company presentation - scorpio bulkers · company presentation september 2017. 2 ... with us, the...

Company PresentationSeptember 2017

2

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.

Safe Harbor Statement

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

• Restriction on payments of dividends lifted

• No unattractive legacy terms and conditions on financing

✓Compliant with future regulatory

requirements

• 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

4

Company Overview

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:

• 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

Key Facts Fleet Profile

Scorpio Average Age vs. Worldwide Fleet

34

18

1

1

0

5

10

15

20

25

30

35

40

Ultramax Kamsarmax

Owned TC/BB Chartered-In

1.7 1.5

8.08.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Handymax Panamax

Scorpio Bulkers Active Fleet

5

Market Cap ($m)

Trading Liquidity ($m/day)Stock and Bond Price Performance

Company Profile

Current Shareholders

Source: Fearnley Securities September 25th, 2017

# 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%

$0

$2

$4

$6

$8

Star Bulk ScorpioBulkers

GoldenOcean

Diana Eagle Bulk NaviosPartners

Genco

$0

$200

$400

$600

$800

$1,000

GoldenOcean

Star Bulk ScorpioBulkers

Genco Eagle Bulk Diana NaviosPartners

$19

$20

$21

$22

$23

$24

$25

$26

$2

$3

$4

$5

$6

$7

$8

$9

$10

Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17

Share Price (LHS) Senior Notes (RHS)

6

$3,462

$5,335

$7,083$7,238

$8,230$8,360

$9,005

$3,331

$5,263

$6,349

$7,401

$9,164 $9,273

$8,749

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17*

Ultramax Kamsarmax

Quarterly Time Charter Rates

• Six sequential increases in reported TCE earnings for Ultramax and Kamsarmax vessels supports

continued market recovery

* Projections based on 56% and 50% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of July 24th 2017

February 10, 2016 BDI hits 40 year low

7

Financial Snapshot

Operating Cash Flow EBIT

Revenue EBITDA

Figures in $USD millions.

$10.2

$17.4

$23.9

$26.8

$34.7

$37.7

$0

$5

$10

$15

$20

$25

$30

$35

$40

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

-$28.8

-$19.2

-$16.2-$14.1

-$8.5

-$4.7

-$35

-$30

-$25

-$20

-$15

-$10

-$5

$0

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

-$17.0

-$5.8

-$1.3

$0.9

$7.0

$10.9

-$30

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

$15

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

-$27.5

-$18.1

-$4.5-$2.1 -$1.7

$2.5

-$35

-$30

-$25

-$20

-$15

-$10

-$5

$0

$5

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

8

Financial Performance

P&L FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

Revenues 78.4 10.2 17.4 23.9 26.8 34.7 37.7

EBITDA (23.1) (17.0) (5.8) (1.3) 0.9 7.0 10.9

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 1,547.2 1,466.9 1,522.2 1,553.1 1,547.2 1,563.1 1,532.2

PP&E 1,414.1 1,183.3 1,244.8 1,318.3 1,414.1 1,363.5 1,352.5

Cash 101.7 230.2 241.7 200.9 101.7 126.6 149.3

Equity 956.6 941.5 989.0 972.7 956.6 926.0 916.2

Debt 579.5 510.0 523.4 570.8 579.5 628.2 606.3

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 189.0 34.8 97.8 47.0 9.3 49.0 (23.1)

Figures in $USD millions.

9

Market Update

10

Dry Bulk Seaborne Demand

Source: Clarksons Research Services, September 2017

2009-2017

Iron Ore Coal Grains Minor Bulks Total Dry Bulk

CAGR 6.5% 4.9% 6.0% 3.9% 5.0%

Mill

ion

To

nn

es

3,429

3,844

4,080

4,342

4,588

4,829 4,833 4,895 5,074

-

1,000

2,000

3,000

4,000

5,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)

Iron Ore Coal Grain Minor Bulk

11

Metals & Minerals, 27.4%

Coal, 19.2%

Steel Products, 13.7%

Grain, 13.7%

Forest Products, 12.3%

Iron Ore, 8.2%

Argribulks, 4.1% Others, 1.4%

Cargo Carriage - 1H 2017

Kamsarmax Cargo BreakdownUltramax Cargo Breakdown

Coal, 55.8%

Grain, 18.2%

Steel Products, 13.0%

Metals & Minerals, 7.8%

Iron Ore, 5.2%

12

$0

$200

$400

$600

$800

$1,000

$1,200

Aug-13 Aug-14 Aug-15 Aug-16 Aug-17

Rotterdam Singapore Houston

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)

Source: Clarksons Research Services/Ocean Connect September, 2017

13

Ballast Water Treatment Regulations

BWTS Piping in Engine Room

• 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

52 out of 52 of SALT’s vessels are fitted with BWTS

BWTS Filtering Unit

14

Fleet Age Profile & Scrapping


Fleet Scrapping Scrapping Avg Age

Fleet Age Profile

(Mill

ion D

WT

)

20

22

24

26

28

30

32

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Handymax Panamax

4.6

8.26.1

4.2

0.4 1.0 1.80.5

5.6

10.6

6.6

23.3

33.4

23.2

16.4

30.729.3

10.5

0

5

10

15

20

25

30

35

40

Scrap Price ($/ldt)

32% 35% 37%30%

46%34%

38%

40%

12%

14%12%

9%

4%12% 7%

8%

6% 5% 6%12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Capesize Panamax Handymax Handysize

0-4 5-9 10-14 15-19 20+

230

410

200

250

300

350

400

450

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17

15

Time Charter Rates

1 yr TC Rates (Last 12 months)Historical 1 Yr TC Rates


$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Kamsarmax Ultramax

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

Kamsarmax Ultramax BDI

Historical Data 2009-2017

Class Week of Sep. 22 Avg Max Min YTD YoY Since Feb-16

Ultramax $11,000 $11,813 $24,375 $4,875 32.2% 44.9% 105.1%

Kamsarmax $13,500 $12,875 $29,625 $5,363 36.2% 82.5% 123.0%

BDI 1,433 1,408 3,941 307 25.9% 61.4% 272.1%

16

25.3 25.2

44.6

81.3

100.3 100.4

63.0

48.249.3

47.2 46.5

27.6

22.5

-

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018* 2019*


Favorable Supply Dynamics

(1)Does not assume slippage or scrapping (2) Assumes newbuildings deliver as scheduled, Source: Clarksons Research Services, September 2017

Fleet Development Before Scrapping (1)

(Mill

ion D

WT

)

Newbuilding Deliveries Per Year (2)

323.1 327.6 341.8 354.0 355.2

202.1 205.3210.6

215.3 216.4

193.7197.9

201.3202.8 203.2

95.897.4

100.3101.2 101.4

814.7828.2

853.9873.3 876.2

-

100

200

300

400

500

600

700

800

900

1,000

Current 2017 2018 2019 2020

DW

T (M

illio

ns)


17

$18

$20

$22

$24

$26

$28

$30

Ultramax NB Kamsarmax NB

Ultramax Resale Kamsarmax Resale

Asset Values

Figures in million US$, Source: Clarksons Research Services, September 2017

Historical Asset Values

Newbuild & Resale Asset Values

Five Year Old Asset Values

• In the last 12 months asset values have:

– Increased 23.3% and 16.3% for ultramax and

kamsarmax resales, respectively.


panamax 5 year old vessels, respectively.


kamsarmax newbuildings, respectively.

• Resale values now exceed newbuilding values

supporting expectations for continued market

recovery

$0

$10

$20

$30

$40

$50

$60

Ultramax NB Kamsarmax NB Panamax NB

$10

$12

$14

$16

$18

$20

$22

Ultramax 5 yr Kamsarmax 5 yr Panamax 5 yr

18

Low Orderbook & Limited Ordering


Lowest Orderbook as % of Fleet Since 2002 Newbuilding Orders

• 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

7.62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

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

-17

12.215.3

9.6

22.4

15.1

8.9

22.3

36.633.1

29.5

76.4

159.3

101.5

37.0

102.3

41.7

24.4

103.3

63.8

24.2

14.012.2

0

20

40

60

80

100

120

140

160

180

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

YT

D

(Mill

ion D

WT

)

19

Ton Mile Demand Continues to Grow

Total Dry Bulk

Grain Iron Ore

Coal

Figures in Ton Miles (Billions), Source: Clarksons Research Services, September 2017

18,618

21,069 22,374

23,780 24,945

26,371 26,613 27,212 28,241

-

5,000

10,000

15,000

20,000

25,000

30,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)

2,221

2,460 2,404 2,594

2,794 3,002

3,304 3,403

3,642

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)

3,446

4,052 4,322

4,844 5,048

5,240 4,977 4,965

5,188

-

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)

5,365

5,852

6,336 6,718

6,931

7,536 7,579 7,854

8,230

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)

20

Appendix

21

Coal/iron ore

Iron ore/coal

Iron ore/coal

Handysize 10,000 – 40,000

40,000 – 60,000

60,000 – 80,000

Steel/fertilizers/forest/grains/soybeans/

alumina/coal/other minor bulks

Steel/fertilizers/forest/grains/soybeans/

alumina/coal/other minor bulks

Coal/grains/soybeans/bauxite

Vessel type DWT Cargo carried

Handymax/Supramax

Panamax/Kamsarmax

Post-Panamax

Capesize

VLOC

80,000 – 110,000

110,000 – 200,000

Over 200,000

Overview of Dry Bulk Segments

22

• 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.

• 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.

Overview of Dry Bulk Commodity Cargoes

Breakdown of Drybulk Cargoes

Breakdown of Minor Bulks

Breakdown of Major Bulks

Total Sugar3% Total Agribulks

9%

Fertiliser8%

Metals and Minerals

40%

Manufactures40%

Source: Clarksons Shipping Intelligence, September 2017

Iron Ore, 29%

Coal, 23%Grains,

10%

Minor Bulks, 37%

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 1 2015 Chengxi Ultramax

4 SBI Leo 2015 Dacks Ultramax 30 SBI TBN 2 2015 Chengxi Ultramax

5 SBI Echo 2015 Imabari Ultramax 31 SBI TBN 3 2015 Chengxi Ultramax

6 SBI Lyra 2015 Dacks Ultramax 32 SBI TBN 4 2016 Chengxi Ultramax

7 SBI Subaru 2015 Dacks Ultramax 33 SBI TBN 5 2017 Chengxi Ultramax

8 SBI Tango 2015 Imabari Ultramax 34 SBI TBN 6 2017 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

company presentation - scorpio bulkers · company presentation september 2017. 2 ... with us, the...

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