Star Bulk Carriers is providing shareholders a quarterly dividend, making it the second bulker owner in two weeks to offer such a bonus after a several-year hiatus.
The Petros Pappas-led owner Wednesday declared a $0.05 stakeholder perk for the third quarter, marking the first such dividend since putting up $0.15 in September 2012.
The New York-listed company also implemented a future dividend policy in which it plans to give a quarterly dividend if it has a minimum cash balance after subtracting a certain minimum cash balance per ship.
Star Bulk has set up a quarterly minimum cash balance per vessel schedule that starts at $1m per ship at the end of this year and goes up to $2.1m by the third quarter of 2021.
"We are also establishing a transparent dividend policy, under which the company will distribute dividends once our cash balance has reached set thresholds," chief executive Petros Pappas said in a statement.
"We believe the policy safeguards our strong balance sheet, whilst creating value by returning cash to our shareholders.”
Star Bulk a year ago said it could start paying dividends at the beginning of this year, having repaid deferred debt from its September 2016 restructuring of finance agreements.
New York-listed Genco Shipping & Trading, an owner of 56 bulkers led by John Wobensmith, two weeks ago announced its first dividend in several years by providing a $0.175 regular bonus and a $0.325 special dividend.
The New York-based company said it plans to offer that $0.175 regular dividend every quarter.
Company misses Wall Street forecast
Star Bulk's third-quarter earnings fell short of analyst consensus despite profit falling from the same period a year ago.
The owner of 118 ships posted a $5.82m profit versus $26.1m in earnings for the same three months in 2018.
It reported $17.3m in adjusted profit compared to $30.6m in adjusted earnings.
These results allowed for $0.18 adjusted earnings per share (EPS) that missed Wall Street's estimate by $0.03 and fell short of last year's same-time EPS by $0.17.
"We expect shares to trade flat to down tomorrow as the miss is mitigated by the dividend announcement," Stifel analyst Ben Nolan wrote in a client note.
Revenue came in at $248m, which was up from $188m but offset by higher expenses. Voyage costs more than doubled to $67.6m while drydocking expenses for scrubber retrofits in preparation for IMO 2020 more than tripled to $8.16m.
But Deutsche Bank (DB) analyst Amit Mehrotra said the results were a bit better than expected, with EBITDA of $60.5m ahead of its $59m forecast.
The dividend is consistent with what it previewed last month following a meeting Star Bulk management.
DB said then that “surplus cash return to shareholders appears to be the first step in SBLK management’s broader vision for the company- ie. sustainable and noteworthy dividends should allow for shares to continue moving higher relative to net asset value, ultimately allowing SBLK to earn a perpetual capital base to deleverage”.
"We interpret today’s announcement as a big first step in what we view to be a clear and effective strategy to drive significant upside in SBLK shares over time," it added on Wednesday.
"We continued making significant progress in executing our scrubber retrofit program, having installed 88 towers, 50 of which are certified as of today," chief executive Petros Pappas said in a statement.
His company expects to finish the certification process for most of its ships by the end of this year, he said.
