month has rebounded to 11.3 knots as spot freight rates improved and bunker prices lowered. Nevertheless, steaming speeds still stand below last year's levels, and we expect that the EEXI and CII regulations will continue to incentivize slow steaming. During the last 12 months, global port congestion experienced a strong correction from record highs that has gradually inflated active supply and has put downward pressures on earnings. Having said that, changes in trading patterns and inefficiencies related to the war, have normalized congestion slightly above pre-COVID levels. As a result of the above trends, net fleet growth is unlikely to exceed 2% per annum over the next three years. Let's now turn to slide 12 for a brief update of demand.…

[Operator Instructions] Our first question is from Amit Mehrotra with Deutsche Bank.

Hey. Good morning, everybody. This is Chris on for Amit. Thanks for taking our questions. This might be a question for Nicos. This is related to the slow steaming of the fleet. So, I know the fleet has slowed down, and you guys mentioned in the prepared remarks, there's a little bit of an uptick here. But given the EEXI regulations -- or the CII in particular, where do you think the upper limit is in terms of the fleet kind of speeding back up here versus -- is there any additional downside you see this year, or would it -- should we just be thinking about it in terms of the fleet not slowing -- or speeding up as much as it could?

Thank you, Chris. Well, at the moment, the fleet is speeding at around 11.5 knots. We feel that as the regulation tightens towards 2026 with an annual increase of about 2%, we don't see the speed increasing substantially. To the contrary, there will be some impact from the CII rating on every vessel. So, we believe that over the next few years, we should see a slowing down of the fleet. If you add on top of that the fact that there is a lot of idling taking place on a big portion of the fleet, which is the smaller ships, that's going to be a heavier impact on CII, so we cannot see much flexibility on speed for the fleet increasing.

Chris, this is Petros. Actually, I think it's actually below even 11.5. I think it's 11.3 or so. And if I remember well over the last years, we have not seen speeds go much above 11.5 anyway. So, I would say that the risk is on the downside. I think that in the future, we will see vessels actually slowing down.

Okay. Yes, got it. That's pretty distinct, Petros. Thank you for that. Just turning to China for a moment. We saw some increased steel production in the first quarter, there's been some inventory drawdowns since that time. But with the proposed production curbs there for the year, do you think there's further room for additional inventory drawdowns like we saw at the very low levels in 2020, or do you think that the drawdowns are kind of stabilizing, and we'll see a restocking cycle in the next few quarters?

Well, we are seeing iron ore stocks down to 126 million tons, if I'm not wrong, which is the law for the last at least two years. And we, therefore, expect that we will see more imports in the second half of the year and more so from Brazil, which has not yet performed up to its expectations as far as exports are concerned, which will actually increase ton miles. So, we are positive about iron ore trade during the second half. And then, I think that China will increase its efforts on -- on infrastructure level. And I've also seen that new floor space has gone down a lot. So, I would expect that as China -- as the effort to strengthen its economy continues, I think that we will see support, both from the private and the public sector over there.

Okay. Got you. Last question for me. You guys did quarter-to-date rate guidance on the bookings, but just any color around the second half of the current quarter, since we’re already more than halfway through. We've seen some -- a little bit of slowing or deceleration of the economic recovery in China into the second quarter here. Any thoughts around how rates might perform for the rest of 2Q?

Well, as I said before, I think that China will actually increase its effort to support this economy. And I think that as oil prices, energy prices are going down, I think the world in general will also improve as far as GDPs are concerned. So, I think it's not going to just be China. I think we will see a better economic situation going forward. And especially, of course, as interest rates are -- will stop at their rise and may start even falling later on in the year.

All right. Yes. Thank you very much for the time, guys. I'll turn it over.

Our next question is from Omar Nokta with Jefferies.

I just wanted to…

Hi Omar.

Hi, there. Just obviously, the current trends [ph] are definitely new development and pretty significant. And I just wanted to ask about that and how they work. And maybe first off, are these -- are they bareboat leases, or are they just regular in charters? And then also, just in terms of them being against newbuildings, are these new orders that have been placed or were these ships already under construction and have been chartered accordingly?

Omar, hi, it’s Petros. These vessels actually were ordered already or were being ordered. And we're doing these deals for four reasons. First of all, we think the rates we have fixed them are good. So, we expect to make profits. Secondly, it's the way -- it is a way to modernize our fleet. Third, as nobody knows when the new generation vessels will be in and when there's going to be the right infrastructure and ample fuels to fuel those vessels. This we consider to be a bridge between now and that time. And of course, let's not forget that these vessels come at no capital costs. Also, those vessels have scrubbers and they offer us optionality. So we have them for seven years plus options. So, I think only good things come out of these vessels. And I think that there is more to come as well.

Okay. More potential charter-ins as what you've reported?

Yes.

Okay, great. And then, I guess, you mentioned the four reasons in there. And I guess, I wanted to ask, also we've seen in terms of asset value, just a continuous move higher throughout the year despite the fact that the market has been off to a softer start, at least relative to '21 and '22, so ship values are moving higher. We've seen it for Capes especially. But I just wanted to ask, maybe from your perspective, what's been driving the S&P market climbing [ph] so significantly this year? And also, yes, one, what's maybe behind that? And is there a lot of deals being transacted and is there more to come?

Well, first of all, we ship owners, we're bullish people. There is not a lot of space in shipyards and the prices of newbuildings are going up. So, there is this idea that prices of newbuildings will not fall. So I think this is one of the reasons why ship owners are ordering. Also, the new vessels are much more eco than the vessels in the water, and that will allow them potentially to survive for longer periods until the zero ambition vessels come in. So I think basically, these are the reasons why people are ordering and why prices are going up.

Okay. And so maybe from your commentary, just now, it sounds like is more of the activity being done on the modern end of the curve, or is there also deals being done on the 10 plus year range as well?

What do you mean -- you mean newbuilding versus 10-year old vessels?

No, sorry. Just meaning in terms of the S&P activity we've been seeing, is the market -- as you highlighted, there's not a lot of newbuilding slot capacity available and prices are not going to come down from the newbuilding front. So, it seems like you've had this repricing of tonnage, is that repricing on the modern end of the age curve, or is it also happening

Yes. There's also a repricing of the existing vessels in the water, the ones that are actually eco, exactly because if you order today, you will probably take delivery of a vessel in 2026. And therefore, we've seen that happen before. We've seen vessels in the water actually being -- sold for close prices or even higher prices than newbuildings.

Yes. Interesting. And I guess, maybe just one final one for me. You sold those two Capes at fairly good prices. Should we be thinking we'll be seeing something similar? As you mentioned earlier, you'll be adding more charter-in, even though those are a bit outward in terms of delivery. Should we be thinking you'll be adding more new buildings via charter-in and maybe selling some of the older ships to take advantage of the pricing dynamics today?

Yes. Well, first of all, the prices of -- the prices are pretty high compared to what charter levels are. So actually, this means that people expect the market go up. But we don't know what will happen. We are positive, but prices are really, really very good. The two Capes that we sold, we sold them at prices that we were very, very happy with. So, I think what we will do going forward is we will sell some more vessels, trying to improve the average age of our fleet, probably getting rid of a few of the vessels and charter in newbuilding tonnage. That will improve the age profile, and we'll do all the good things that I told you earlier, plus it will strengthen our war chest. In case, we will want in the future and especially if new technologies that really cut down on the consumption of vessels, perhaps we would want to also order newbuildings, not right now, but it would happen in the future.

And Omar, this is Christos, just to add, given also the large discounts to NAV and trading performance lately, selling vessels, a few vessels and especially the inefficient ones, as Petros mentioned, is supported.

Yes. That makes sense. Thanks, Christos, very helpful. And thanks, Petros, for the overview. I'll turn it over.

As a reminder. Our next question is from Ben Nolan with Stifel.

Yes. Thanks for taking my questions. If I could start, I wanted to follow on with some of the charter-ins, just had a few other questions about those. First of all, do they include purchase options at the end? Secondly, how should we think about what your, let's say, annual cost, once all 7 are operating, would look like? And if these were related party transactions or not?

So, Ben, we can't comment, unfortunately, on the detail of those charters. You can see what we're able to comment on in our financial statements in the footnotes. And then, as far as related party transactions, Simos, they're not.

They’re not. We do not have anything.

No. But one advantage one has when he foresee has chartered vessel in is that when you control a vessel and the time comes that the vessel -- the owner wants to sell the vessel, being the charter of the vessel, you're always in a pull position as far as being able to buy, you have forward advice about it. So, it's always an advantage to have a chartered in-vessel, even if you don't have a purchase option.

Okay. That's helpful. I appreciate the color you were able to give there. And then, for my second question, as I was going through the release, it seemed like there -- for the second quarter, there was -- is going to be a whole lot more dry docking days than what had previously been the case, unless I'm mistaken. I'm curious if you guys are bringing forward dry docks or something into the second quarter?

Hi, Ben. This is Nicos. This correct. What we're doing is we're accelerating some of the bigger ships in to 2Q, taking advantage, unfortunately -- are north of the kind of software market of the big ships and preparing for Q3 and Q4. We're doing this also to install efficiency devices on these vessels, putting them back in to trade towards the end of Q2. So, that's why you see concentrations here.

Okay. So, is that -- any sense as to sort of what dry docking should look like for 2024 then?

We have 24 ships scheduled -- for 2024.

Okay. All right. I appreciate you guys taking my questions.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing remarks.

Well, thank you very much for following us, and have a good day. See you next time around. No more comments.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.