Company Presentation September 2017

Transcription

1 Company Presentation September 2017

2 Safe Harbor Statement This document may contain forward-looking statements that reflects management s expectations for the future. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. 2

3 Investment Highlights Youngest ECO dry bulk fleet Fleet has an average of 1.66 years Industry leading balance sheet Strong cash position, $149.3 m as of Q2-17 Low financial leverage First dry bulk company to reinstate full amortization Compliant with future regulatory requirements Restriction on payments of dividends lifted No unattractive legacy terms and conditions on financing 52 out of 52 vessels fitted with ballast water treatment systems Fuel efficient vessels suitable for new low sulfur fuel regulation Favorable supply dynamics Lowest orderbook as a % of fleet since 2002 Limited newbuilding orders & continued scrapping of older tonnage Positive demand outlook Dry bulk seaborne demand expected to grow 3.4% in 2017 Positive rate environment Six sequential quarters increase in reported TCE earnings 3

4 Company Overview Key Facts Fleet Profile Scorpio Bulkers Inc. ( Scorpio or the Company ) owns and operates dry bulk vessels Founded in March 2013 by the senior management team of the Scorpio Group Company currently owns 52 dry bulk Eco vessels and time charters in two vessels NYSE-compliant governance and transparency, listed under the ticker SALT Headquartered in Monaco, incorporated in the Marshall Islands and is not subject to US income tax Scorpio has access to Scorpio Group s customer and supplier relationships as well as technical and commercial management Scorpio s strategy is to: Owned TC/BB Chartered-In Ultramax Kamsarmax Scorpio Average Age vs. Worldwide Fleet Scorpio Bulkers Active Fleet Own and operate the latest generation of fuel efficient dry bulk vessels built at quality shipyards Operate vessels in the spot market through the Scorpio Ultramax and Scorpio Kamsarmax pools Maintain a strong balance sheet in the current difficult operating environment Handymax Panamax 4

5 Company Profile Current Shareholders Market Cap ($m) # Holder Ownership 1 Scorpio Services Holding Limited 17.9% 2 Grm Investments Ltd 17.0% 3 Evermore Global Advisors, LLC 8.4% 4 Raging Capital Management, LLC 5.5% 5 BlackRock Fund Advisors 3.2% 6 Q Investments 2.1% 7 Anchorage Capital Group, LLC 1.7% 8 Impala Asset Management, LLC 1.7% 9 Warlander Asset Management, LP 1.6% 10 Royce & Associates, LP 1.3% $1,000 $800 $600 $400 $200 $0 Golden Ocean Star Bulk Scorpio Bulkers Genco Eagle Bulk Diana Navios Partners Stock and Bond Price Performance Trading Liquidity ($m/day) Share Price (LHS) Senior Notes (RHS) $8 $10 $26 $9 $8 $25 $24 $6 $7 $6 $5 $23 $22 $4 $4 $21 $2 $3 $20 $2 $19 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 $0 Star Bulk Scorpio Bulkers Golden Ocean Diana Eagle Bulk Navios Partners Genco Source: Fearnley Securities September 25th,

6 Quarterly Time Charter Rates Six sequential increases in reported TCE earnings for Ultramax and Kamsarmax vessels supports continued market recovery $10,000 $9,000 $8,000 $7,000 February 10, 2016 BDI hits 40 year low $7,083 $6,349 $7,401 $7,238 $8,230 $9,164 $8,360 $9,273 $9,005 $8,749 $6,000 $5,335 $5,263 $5,000 $4,000 $3,462 $3,331 $3,000 $2,000 $1,000 $0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17* Ultramax Kamsarmax * Projections based on 56% and 50% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of July 24 th

7 Financial Snapshot Revenue EBITDA $40 $35 $34.7 $37.7 $15 $10 $7.0 $10.9 $30 $25 $20 $15 $10 $5 $10.2 $17.4 $23.9 $26.8 $5 $0 -$5 -$10 -$15 -$20 -$25 -$17.0 -$5.8 -$1.3 $0.9 $0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 -$30 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Operating Cash Flow EBIT $5 $2.5 $0 $0 -$5 -$10 -$15 -$20 -$25 -$18.1 -$4.5 -$2.1 -$1.7 -$5 -$10 -$15 -$20 -$25 -$19.2 -$16.2 -$14.1 -$8.5 -$4.7 -$30 -$27.5 -$30 -$28.8 -$35 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 -$35 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Figures in $USD millions. 7

8 Financial Performance P&L FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Revenues EBITDA (23.1) (17.0) (5.8) (1.3) EBIT (78.3) (28.8) (19.2) (16.2) (14.1) (8.5) (4.7) Net Income (99.9) (33.4) (24.7) (21.3) (20.6) (16.4) (13.4) Balance Sheet FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Total Assets 1, , , , , , ,532.2 PP&E 1, , , , , , ,352.5 Cash Equity Debt Cash Flow FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Cash from operations (52.2) (27.5) (18.1) (4.5) (2.1) (1.7) 2.5 Cash from investing (235.4) 22.6 (23.0) (128.5) (106.4) (22.4) (1.5) Cash from financing (23.1) Figures in $USD millions. 8

9 Market Update 9

10 Million Tonnes Dry Bulk Seaborne Demand Iron Ore Coal Grains Minor Bulks Total Dry Bulk CAGR 6.5% 4.9% 6.0% 3.9% 5.0% Iron Ore Coal Grain Minor Bulk 5,000 4,000 3,844 4,080 4,342 4,588 4,829 4,833 4,895 5,074 3,429 3,000 2,000 1,000 - Source: Clarksons Research Services, September (f) 10

11 Cargo Carriage - 1H 2017 Ultramax Cargo Breakdown Kamsarmax Cargo Breakdown Argribulks, 4.1% Others, 1.4% Iron Ore, 5.2% Iron Ore, 8.2% Metals & Minerals, 7.8% Metals & Minerals, 27.4% Forest Products, 12.3% Steel Products, 13.0% Coal, 55.8% Grain, 13.7% Coal, 19.2% Grain, 18.2% Steel Products, 13.7% 11

12 New Sulfur Emission Regulations from 2020 Scrubbers can cost $3-$10 million to install depending on the size of the ship (1) Modern fuel efficient ships have a competitive advantage over older tonnage through lower fuel consumption ECO Ships make a difference. Increase in scrapping expected as the cost to equip older tonnage with scrubbers can exceed the scrap value of the vessel and Historical FO & MGO Prices ($/MT) (1) $1,200 $1,000 $800 $600 $400 $200 $0 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Rotterdam Singapore Houston Source: Clarksons Research Services/Ocean Connect September,

13 Ballast Water Treatment Regulations 52 out of 52 of SALT s vessels are fitted with BWTS BWTS are expected to cost $500,000 to $1.5 million and depends on the type and size of vessel Retrofits on older, existing ships, can be more challenging and expensive as they were designed without the space in the engine room to fit BWTS (see how large these BWTS are) Will be substantial push factor encouraging scrapping of older vessels BWTS Filtering Unit BWTS Piping in Engine Room 13

14 (Million DWT) Fleet Age Profile & Scrapping 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Fleet Age Profile % 5% 6% 4% 12% 7% 12% 12% 12% 8% 14% 9% 46% 38% 34% 40% 32% 35% 37% 30% Capesize Panamax Handymax Handysize Fleet Scrapping Scrap Price ($/ldt) Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Scrapping Avg Age Handymax Panamax Source: Clarksons Research Services, September YTD 14

15 Time Charter Rates Historical Data Class Week of Sep. 22 Avg Max Min YTD YoY Since Feb-16 Ultramax $11,000 $11,813 $24,375 $4, % 44.9% 105.1% Kamsarmax $13,500 $12,875 $29,625 $5, % 82.5% 123.0% BDI 1,433 1,408 3, % 61.4% 272.1% Historical 1 Yr TC Rates 1 yr TC Rates (Last 12 months) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 1,400 1,300 1,200 1,100 1, Kamsarmax Ultramax Kamsarmax Ultramax BDI Source: Clarksons Research Services, September

16 DWT (Millions) (Million DWT) Favorable Supply Dynamics Fleet Development Before Scrapping (1) Newbuilding Deliveries Per Year (2) 120 1,000 Capesize Panamax Handymax Handysize Capesize Panamax Handymax Handysize * 2018* 2019* Current (1)Does not assume slippage or scrapping (2) Assumes newbuildings deliver as scheduled, Source: Clarksons Research Services, September

17 Asset Values In the last 12 months asset values have: Newbuild & Resale Asset Values Increased 23.3% and 16.3% for ultramax and kamsarmax resales, respectively. $30 $28 Increased 22.6% and 32.1% for ultramax and panamax 5 year old vessels, respectively. Increased 3.4% and 1.0% for ultramax and kamsarmax newbuildings, respectively. Resale values now exceed newbuilding values supporting expectations for continued market recovery $26 $24 $22 $20 $18 Ultramax NB Kamsarmax NB Ultramax Resale Kamsarmax Resale Historical Asset Values Five Year Old Asset Values $60 $50 $40 $30 $20 $10 $0 $22 $20 $18 $16 $14 $12 $10 Ultramax NB Kamsarmax NB Panamax NB Figures in million US$, Source: Clarksons Research Services, September 2017 Ultramax 5 yr Kamsarmax 5 yr Panamax 5 yr 17

18 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug YTD (Million DWT) Low Orderbook & Limited Ordering Orderbook as % of the fleet is 7.62%, the lowest since April 2002 Newbuilding orders through August is 12.2m DWT, 74% below the 20 year avg of 47.0m DWT Lowest Orderbook as % of Fleet Since 2002 Newbuilding Orders 90% % % % % % % % 7.62% % % 0 Source: Clarksons Research Services, September

19 Ton Mile Demand Continues to Grow Total Dry Bulk Coal 30,000 25,000 20,000 18,618 21,069 22,374 23,780 24,945 26,371 26,613 27,212 28,241 6,000 5,000 4,000 3,446 4,052 4,322 4,844 5,048 5,240 4,977 4,965 5,188 15,000 3,000 10,000 2,000 5,000 1, (f) (f) Grain Iron Ore 4,000 3,500 3,000 2,500 2,000 1,500 2,221 2,460 2,404 2,594 2,794 3,002 3,304 3,403 3,642 9,000 8,000 7,000 6,000 5,000 4,000 3,000 5,365 5,852 6,336 6,718 6,931 7,536 7,579 7,854 8,230 1,000 2, , (f) Figures in Ton Miles (Billions), Source: Clarksons Research Services, September (f) 19

20 Appendix 20

21 Overview of Dry Bulk Segments Vessel type DWT Cargo carried Handysize 10,000 40,000 Steel/fertilizers/forest/grains/soybeans/ alumina/coal/other minor bulks Handymax/Supramax 40,000 60,000 Steel/fertilizers/forest/grains/soybeans/ alumina/coal/other minor bulks Panamax/Kamsarmax 60,000 80,000 Coal/grains/soybeans/bauxite Post-Panamax 80, ,000 Coal/iron ore Capesize 110, ,000 Iron ore/coal VLOC Over 200,000 Iron ore/coal 21

22 Overview of Dry Bulk Commodity Cargoes Breakdown of Major Bulks Breakdown of Drybulk Cargoes Iron ore: primary ingredient in the production of steel, along with limestone & coking coal and is the largest single commodity shipped on dry bulk vessels. Minor Bulks, 37% Iron Ore, 29% Coal: seaborne coal trade is comprised of two different types of coal; steam coal (which is used for electricity generation and industrial uses), and coking coal (which is the key ingredient for steel making). Grains: consists primarily of wheat, coarse grains (such as corn, barley, oats, and rye) and soya bean/meal. Minor bulks: include several other dry bulk goods such as phosphate rock, fertilizers, bauxite, steel products, forest products, nickel, ore, sugar, salt, and others. Grains, 10% Breakdown of Minor Bulks Manufactures 40% Coal, 23% Total Sugar 3% Total Agribulks 9% Metals and Minerals 40% Fertiliser 8% Source: Clarksons Shipping Intelligence, September

23 Fleet List Owned Vessels # Name Year Yard Type # Name Year Yard Type 1 SBI Athena 2015 Chengxi Ultramax 27 SBI Samson 2017 Chengxi Ultramax 2 SBI Bravo 2015 Nacks Ultramax 28 SBI Phoenix 2017 Chengxi Ultramax 3 SBI Antares 2015 Nacks Ultramax 29 SBI TBN Chengxi Ultramax 4 SBI Leo 2015 Dacks Ultramax 30 SBI TBN Chengxi Ultramax 5 SBI Echo 2015 Imabari Ultramax 31 SBI TBN Chengxi Ultramax 6 SBI Lyra 2015 Dacks Ultramax 32 SBI TBN Chengxi Ultramax 7 SBI Subaru 2015 Dacks Ultramax 33 SBI TBN Chengxi Ultramax 8 SBI Tango 2015 Imabari Ultramax 34 SBI TBN Chengxi Ultramax 9 SBI Maia 2015 Nacks Ultramax 35 SBI Samba 2015 Imabari Kamsarmax 10 SBI Hydra 2015 Nacks Ultramax 36 SBI Rumba 2015 Imabari Kamsarmax 11 SBI Pegasus 2015 Chengxi Ultramax 37 SBI Capoeira 2015 Hudong Kamsarmax 12 SBI Ursa 2015 Dacks Ultramax 38 SBI Electra 2015 Yangzijiang Kamsarmax 13 SBI Thalia 2015 Chengxi Ultramax 39 SBI Carioca 2015 Hudong Kamsarmax 14 SBI Cronos 2015 Imabari Ultramax 40 SBI Conga 2015 Hudong Kamsarmax 15 SBI Orion 2015 Chengxi Ultramax 41 SBI Flamenco 2015 Hudong Kamsarmax 16 SBI Achilles 2016 Imabari Ultramax 42 SBI Bolero 2015 Hudong Kamsarmax 17 SBI Hercules 2016 Chengxi Ultramax 43 SBI Sousta 2016 Yangzijiang Kamsarmax 18 SBI Perseus 2016 Chengxi Ultramax 44 SBI Rock 2016 Yangzijiang Kamsarmax 19 SBI Hermes 2016 Imabari Ultramax 45 SBI Lambada 2016 Hudong Kamsarmax 20 SBI Zeus 2016 Mitsui Ultramax 46 SBI Reggae 2016 Hudong Kamsarmax 21 SBI Hera 2016 Mitsui Ultramax 47 SBI Zumba 2016 Hudong Kamsarmax 22 SBI Hyperion 2016 Nacks Ultramax 48 SBI Macarena 2016 Hudong Kamsarmax 23 SBI Tethys 2016 Nacks Ultramax 49 SBI Parapara 2017 Hudong Kamsarmax 24 SBI Phoebe 2016 Chengxi Ultramax 50 SBI Mazurka 2017 Hudong Kamsarmax 25 SBI Poseidon 2016 Mitsui Ultramax 51 SBI Swing 2017 Hudong Kamsarmax 26 SBI Apollo 2016 Mitsui Ultramax 52 SBI Jive 2017 Hudong Kamsarmax 23