Star Bulk Carriers 2Q17 Earnings Call Notes

Petros Pappas

Generally positive about the market

” We’re generally positive about the market from the second half 2017 onwards and we believe that every subsequent year will fare better than the year before. This however is a fragile balance, which may tilt against us if ship owners embark in massive newbuilding ordering. We therefore highlight once again that the most important factor for market balance is owners newbuilding ordering discipline, in order to ensure a sustainable recovery as environmental regulations gradually come in to force. This environmental regulations will thereafter not only contribute to a transition towards a cleaner environment, but it will also assist shipping in reducing vessel supply and will therefore lead us to better markets as of 2020 onwards.”

Not concerned about Iron Ore stockpiles in China

“I think that the present stock is about the 142 million tons. Now, if you think that China consumes 1.6 billion, perhaps even more than that – billion tons of iron ore every year that is about a 140 million tons per month. Therefore 140 million tons of stock is one months’ worth. Now, I don’t think they would go below 70, so even if they decided to draw on their stocks that would be 15 days’ worth. I’m not saying this wouldn’t affect the market. This would probably temporarily affect the market, but it is not really such a great amount to be extremely worried about. I do not rule out that at some point that potentially iron ore prices go very high, they might temporarily draw on those stocks and that would have a transient effect on the market, but I do not consider this as a huge amount of stocks that would do permanent damage to the market.”

Star Bulk Carriers 1Q17 Earnings Call Notes

Petros Pappas

Continued demolition is necessary to balance the market

“Continued absence of ordering and acceleration of demolition are required to place a cap on fleet growth for 2019, as 2018 is already almost closed at low prospective delivery levels. That way, the foundation will be laid for a sustainable market upturn to increase pace. Thereafter, and assisted by the positive scrapping and speedy reduction impact of the impending environmental regulations, the shipping markets will finally find their way to a strong recovery.”

Star Bulk Carriers 3Q16 Earnings Call Notes

Star Bulk Carriers’ (SBLK) CEO Petros Pappas on Q3 2016 Results

Commodity prices appear to have reached bottom

“. After more than two years of strong declines, commodity prices appear to have reached a bottom during the first half of 2016 and have experienced a strong recovery rally during the last couple of months. We believe that the monetary and fiscal stimulus that took place in China during 2015 and first half 2016 has resulted in a healthy recovery of steel consumption as well as electricity requirements. Home prices have continued to increase, while steel mill production and profitably has also improved. It is encouraging that both iron ore and coal internal production in China have continued to record strong declines during the first 10 months of 2016. This has partly been the result of government regulation, such as a 276-workday restriction on coal mining that came into effect during the second quarter of 2016.”

No reason to be that positive on the market until after 2018 or 2019

“The major problem is if we become too positive about the market, which I don’t think there is a basis right now. I think there is a basis to become very positive about the market after 2018, 2019. I think we will see a very strong market after that. But for 2017, I don’t see the reason to be that positive. I believe that this additional deadweight will require demand of about 4% to 5%, which we will probably not see. And the problem is going to be that people might stop scrapping. Not to mention potentially some people ordering.”

Customers don’t view the current market as sustainable

“Hi, Herman. Well, first of all, I think that charters believe that the market is not sustainable. That’s number one. So they would not experience for let’s say one-year because they probably think that at some point later on in time, the rate would fall again. However, as the market is pretty strong right now, and especially in the Atlantic, what charters do is they give us like one-year charters. Because if they don’t, they will have to pay $15,000 and $17,000 and $18,000 a day for the next trip.”

Capital is not as available as it used to be. We have all lost a lot of money

“Well, hi, Ben, thank you for the question. I think that first of all, equity capital is much less than what it used to be. We have lost – all of us have lost a lot of money. So on that side, I don’t see much capability for newbuildings. Also, the Western banks will probably not finance newbuildings. I mean, the banks have talked – I think it’s the last thing in their agenda right now. I think the only risk of ordering comes through China in case Chinese banks in cooperation with the state decide to give 90% finance to finance vessels in their home yards. That’s I think the only risk that we are in right now.”

I don’t know what the Trump affect is going to be

“Now I don’t know what the Donald Trump affect is going to be in the market. You guys are all in the States. You can probably judge better than I can. On the one hand, maybe there’s going to be measures that boost the American economy. On the other hand, if there is issues with the trade act with other countries that could create protectionist – build protectionist walls for trade. So I don’t know the plus or minus what is going to be the final effect there.”

Star Bulk Carriers 1Q16 Earnings Call Notes

Star Bulk Carriers’ (SBLK) CEO Petros Pappas on Q1 2016 Results

Commodity prices appear to have reached bottom

” after more than two years of strong declines commodity prices appear to have reached the bottom during the first quarter of 2016.”

Some fundamentals improving in China

“We expect that the ongoing monetary in the system stimulus taking place in China will boost steel consumption in the medium-term. As a matter of fact house prices and building permits have been recording healthy increases during the first half of 2016. Furthermore, we find very encouraging that both iron ore and coal production in China are reported to have recorded strong declines during the first month of 2016.”

Scrapping could be slower in the second half of the year

“if you look at last year’s scrapping the way scrapping went last year there was a lot of it in the first half and much less in the second half. So, depending on people’s expectations we will also see how scrapping moves. I think that probably scrapping in the second half of the year will reduce in comparison to the first half, but it will depend a lot on how rates go, if rates are strong scrapping will slowdown.”

China will be importing coal from different locations

“Well, what we’re seeing is that Indonesia is supposedly going to cut exports by about 50% going forward because of needs for domestic consumption. We think that China has raised its bottom of — I mean the downside of Chinese coal imports have reached their bottom. And we think that China will be obliged to import this coal now mostly from South Africa, Australia and probably also Colombia especially with the new Panama Canal coming into play.”

A year from now the market for ton miles should be better than it is today

“Just one thing I want to say. I believe that in a year or a year and a half from now we will see a better market as far as ton miles are concerned in various sectors like coal as we already discussed, iron ore because we see that Brazil is going to be exporting many more tons probably more than 100 million tons starting as of mid ’17. And Australia has much less to export in addition to what it’s already exporting and that is a major factor in the market it’s more important than tons, ton-miles it should be more important than tones. And then we think that there is going to be much more trade in bauxite because Indonesia again is curtailing their exports in bauxite and we’d probably see it coming from Africa. And we think there is going to be more grain trade which by definition is long ton miles. So, we believe that the upturn of this market is going to start from that sector more than anything else”

Scrapping will be a key to a better market in 2018

“I think this year there is going to be more scrapping than last year I don’t know by how much. And oil prices are important because if it stays around $50 versus $30-$35 that we were seeing last year will probably contribute in slowing down vessel speeds. And we see China looking more towards infrastructure and we see more housing permits starting up, so we think that there are reasons why we should be looking at a better future. However, as we said more strain on ordering and more scrapping this is going to be the key of a better market in 2018. Thank you very much operator.”

Star Bulk Carriers 4Q15 Earnings Call Notes

Star Bulk Carriers’ (SBLK) CEO Petros Pappas on Q4 2015 Results

2016 should be one of the most challenging years in dry bulk history

“”We expect 2016 to be one of the most challenging years in dry bulk history. Practically this should ultimately be seen as a positive factor for the medium-term as it will encourage further scrapping and we’ll discuss newbuilding orders and further train the order book through cancellations and conversions.”

Absence of ordering and increased demolition is putting a cap on fleet growth

“Absence of ordering and increased demolition since early 2015 is slowly putting a cap on fleet growth for the next couple of years and is creating the foundation for a sustainable recovery to take place sometime in the not too distant future. ”

Cost of laying up ships is $2000 per day

“Let’s say that the cost is $2,000, let’s say that the operating expense of vessel is $5,000. If the market rates are at $3,000, we are losing $2,000 a day that is exactly the point where you have to decide whether you keep on operating or you lay-up the vessel because whether you lay-up the vessel or you keep on operating you lose $2,000 a day. So there the decision is qualitative, you have to think what is going to happen during the next two, three, six months onwards and it’s not an exact sense, but we have to figure out how we believe a market to be going forward.”

Star Bulk 3Q15 Earnings Call Notes

Star Bulk Carriers’ (SBLK) CEO Petros Pappas on Q3 2015 Results

Hamish Norton – President

Deferring deliveries

“During the year, we’ve actively been negotiating with our shipyards and we have managed to agree on some measures that benefit the company’s liquidity. In Q3, we agreed to defer the delivery of four new building vessels from the fourth quarter of 2015 to 2016 preserving our liquidity and you know at some point increasing the vessel resale value as its going to be one year younger.”

Lower than industry operating expenses

“Star Bulk has operating expenses as we’ve said of $4,325 per vessel per day which is 17% lower than industry average excluding Star Bulk of $5,245 per day.”

Petros Pappas – CEO and Director

First half of 2016 may be especially challenging

“looking into 2016, we expect that the first half may be especially challenging which should ultimately be seen as a positive factor as it will encourage further scrapping and will largely discourage new building orders. The second half should start improving and we expect that during 2016 as a whole, demand should start picking up in comparison to 2015.”

There has been a slowdown in scrapping as people expected the market to go up

“ell, the first reason why scrapping slowed down, we should remember that the first six months of the year was about 21 million tons. And right now there’s another 7 million tons for their four and half months of the second half. The reason for this slowed down is because people expected that the market go up, but there is no question about that, that’s one reason.”

We definitely have structural problems around Chinese demand in the industry

“I think we definitely have a structural problem in two ways, first of all, there’s no question that there is a slowdown in China and that steel production will be much lower – the growth of the steel production will be much lower if not remaining around the same from where it is. So that’s the one structural issue. And a second structural issue is coal. There is also a trend there for less use of coal, so in that sense we have a structural issue.”

We’re in a new normal in this business with slower demand growth

“in my view, we’re starting in – we’re going to having a new normal in this business. I don’t gap I’m not sure that for a few years we’ll be seeing very high demand. This year demand was – is going to be about zero or thereabouts. We expect demand next year perhaps to be around 2% or 2.5% there’s number of reasons that I can discuss later on if you need about that. ”

We need to see a bit of blood in the streets. We’ll get there

“We need to see a bit of blood in the streets so that people don’t order and people scrap. And we’re not extremely far away from things turning around because in 2017 for example, our calculation is that net supply is going to be about 1.5%. And 2018 is going to be about 1%. So if you ask me I believe that we’ll get to the point that you ask, somewhere in 2017 onwards.”

First semester of next year will be time to buy

“I think that the best point in time to buy is going to be the first semester of next year.”

Christos Begleris – Co-CFO

Debt to net assets covenant at 80%, we are in the 50s or 60s now

“we have a corporate net debt to market value of the assets that is say that 80% and is tested on a quarterly basis. Net debt accounts for debt less cash available for the company. On the basis of evaluations of as of September we are actually in the high 50s or low 60s. So there is obviously significant room there. And market value of asset is defined to include the book value of work in progress at the yards.”

Andrew Sohn Notes: GIS, SBLK, NKE, ISCA

Andrew Sohn, a junior at Columbia University, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Andrew has read this week.

 

GIS

GIS shifting and focusing on the core of the business-Ken Powell CEO

We have four clear priorities for U.S. retail in 2016. They are, first and foremost to grow our cereal business, second to accelerate our performance in better-for-you snacking, which includes both our yogurt and snacks operating units within U.S. retail, third to drive double-digit growth on our natural and organic portfolio by leveraging the combination of Annie’s and our heritage natural and organic brands and finally to deliver Consumer First value on select brands in a way that generates positive returns for our business.

GIS cautious about growth and penetration into Chinese markets-Ken Powell CEO

The products are on the shelf in retail stores in Shanghai. We are offering a couple of traditional spoonable varieties. These are very, very high quality building on the French heritage of Yoplait. We are also offering a drinkable product. So there will be basically three platforms. They are on the shelf. They look great. We are really excited by it. We are going to do what we have always done in China, which is to really learn about the business model in Shanghai and then as we success we fully intend to expand that business into other major cities in China.

GIS’s growth predicated on sustained expansion in markets with plenty of runway left for growth-Ken Powell CEO

As you know, our convenience and foodservice business is very, very targeted to the channels that we think have longer term growth potential and so we are highly focused in schools and universities and healthcare and all of those channels are growing anywhere from 2% to 4%. So a part of it is that we are just seeing there is a little bit of a tail wind there and I would say the second part is that our innovation has just worked terrifically well in those channels.

GIS intends to ramp down media based advertising and focusing more on a marketing tactic predicated on sampling-Don Mulligan CFO

Media is down and what I said is our total consumer will be up. And just let me parcel that out. So media is obviously what you see on air, what you see in digital or in print. It will be slightly down, essentially I think about it as flat on a 52 to 52 week basis. So we lose a week obviously this year. Importantly it’s going to be up on key growth platforms where we have clear ideas. Ken just talked about cereal in U.S. and internationally, our snacks business in the U.S., yogurt in the U.S., natural and organic in the U.S. Internationally, we see it in Old El Paso in addition to the cereal businesses and in emerging markets. So we will have media up on platforms where we have strong growth ideas.

And then total consumer will be up low-single digit. So when I talk about total consumer, that takes into things like in-store events. We have many of those in the emerging markets. We are doing Häagen-Dazs in-store displays in Southeast Asia markets. Obviously Yoplait displays in China, Yoki in Brazil. So a lot of opportunity to get more exposure in the store itself. And then sampling falls into it as well. Again think about Yoplait in China as we are launching that brand. We are going to see a lot of our natural and organic businesses getting supported by increased sampling this year in the U.S. So there is a number of vehicles that don’t hit media nor a consumer vehicles that don’t hit media that we will be increasing or invested on this year.

GIS going hard for sampling driven marketing-Ken Powell CEO

Sampling is perhaps the most powerful penetration driver that we have and many of our natural and organic businesses are not really driven in the traditional media. They are in fact driven almost entirely by getting the products into people’s mouths. So that’s a growing part of our marketing mix and one that is not really counted in the media thing. So that’s an important highlight for you.

STRBLK

Its been rough for dry bulk shipping-Petros Pappas CEO

The first quarter has been the worst dry bulk market on record, with the all-time low Baltic Dry Index, set on February 18th. Our financial results have therefore been disappointing, but we’re continuing to pursue a number of actions that will increase our liquidity while also reducing our breakeven levels.

Cost cutting via exploitation of economies of scale has proven to be valuable in a tough environment-Petros Pappas CEO

We have been able to reduce our cost. OpEx for Q1 was $4,439 per day down 7% from a figure for calendar 2014. Our net cash G&A expense for the quarter was cut by 22% to $1,130 per day per vessel. This makes us one of the lowest cost operators in the dry bulk space. We are seeing a direct effect of our economies of scale and strong relationships with key suppliers on our bottom line.

STRBLK using adjustments to ship manufacturing schedule to time capacity for an upswing in the market-Petros Pappas CEO

These agreements increased the liquidity of the Company in the near term and enable us to take delivery of our vessels at the time when we expect trades will have improved. The vessels that have been moved into 2016 will also have a high resale value as they will be one year younger. We raised proceeds of $405 million from equity offerings in January and May 2015. These funds should allow us to outlast this market downturn and benefit from an eventual recovery.

Recent macroeconomic headwinds have caused reshuffling in assets in shipping industry-Petros Pappas CEO

The low straight environment during Q1 is the result of an unprecedented negative demand growth during a period that the market had already been dealing with over supplier. Vessel demand became even more challenging as the continuing fall of commodity prices affected by activity and lead destocking of all major dry bulk commodities with a significant negative effect on seaborne traded volumes. This recent market shock could prove to be a blessing in disguise for the dry bulk market as it has forced owners to take action.
During the first months of 2015 we have experienced record high levels of demolition and significant delays in scheduled deliveries. Furthermore orders have been running at record low level since October ‘14. In fact also after we adjust for conversions and cancellations we can say with confidence that we have practically experienced negative contracting of vessels. The above adjustments have put a ceiling for medium term fit growth and as a consequence the fundamental requirements for a sustainable recovery are slowly being built.

Commodity demand, specifically in steel has been a major cause of the headwinds in the industry-Petros Pappas CEO

Dry bulk trade growth during the first half of 2015 experienced a sharp slowdown mainly as a result of the ongoing commodity price correction that began in the second half of 2014. The steel industry is the most important sector for dry bulk trade. The recent steel consumption slowdown affected demand for raw materials related to the production of steel products, consequently it has also led to a slowdown in energy consumption and impacted thermal coal requirements.

Consumption in China has also caused problems too-Petros Pappas CEO

Furthermore dry bulk trade received additional negative pressure from higher consumption of stocks. For example, China iron ore stocks at ports are currently down 30% year-over-year while thermal coal stocks at major power plants have decreased 4% during the last seven months. As a result during the first five months of 2015 Chinese imports of iron ore and coal decreased by 1% and 38% respectively. On the other hand the Chinese mining industry has been negatively affected from the correction of raw material prices. Between January and May 2015 China domestic production of iron ore and coal have decreased by 10% and 8.5% respectively. We believe that China’s depletion of stocks and domestic production cutbacks will inevitably lead to higher import requirements in the near future and we view 2015 to be a transition year for trade growth.

Scraping has become a key tool to surviving the drought-Petros Pappas CEO

Absence of ordering and increased demolition has slowly put a cap for fleet growth for the next couple of years. Scraping is the single most effective commercial defensive weapon ship owners have in their arsenal apart from laying up. If we stop scraping the market will commensurately delay improving.

NKE

Even with headwinds, 2015 has been great for Nike-Mark Parker CEO

Fiscal ’15 was a great year for nike.com. We delivered 51% revenue growth in Q4 with 55% growth for the full year. We saw increases in both traffic and conversion, fueled by our investments in critical infrastructure to improve the consumer experience on both desktop and mobile. And as I mentioned last quarter, our traffic on mobile has exceeded traffic on desktop, making it a very sharp point for consumer engagement going forward. I’m proud to say our e-commerce business surpassed $1 billion in revenue this past year, a fantastic achievement from all of our teams. But really we’re just scratching the surface of our potential in this area. Global consumer spending through e-commerce exceeds $1 trillion, a significant portion of which is done on mobile devices, tremendous opportunity ahead for us in e-commerce.

While other struggle, Nike has done well in internationally-Trevor Edwards CEO

Now let’s turn to Western Europe where we’ve seen broad-based demand with growth of 17% in the quarter and 21% for the year. Growth in the quarter and throughout the year was fueled by our continued efforts to transform the marketplace in line with the category offense. We saw strong growth across most key categories led by sportswear, running, women’s training and basketball and in the territories, particularly in AGS, that’s Austria, Germany and Switzerland as well as in the U.K. and Ireland.
And finally in China, our Q4 revenue grew 20% and we posted a full year growth of 19%. Our strong growth in the quarter was driven primarily by running, basketball and sportswear. For our wholesale partners, those that have been retrofired continue to outperform the rest of the fleet and in DTC, we saw a growth of 52% with continued strong growth in our stores as well as online.

In China, the NIKE Brand is incredibly strong, which provided the foundation to reset the market in line with the Category Offense. Our strong results throughout fiscal year ’15 demonstrate that our strategy has paid off. We’ve returned to strong revenue growth, we’ve improved profitability and productivity for ourselves and our wholesale partners and inventory in the marketplace is healthy. Going forward, we will leverage the momentum from fiscal year ‘15 and continue to execute this consumer-led strategy to drive sustainable profitable growth in this key geography

ISCA

ISCA has done well, price and volume have both increased-John Saunders ISCA

We’re pleased to report our second quarter results, again exceeding our expectations. The attendance upturn that started with Talladega in the Contender round of last year’s Championship Chase continues to build, and this is the third consecutive quarter we have seen an increase in average ticket price for comparable events, demonstrating a solid trend in the resurgence of our core business.

The average ticket price for comparable events, held during the quarter, was approximately $55.22, an increase of 2.6% as compared to the same period in 2014. For fiscal 2015, the average ticket price for all events held year-to-date is approximately $69.67, an increase of 2%.

NASCAR has been doing well-John Saunders ISCA
NASCAR Sprint Cup has been the number one or number two sport of the weekend for 10 of 15 events in 2015 and the sport is continuing to experience positive trends in social and digital metrics to-date. On the corporate sales front, again a year-over-year increase helped drive results for the quarter. We continue to see favorable trends including robust ad sales for MRN. We have sold all but one of our NASCAR Sprint Cup entitlements and our sales team is well into discussions for a strong partner for this remaining fall cup race at Talladega. We have secured 97% of our total 2015 corporate sales target compared to 94% at this time in 2014.

Casinos at racetracks has proven to be quite profitable-John Saunders ISCA

Our Hollywood casino at Kansas Speedway joint venture is once again a strong contributor to earnings and cash flow during the quarter. Our share of equity earnings increased over 60% compared to last year’s second quarter, driven mainly by continued growth of market share. Our cash distributions from the casino totaled $19.5 million since December 1, 2014 through the end of June and we expect that total of $30 million to $31 million for fiscal 2015. This compares to $22 million received in fiscal 2014. Approximately $4.5 million of the increase is non-recurring and a result of transitioning from quarterly to monthly distributions in 2015, the balance resulting from improvement in operating results

Star Bulk Carriers FY 1Q15 Earnings Call Notes

Pushing out delivery and canceling orders to build ships

“We have negotiated with our shipyards [postpone] $288 million of pre-delivery and delivery installments from 2015 into 2016. Weighted average payments have been delayed by 4.8 months. We have also shifted our newbuilding vessel delivery schedule by 78 months in aggregate for an average of 3.4 months per vessel. As part of our discussions, we have managed to cancel a newbuilding vessel with no penalty to the Company, a saving of $11.6 million in equity CapEx. This overall arrangement is a result of the close relationships we have with our shipyards which enabled us to agree a mutually beneficial scheduling of newbuilding vessel deliveries and installment payments at no extra cost to the Company.”

Working with banks to position for strength if there is no market recovery

“We have been proactively working with our banks in order to be in a position of strength if there is no market recovery during 2015 and 2016.”

We manage our vessels in house unlike others

“Unlike many of our competitors we manage our vessels in house which provides us with a distinct advantage in terms of quality and cost. During the first quarter of 2015 we’ve continue to see the positive effect of our economies of scale in practice as the number of in water vessels increased to 68 as of March 31, 2015.”

We are not in breach of any covenants

“Let me underline that we are not in breach of any corporate loan covenants. We are being proactive, should the market remain as challenging in the next 18 months as it has been year-to-date in 2015. ”

Worst market in the history of dry bulk

“During the first half of 2015 we experienced what can be characterized as the worst market in the recent history of dry bulk. The weakness was apparent on all the vessel sub-categories with major Baltic indices recording historical lows.”

Unprecedented demand shrink in a period of oversupply. The most recent shock could be a blessing in disguise though

“The low straight environment during Q1 is the result of an unprecedented negative demand growth during a period that the market had already been dealing with over supplier. Vessel demand became even more challenging as the continuing fall of commodity prices affected by activity and lead destocking of all major dry bulk commodities with a significant negative effect on seaborne traded volumes. This recent market shock could prove to be a blessing in disguise for the dry bulk market as it has forced owners to take action.”

Vessels are being demolished and the fundamental requirements for a recovery are slowly being built

“During the first months of 2015 we have experienced record high levels of demolition and significant delays in scheduled deliveries. Furthermore orders have been running at record low level since October ‘14. In fact also after we adjust for conversions and cancellations we can say with confidence that we have practically experienced negative contracting of vessels. The above adjustments have put a ceiling for medium term fit growth and as a consequence the fundamental requirements for a sustainable recovery are slowly being built.”

Almost 3x as many tons have been demolished in the first 5 months of the year compared to 2014

“During the first five months of 2015, we have identified more than 20 million deadweights that has already been scraped and/or committed for demolition. This compares with 16.2 million deadweight demolished throughout 2014 and 7 million deadweight demolished during the first five months of 2014.”

New orders are only 2m

“This unexpectedly strong supply response has led the current Capesize fleet to stand at lower levels than October 2014. Reported new dry bulk orders for 2015 year-to-date currently stand at approximately 2 million deadweight.”

We believe that a significant share of the order book will not be delivered

“We also believe that the significant share of the existing order book which currently stands at 18.5% of the fleet will never be delivered.”

China has been depleting mineral stockpiles

“dry bulk trade received additional negative pressure from higher consumption of stocks. For example, China iron ore stocks at ports are currently down 30% year-over-year while thermal coal stocks at major power plants have decreased 4% during the last seven months.”

We believe that depletion of stocks will inevitably lead to higher import demand

“We believe that China’s depletion of stocks and domestic production cutbacks will inevitably lead to higher import requirements in the near future and we view 2015 to be a transition year for trade growth.”

Core shareholders Oaktree, Monarch and Angelo Gordon

“Our core set of institutional shareholders Oaktree, Monarch, Angelo Gordon as well as my family and associates all invested in the company in 2015. We believe in the value of the platform and the prospects of Star Bulk. As of June 24, our company had the cash balance of $335.2 million to extent the current low freight trade environment. We are confident that when the recovery comes, our company will be in a position to take advantage of the improved rate environment with its modern fleet and secured profits for its shareholders.”

It’s possible that things could get better in the second half of the year and if they do then scrapping will probably slow down unfortunately

“I agree with you if the market goes up in the next couple of months it has already started improving actually I was looking at our income figures this month they are 16% better than it has been up to now so it has been improving and we are actually in July which usually is not a good month and August is not a good month higher there so if we’re 16% up in July it’s possible that we might see a better market during the second half of this year. Unfortunately this will probably have an effect on scrapping so it is possible that scrapping will slow down and if that happens we’ll probably see again a slow beginning of next year.”

Starbulk Carriers 4Q14 Earnings Call Notes

16m in EBITDA in 4Q

“Against a backdrop of weakening market conditions in the fourth quarter of 2014, the company recorded an adjusted net loss of $5.5 million and adjusted EBITDA of $16.6 million on net revenues of $45.6 million”

66 ship fleet

“Our fleet currently consists of 66 vessels on the water. We have taken delivery of 33 out of the total 34 vessels we acquired from Excel Maritime and expect to have the last vessels delivered to us by the end of this month.”

1Q is usually the seasonal high point for vessel supply

“The first quarter is the seasonally high-point of the year in terms of vessel supply due to high January vessel deliveries and the low-point in terms of demand or cargo availability as a result of poor weather conditions in the Northern Hemisphere. The Chinese New Year and maintenance taking place in major port and steel mills.

The first quarter of 2015 has become even more challenging in terms of supply and demand fundamentals as the continuing fall of commodity prices affected buying activity.”

Ship owners have been proactive in scrapping

“Ship owners have been very proactive when responding to negative demand developments. This year we are experiencing an encouraging strong response that has come in the form of vessel scrapping, converting, canceling and curtailing of the order. During the first two and a half months of 2015, we have identified almost 10 million deadweight that has already been scrapped and/or committed for demolition.”

We don’t think collapsing sentiment should be extrapolated

“During 2014, a number of medium term negative dry bulk fundamental developments took place such as Indonesian bauxite and nickel ore export ban; China’s coal import regulations and strong hydropower contribution to energy generation; reduced grain congestion in Brazil; and iron ore congestion in China; acceleration of iron ore imports from Australia displacing long haul iron ore from Brazil and reducing ton miles.

The combination of all these factors lead to a previously unanticipated freight rate correction across all vessel sizes that began in early December and painted a negative picture for the short-term and a collapsing sentiment which in our opinion should not be extrapolated.”

Raised capital

“we proactively raise $245 million of equity in January 2015 to fully fund the equity portion of our newbuilding program. Through this transaction we were also able to strength our balance sheet as we raise more than $100 million of funds in addition to our CapEx needs to support the company through in the least low point of the cycle.

Our current set of institutional shareholders Oaktree, Monarch, Angelo Gordon as well as my family and associates all invest into these equity raise as they all believe in the value of the platform and the prospect of Star Bulk.”

Seasonally strong ties between March and May and October to December

“usually there is two periods where the market is stronger, one is between mid-March and end of May and the other one is between mid-October and mid-December. This part of the year usually the market gets stronger because people are back from vacation and there is also the grain trade that increases. And therefore, I don’t think we are coasting down the bottom. I think we might see a more meaningful upturn. But, I think it’s going to be cyclical potentially this summer will be a bit challenging as again.”

There’s been extremely light ordering

“I think there is a realization that to be able to get there, we need to act and looking at 600,000 deadweight ordering for the first three months of this year is amazing, I have not seen this since 1990 happen.”

History of the 80s cycle

“Okay, similarities over supply, what happened in 1981-1982 was that there was a big congestion in Nigeria and that congestion actually was skipping 100s of vessels at their road for months. And that was misperceived as – and that might have went up a consequence and that was perceived as strong demand. It wasn’t strong demand. It was just a lot of congestion. And therefore, people ordered’

“think is that banks panicked. And they started selling vessels without regards to price. And that actually made prices of vessels go down – got down the drain. This however is never happened again after 1985. The banks always kept their cool and this is what’s happening now as well. So I think that this being frugal and looking forwards and doing things early enough. I mean we saw the problem in the first week of January and we raised $245 million. That was a good move and we did it first.”