Star Bulk Carriers Corp. (SBLK) Earnings

Management highlights

- Overall Financial Performance & Capital Returns * Q1 2026 delivered solid profitability, with net income of $58.5 million, adjusted net income of $63 million ($0.52 adjusted EPS), and adjusted EBITDA of $114.3 million * Updated dividend policy to distribute 100% of free cash flow, subject to maintaining a minimum cash balance of $210 thousand per vessel; a $0.50 per share dividend was declared for the quarter * Repurchased 1.9 million shares for $37.9 million in Q1 2026; since 2021, the company has completed ~$3.1 billion in value-enhancing actions including $1.4 billion in dividends, 63% net debt reduction, and opportunistic fleet expansion * The balance sheet remains a core strategic advantage: $432 million in cash, $874 million in outstanding debt, €110 million in undrawn revolver capacity, and 29 debt-free vessels valued at ~$700 million, providing strong financial flexibility and downside protection - Operational Performance & Fleet Management * Sustained industry-leading cost efficiency: daily OpEx of $5.04 thousand per vessel, net cash G&A of $1.38 thousand per vessel; combined daily OpEx and G&A of $6.42 thousand per vessel per day, for a daily cash margin of $12.1 thousand before debt service and CapEx * All 8 new generation high-spec Kamsarmax newbuildings are on track for delivery in 2026, with $195 million in remaining CapEx and nearly all funding secured on competitive terms; first two deliveries are scheduled for May 2026 * Sold two older non-core vessels in Q1 2026 for net proceeds of $46.4 million; 49 vessels have been sold since 2023, with most proceeds reinvested in accretive share buybacks; the strategy reduces average fleet age and improves overall efficiency * Completed 61 ballast water treatment system installations, with additional efficiency upgrades (energy saving devices, low-friction hull paint, hull cleaning robots, telemetry retrofits) scheduled for 2026; upgrades deliver measured fuel efficiency improvements of 7% to 15% * Full delivered fleet will total 141 vessels with an average age of 12.2 years, making it one of the youngest, largest fleets among listed Western dry bulk peers - ESG, Regulatory & Digital Update * IMO has not reached consensus on a net zero emissions framework, with further intercessional work scheduled ahead of a November 2026 decision; Star Bulk remains actively engaged in industry efforts to develop practical, global GHG reduction rules * Star Bulk joined the new advisory council of the Poseidon Principles Association to support dialogue on implementation of the principles * Expanded digital and AI capabilities across operations, and completed an external cybersecurity risk assessment for AI tools; new responsible AI policies are in development and deployed AI tools will be included in upcoming penetration testing - Industry Fundamentals * Dry bulk fleet growth remains controlled: net fleet growth of 1.3% YoY, order book at just 13.2% of current fleet, limited shipyard availability through late 2028; approximately 50% of the global fleet will be over 15 years old by end-2027 * 2026 dry bulk trade is projected to grow 1.3% by ton and 2.5% by ton-mile; Q1 2026 total volumes rose 3.5% YoY, with faster ton-mile growth driven by longer trade routes

Guidance

- Management is bullish on dry bulk market performance for the second half of 2026 and all of 2027, expecting the usual seasonal strength in H2 to hold this year, with underlying demand growth supporting high rates - Projected 2026 commodity-specific trade growth: iron ore +1.1% tons / +1.6% ton-miles; grain +3.7% tons / +6.8% ton-miles; minor bulk +2.4% tons / +3.1% ton-miles; coal projected to contract -1.6% tons / -0.5% ton-miles, though management expects this forecast to be revised upward due to stronger-than-expected demand - At the current 12-month fleet-wide TCE of ~$20.5 thousand per day, the company expects to generate ~$3.4 per share of free cash flow, for a 13% implied cash flow yield - A $1.5 thousand fleet-wide increase in TCE would increase annual EBITDA by $71 million, translating to $0.64 per share in incremental dividends under the updated distribution policy

Segment performance

Overall company revenue for Q1 2026 was $212.5 million, with total adjusted EBITDA of $113 million. - Ultramax/Supramax: This is the largest revenue segment, generating $80.7 million in revenue, contributing 38% of total company revenue, and delivering $39.7 million in adjusted EBITDA. - Newcastlemax/Capesize: This segment generated 33% of total company revenue and accounted for 30% of adjusted EBITDA; it holds 41% of the company's fixed market value and benefited from strong market positioning. - Post Panamax and Kamsarmax: This segment provided stable earnings, contributing 29% of total company revenue and 28% of adjusted EBITDA.

Risks & headwinds

- Heightened geopolitical tension in the Middle East poses dual risks: prolonged conflict could push oil and energy prices significantly higher, damaging global economic growth, reducing commodity demand, and hurting trade; if conflict resolves, some of the short-term supply tightness benefits (slower vessel speeds, reduced available tonnage, increased ton-mile demand) will dissipate - China's domestic consumption remains weak, and iron ore stockpiles are at record levels, creating downside risk for Chinese iron ore imports in H2 2026 - Strong El Nino creates mixed weather risks: it can increase short-term energy demand for coal, but may also cause droughts that disrupt grain production and trade, or lead to a warmer winter that reduces winter energy demand - The global newbuilding order book could grow and create future oversupply if new ordering activity remains elevated - Newbuilding prices are currently very high, making new orders uneconomical until prices decline

Analyst Q&A

• Q: The stock trades at a discount to NAV, and the company has used asset sales in the past to close this gap. Are vessel sales still planned, or will the company hold maximum exposure to the strengthening market? /

  A: Management still plans to sell smaller, older, less fuel-efficient vessels. Current market conditions are favorable for selling these assets. Proceeds from sales can be used for share repurchases or held for future opportunities, and the company will continue distributing 100% of operating free cash flow to shareholders under the updated policy.

• Q: What is management’s outlook for H2 2026 dry bulk rates, given mixed signals of strong early-year rates but slowing Chinese April activity, and will China policy support boost demand? /

  A: Management remains bullish for H2 2026 and the next 18 months. Geopolitical tension in the Persian Gulf has supported the market by raising oil prices, slowing vessel speeds, reducing available supply, increasing ton-mile demand from Red Sea disruptions, and boosting coal demand. Q1 ton-mile demand grew 5.1%, and China’s economy has performed better than expected so far with no imminent slowdown expected.

• Q: How has heightened geopolitical conflict changed management’s 2026 market optimism, and what are the downside risks if conflicts persist? /

  A: Management’s overall optimistic outlook for 2026 and 2027 remains unchanged. Current Persian Gulf tension has been supportive for the market, and if conflicts end, post-conflict reconstruction would create additional dry bulk demand. A key downside risk is that further large increases in oil prices would damage the global economy, including emerging markets, raise commodity costs broadly, and reduce overall commodity demand and trade.

• Q: What is the company’s appetite for new additional newbuilding orders given current high shipyard prices? /

  A: Newbuilding prices have risen sharply, and current prices require very long periods of high rates to deliver acceptable IRRs. The company will not place additional newbuilding orders until prices fall. The 8 current Kamsarmax orders were placed to reduce the segment’s average fleet age, aligned with the strategy of selling older inefficient vessels to improve overall fleet efficiency.