Star Bulk (SBLK) Q4 2025 Earnings Call Transcript

Date

Thursday, Feb. 26, 2026 at 11 a.m. ET

Call participants

• Co-Chief Executive Officer & Director — Simos Spyrou
• Co-Chief Executive Officer & Director — Petros Pappas
• Chief Operating Officer — Nicos Rescos
• Chief Financial Officer — Christos Begleris
• President — Hamish Norton
• Chief Strategy Officer — Charis Plakantonaki
• Head of Market Analysis — Constantinos Simantiras

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Takeaways

• Adjusted EBITDA -- $126.4 million, illustrating continued operating profitability in a moderate rate environment.
• Net income -- $65.2 million, with adjusted net income at $74.5 million and $16 adjusted EPS.
• Shareholder returns -- 1.2 million shares repurchased for $37.9 million in the quarter; $0.37 per share dividend declared, payable March 19, 2026.
• Liquidity and debt -- Cash and cash equivalents at $459 million; outstanding debt at $1 billion; $110 million undrawn revolving capacity.
• Unencumbered assets -- 27 debt-free vessels with a market value of $630 million, supporting financial flexibility for future growth.
• New share repurchase program -- $100 million authorized, matching terms of prior program, to be funded by vessel sales.
• Per vessel performance -- Time charter equivalent at $19,012 per day; combined daily operating and net cash G&A expenses at $6,444 per day; daily cash margin approximately $12,570 before debt service and CapEx.
• Capital allocation track record -- Approximately $3 billion in value-enhancing actions including dividends, share repurchases, and debt repayment since 2021, reducing net debt by 47% and returning $13.49 per share in dividends (approximately 55% of current share price).
• Debt leverage -- Leverage now below 65% of current fleet demolition value.
• Operating cash flow -- $101 million generated during the quarter with quarter-end cash balance increase from $457 million to $459 million (offset by capital returns and investments).
• Operational efficiency -- Fourth quarter daily operating expenses at $5,045 per vessel; net cash G&A at $13.99 per vessel per day.
• Fleet investments -- $130 million of debt secured for five Qingdao newbuilds; $74 million expected for three Jingli vessels as part of fleet expansion and upgrades.
• Vessel upgrades -- Thirteen more ships fitted with energy-saving devices (ESDs), six with high-efficiency propellers in 2025; 55 of 80 total ESD installations completed, 14 more planned for 2026.
• Digitalization and telemetry -- Near completion of digital monitoring equipment rollout; Starlink and onboard firewalls deployed fleetwide.
• Selective disposals -- Three vessels delivered to buyers in the fourth quarter, with two additional older vessels committed for sale in the first quarter of 2026, reducing average fleet age to 12.1 years.
• Fleet size -- 141 vessels on a fully delivered basis, one of the largest dry bulk fleets among U.S. and European peers.
• Sustainability progress -- Maintained B score in Carbon Disclosure Project Water Management; tested hull cleaning robots and antifouling coatings; entered pooling agreement covering 100% CO2 deficit for 2026 and part of 2027 via surplus units purchased.
• Market supply trends -- Net global dry bulk fleet growth at 3% in 2025; newbuilding orderbook at 12.8% of the fleet; aging fleet with 50% over 15 years by 2027; expected approximately 0.5% reduction in effective capacity across 2026-2027 due to special surveys and drydocks.
• Trade and demand metrics -- Dry bulk trade grew 1.3% in volume and 2.1% in ton miles during 2025; non-China import volumes up 3.2% in 2025; grain trade projected to rise 7.8% in 2026; minor bulks projected to expand 2.1% in 2026; China dry bulk imports essentially flat in 2025 with record iron ore and coal imports in December.
• Dividend policy update -- Management states intent to distribute 1% of free cash flow of $0.50 per share going forward.

Summary

Management confirmed strategic execution across capital returns and operational efficiency, reinforcing Star Bulk Carriers (NASDAQ:SBLK)'s leadership in fleet scale and asset quality for U.S. and European peers. Environmental compliance remains top of mind through early adoption of digitalization, energy-saving device retrofits, and active management of regulatory exposure, as evidenced by full coverage of CO2 deficit through pooling agreements for upcoming years. The combination of a sizable unencumbered fleet, extensive distribution to shareholders, and optimization initiatives sustains the company’s competitive capital return agenda, with a new share repurchase program funded by disposals and continued dividend commitments. Concurrently, market insights point to tightening supply due to aging vessels, regulatory-driven capacity reductions, rising ton mile demand, and persistent port congestion—factors highlighted as support for dry bulk fundamentals into 2026 and beyond.

• Management linked dividend policy flexibility directly to share price performance, stating, "the better the share does, the stronger the incentive to pay dividends as opposed to a share repurchase."
• Implied free cash flow per share will be lower than net income due to higher debt repayments relative to depreciation, and working capital changes associated with market cycles; Christos Begleris stated, "So if I may add, a few things. First of all, debt repayment is slightly higher than depreciation, and therefore, the free cash flow is lower than net income. And also, as you will see, the change in net working capital. So you have to look at the difference between depreciation and change in working capital. So in a market that rises fast, you would expect the working capital change to be greater, thereby reducing the free cash flow. Whereas in a market that is reducing, the change in working capital will be positive, and therefore, that is boosting the free cash flow available for dividends." in falling markets.
• Star Bulk expanded the use of artificial intelligence on its fleet, with a first custom-built AI application now operational according to Charis Plakantonaki.
• Management maintained seven long-term chartering contracts to preserve flexibility while navigating volatile dry bulk market cycles.
• Head of Market Analysis Constantinos Simantiras cited, "net fleet growth of 31,000,000 deadweight, or 3%," with ton mile growth outpacing volume increases—a dynamic reinforced by the shift to longer Pacific and Atlantic distances in 2025.
• Star Bulk completed an employee-wide survey during the fourth quarter of 2025 to assess workforce engagement and identify actionable improvements to internal support structures.

Industry glossary

• Time charter equivalent (TCE): Standardized measure of daily vessel revenue after deducting voyage expenses, critical for comparing operating performance across shipping companies.
• Energy-saving device (ESD): Retrofit technology to improve vessel fuel efficiency and reduce emissions.
• RightShip: Leading vessel safety and emissions rating provider referenced by charterers and regulators in dry bulk shipping.
• Pooling agreement: Commercial arrangement allowing vessel operators to pool emission units, optimizing compliance with environmental regulations like FuelEU Maritime.

Full Conference Call Transcript

Simos Spyrou: Thank you, operator. Thank you, operator. And I would like to welcome you to our conference call. Good morning, ladies and gentlemen, and thank you for joining us today for the 2025 financial results. Before we begin, I kindly ask you to take a moment to read the safe harbor statement on slide number two of our presentation. In today's presentation, we will review our fourth quarter 2025 company highlights, financial performance, capital allocation initiatives, cash evolution during the quarter, operational performance, our continued investments in the fleet, developments on the regulatory front, and our perspective on industry fundamentals. Turning to slide three, the fourth quarter was characterized by solid profitability, disciplined capital allocation, and continued balance sheet strength.

Adjusted EBITDA was at $126,400,000, demonstrating, even in a moderate rate environment, the strong cash-generating capacity of our platform. For the 2025, our net income amounted to $65,200,000, while adjusted net income reached $74,500,000, or $16 adjusted EPS. We continue to actively return capital to our shareholders. During the fourth quarter, we repurchased 1,200,000 shares, totaling $37,900,000. Year to date during the 2026, we have repurchased approximately 1,900,000 shares. In addition, our Board of Directors declared a $0.37 per share dividend for the fourth quarter, payable on March 19, 2026, to all shareholders of record as of March 9, 2026. Our balance sheet remains a key strategic advantage. Total cash and cash equivalents are approximately $459,000,000.

Outstanding debt is approximately $1,000,000,000, and we have an undrawn revolving capacity of $110,000,000. Importantly, we also have 27 debt-free vessels with an aggregate market value of approximately $630,000,000. This unencumbered asset base provides substantial financial flexibility to fund growth opportunities. Dividend policy. Going forward, we intend to distribute 1% of our free cash flow of $0.50 per share. We have also authorized a new $100,000,000 share repurchase program on substantially the same terms as the prior program. This dual-track approach—dividends plus opportunistic buybacks funded from vessel sales—allows us to dynamically allocate capital depending on the market conditions and the discount or premium of our shares relative to the intrinsic value.

These initiatives reflect both our confidence in the company's forward cash flow visibility and our commitment to maintaining a competitive and sustainable capital return profile. On the top right side of slide number three, you can see our per-vessel daily performance metrics for the quarter. Time charter equivalent came at $19,012 per day per vessel. Combined daily operating expenses and net cash G&A expenses came at $6,444 per day per vessel. These numbers highlight the operating efficiency of our platform, and our ability to generate meaningful cash flow, with a daily cash margin of approximately $12,570 per vessel per day before debt service and CapEx, even at mid-cycle rate levels.

Slide number four summarizes our capital allocation track record over the last five years. Since 2021, we have executed approximately $3,000,000,000 in value-enhancing actions including dividends, share repurchases, and debt repayment. During this period, we have returned $13.49 per share in dividends, representing approximately 55% of our current share price. We have reduced our total net debt by 47%, bringing leverage to a level where it is below 65% of the current demolition value of the fleet. At the same time, we expanded the fleet opportunistically through accretive fleet acquisitions, issuing equity at or above NAV, thereby increasing scale while protecting per-share value.

The result is a larger, more efficient platform with materially lower financial risk and significantly enhanced free cash flow per share potential. Slide number five illustrates the movement in our cash balance during the fourth quarter. We began the quarter with $457,000,000 in cash. We generated $101,000,000 in operating cash flow. In summary, during the fourth quarter, we delivered solid profitability, strengthened our liquidity position, continued to delever, returned meaningful capital to shareholders, and preserved significant optionality for future capital allocation. Our balance sheet resilience, operating efficiency, and disciplined capital allocation framework position us well to navigate market volatility while continuing to enhance per-share value.

With that, I will now turn the call over to Nicos Rescos for an update on our operational performance and the continued investments we are making in our fleet.

Nicos Rescos: This operational cost discipline has not come at the expense of quality, as illustrated. Star Bulk Carriers Corp. continues to rank at the top amongst listed peers in RightShip safety scores. We continue to run one of the most cost-efficient platforms in the dry bulk sector. Please turn to slide seven, covering our operational performance. Daily operating expenses for Q4 came in at $5,045 per vessel, and net cash G&A at $13.99 per vessel. Moving to slide eight, on the newbuilding front, all eight of our customers' newbuildings are on track for delivery during 2026. Importantly, we outline our fleet-wide investment program.

We have secured $130,000,000 of debt against the five Qingdao vessels, and expect a further $74,000,000 against the three Jingli vessels. Financing is well advanced. Our vessel upgrades made meaningful progress during 2025, fitting 13 additional vessels with energy-saving devices, and six with high-efficiency propellers. In total, we have now completed 55 out of 80 ESD total installations across the fleet, with another 14 planned for 2026. We have also nearly completed our telemetry rollout with digital monitoring equipment. The top right of the page shows our CapEx schedule, illustrating both the newbuilding payments and our vessel efficiency upgrade spending alongside the corresponding debt financing, which totals approximately $55,600,000 with around 1,585 off-hire days for the full year.

At the bottom, you can see our expected drydock schedule for 2026: 121 out of 126 eligible vessels now retrofitted on a fully delivered basis. Continue to optimize our fleet through selective disposals, prioritizing the sale of older non-eco tonnage to reduce our average fleet age and improve overall efficiency. Turning to slide nine for our fleet update. During Q4, we delivered three vessels to their new owners: the Supramax and the Panamax, Star Runner, Star St. Piper, and Star Remy. In December, we agreed to sell Star Stomington, an Ultramax, which was delivered to her new owners in February.

Looking into Q1 2026, we have committed two additional older vessels for sale—an inefficient Capesize and a Kamsarmax—Tascar and Star Mariela, with deliveries expected in April. We will continue to maintain seven long-term chartering contracts which provide commercial flexibility across market cycles. Star Bulk Carriers Corp. operates one of the largest dry bulk fleets among U.S. and European listed peers with 141 vessels on a fully delivered basis and average age of approximately 12.1 years. Thank you. Please turn to slide 10. I will now pass the floor to our Chief Strategy Officer, Charis Plakantonaki, for an update of recent global environmental regulation developments and where we highlight our progress across ESG priorities.

Charis Plakantonaki: Despite the one-year postponement of the IMO net-zero framework in October 2025, we remain committed to our strategy to reduce greenhouse gas emissions from our fleet operations. Alongside the ongoing renewal of our fleet, we continue to enhance energy efficiency of our vessels through targeted technical and operational measures, including the successful testing of hull cleaning robots and silicone antifouling coatings. In 2025, the Star Bulk Carriers Corp. fleet achieved an average C rating in the RightShip greenhouse gas rating. We also maintained our B score in the 2025 Carbon Disclosure Project Water Management submission, reflecting effective environmental management.

We continue to contribute actively to the work of the Maritime Emission Reduction Centers, working with our partners to assess emerging technologies aimed at improving battery performance. Comply with FuelEU Maritime, and consistent with last year, we entered into a pooling agreement with an external party to cover 100% of our CO2 deficit for 2026 and part of 2027 by purchasing surplus units, the most cost-effective compliance strategy. On the technology front, we completed the deployment of Starlink and installed onboard firewalls across the fleet. As part of our artificial intelligence strategy, we delivered the company's first custom-built AI application while continuing to leverage AI within existing systems to develop new tools to further automation and optimization.

The well-being of our people remains a priority. During Q4 2025, we contracted a comprehensive company-wide employee survey to listen closely to our teams and identify tangible ways to better support them in their roles. I will now hand the floor to our Head of Market Analysis, Constantinos Simantiras, for a market update and his closing remarks.

Constantinos Simantiras: Thank you, Charis. Please turn to slide 11 for a brief update of supply. During 2025, 36,200,000 deadweight was delivered and 5,200,000 deadweight sent to demolition, resulting in net fleet growth of 31,000,000 deadweight, or 3% year over year. The newbuilding orderbook has grown over the past three years, reflecting limited shipyard capacity through 2028, high shipbuilding costs, and ongoing uncertainty around wind propulsion technologies. Contracting remained under control, decreasing to 45,800,000 deadweight during 2025, but remains at relatively low 12.8% of the fleet. The IMO's recent decision to postpone adoption of the net-zero framework will likely extend this uncertainty into 2026.

That said, we have seen a noticeable uptick in contracting in the Capesize segment over the past few months. Meanwhile, the fleet continues to age, and by 2027, approximately 50% of the existing fleet will be over 15 years old. Moreover, the rising number of vessels undergoing the third special survey and drydocks is estimated to reduce effective capacity by approximately 0.5% during 2026 and 2027. On the operational side, average fleet steaming speeds have recovered from last year's historical lows, stabilized at around 11.1 knots over the past two quarters, incentivized by firmer freight rates and lower bunker costs. Over the coming years, stricter environmental regulations are expected to continue to support slow steaming and help constrain effective supply.

Finally, global port congestion dropped to a six-year low during the fourth quarter 2025, but has since returned to long-term average levels. For 2026, we anticipate congestion to follow typical seasonal patterns in the second half. Though there could be some upside for the supply and demand balance from delays at new mining hubs in West Africa, where loading operations remain particularly time intensive. Let us now turn to slide 12 for a brief update of demand. Moving to Clarksons, total dry bulk trade grew 1.3% in volume, and 2.1% in ton miles during 2025. Throughout the year, strong Atlantic exports, longer Pacific distances, and ongoing ore-related inefficiencies supported ton miles growth.

Red Sea crossings improved somewhat during the fourth quarter after the October ceasefire, but they are still roughly 40% below healthy levels, and geopolitical risk in the region remains high. China’s total dry bulk imports were essentially flat during 2025, as the 4.2% decline during the first half was fully offset by a 4.1% rebound through the second half, with iron ore and coal imports reaching new all-time highs during December. Meanwhile, imports to the rest of the world continue to recover in 2025 with notable strength in the second half amid reduced uncertainty in international trade relationships, supported by lower commodity prices, a weaker U.S. dollar enhancing affordability, and resilient demand in key regions.

Non-China import volumes grew 3.2% throughout the year. Growth was mainly driven by Southeast Asia, India, and the Middle East, with additional support from Africa and intra-Asian trade. Looking ahead, dry bulk demand is projected to grow by 0.6% in tons and 1.9% in ton miles during 2026. The IMF recently raised its 2026 global GDP forecast by 0.2% to 3.3%, with upward revisions of 0.3% for both the U.S. and China. The trade truce between the U.S. and China, new agreements with major partners, and the recent decision by the U.S. Supreme Court on presidential authority to invoke reciprocal tariffs should reduce uncertainty, support economic activity, and demand for raw materials.

That said, elevated Chinese stockpiles across a range of commodities, slower industrial production, and softer fixed asset investment present downside risk, though these should be partly offset by new mine capacity ramping up. Breaking it down by key commodities, iron ore trade grew 2.2% during 2025 and is projected to rise 1.9% in 2026. For the first time since 2020, China crude steel production fell below 1,000,000,000 tonnes, down 4.5% overall in 2025 and 11% in Q4, as a result of policy curbs on steel supply and the ongoing real estate slowdown.

Domestic iron ore output declined by 2.5% in 2025, while stockpiles at Chinese ports currently stand close to all-time highs after the Q4 import surge, while steel output in the rest of the world increased by 1.2%. Looking ahead, Chinese iron ore imports are expected to remain broadly flat in 2026, while stronger Brazil volumes and the gradual ramp-up of high-quality exports from West Africa should support ton mile growth over the coming years. Coal trade contracted 5.6% during 2025 and is projected to decline another 2.5% in 2026. Volume experienced a strong recovery in the second half but stayed below 2024 levels. Strong renewable expansion in China should continue to pressure demand.

Domestic production in China and India is outpacing consumption growth and stockpiles remain high. Indonesia coal exports are expected to decline further in 2026, following announced production cuts of up to 25%, which could tighten volume but potentially support ton miles through longer-haul flow from Southeast Asia and global focus on energy security. Furthermore, India’s new thermal energy capacity should provide support for coal trade over the next years. Grain trade grew 2.9% in 2025 and is projected to surge 7.8% in 2026. Second half 2025 volumes jumped 10%, led by robust exports from Brazil, Argentina, and Australia, plus better-than-expected U.S. shipments. Black Sea exports remain subdued, but should gradually recover over the next two years.

More important, China’s resumption of U.S. soybean purchases under the trade truce will carry into 2026, boosting ton miles. Minor bulks grew 5.2% in 2025 and are projected to expand by 2.1% in 2026. Minor bulks carry the highest correlation to global GDP and continue to benefit from healthy macro outlooks across major economies. That said, growth should moderate somewhat next year due to rising protectionism and a slowdown in growth of West African bauxite volumes after last year's 33% surge. As a final comment, underpinned by a favorable supply backlog, tightening environmental regulations, and easing trade tensions, we remain optimistic about the dry bulk market outlook.

In a period of heightened geopolitical uncertainty, we remain focused on actively monitoring our diverse scrubber-fitted fleet to capitalize on market opportunities and deliver value to our shareholders. Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have.

Operator: Thank you. We will now be conducting a question-and-answer session. And our first question will come from Christopher Robertson with Deutsche Bank.

Christopher Robertson: Thank you, operator, and good morning, team. My question is just related to the underlying demand and ton mile expansion happening in the iron ore market with Brazil and West Africa, where, let us say, underlying demand for the commodity remains flattish. Are there any other similar dynamics or maybe even slightly weaker, but ton mile demand has held stable or expanded because of the geographical dispersion of where the commodities are coming from? Any commentary around that would be helpful.

Constantinos Simantiras: Hi, Chris. So besides bauxite and iron ore, we see a very strong trade on grains, which are going to be increasing by about 7.5% to 8%. And as most of them are coming from Brazil, we will get extra ton miles from there. We also see demand from West Africa on smaller vessels, and that is going to create congestion as well because of construction projects that they have. I think this is going to be a positive as well. Now, minor bulk coal exports. This might also increase ton miles as imports may have to come from further away. If Indonesia actually goes ahead with cutting down 25% of their possibilities as well.

But the bauxite and the iron ore trade are actually going to be big pluses.

Christopher Robertson: Are there any of the projects, whether it is rail or trucking or the ports themselves, etc., are there any projects right now to build out that infrastructure a bit more to make the supply chain more efficient? Kind of what is going on there that may lead to congestion maybe going up in the short term, but being alleviated in the long run?

Petros Pappas: Well, I do not know details about that. What I know is that Supramax/Ultramax calls in West Africa have increased by about 30% during the past year. Now, if our analyst knows anything about the projects, he can add that it is exactly what we expect, that we will have in the short term an increase in congestion, and over the next few years, as the infrastructure is upgraded, this will gradually go down, but this is not something that would take place in one to two years.

Christopher Robertson: Got it. Yeah. That is super helpful. Thank you very much. I will turn it over.

Petros Pappas: Thank you, Chris.

Operator: We will go next to Omar Nokta with Clarksons.

Omar Nokta: Good afternoon. I just wanted to ask maybe just about the capital return policy. The decision, I guess, to boost the dividend payout, does that come about simply just given the strong share performance we have seen here recently? Or is there more to it? Just a bit more detail on that. Clearly, do you move back to 100% payout or maybe somewhat similar to how it was prior to the focus on the buybacks last year?

Hamish Norton: Hi, Omar, it is Hamish Norton. Basically, the better the share does, the stronger the incentive to pay dividends as opposed to a share repurchase. And, you know, so there is nothing really more to it than that.

Omar Nokta: Okay. Thank you. And then just a follow-up into that. As we think about free cash flow, is earnings a good representation of that—approximate what free cash flow looks like? I know quarter to quarter is going to be changes. Or any color you can give on that? It is not terrible. But is earnings a good way to look at it? Do you think it understates free cash flow?

Christos Begleris: Hi, Omar, this is Christos. So if I may add, a few things. First of all, debt repayment is slightly higher than depreciation, and therefore, the free cash flow is lower than net income. And also, as you will see, the change in net working capital. So you have to look at the difference between depreciation and change in working capital. So in a market that rises fast, you would expect the working capital change to be greater, thereby reducing the free cash flow. Whereas in a market that is reducing, the change in working capital will be positive, and therefore, that is boosting the free cash flow available for dividends.

Omar Nokta: Okay. Thanks, Christos. And thanks, Hamish. That is it for me. Thank you.

Petros Pappas: Thank you, Omar.

Operator: And this now concludes our question-and-answer session. I would like to turn the floor back over to management for closing comments. You may disconnect your lines and have a wonderful day. Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference.

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