company presentation - scorpio bulkers · company presentation september 2017. 2 ... with us, the...
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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 $1.5 million and depends on the type and size of vessel
• Retrofits on older, existing ships, can be more challenging and expensive as they were designed
without the space in the engine room to fit BWTS (see how large these BWTS are)
• Will be substantial ‘push factor’ encouraging scrapping of older vessels
52 out of 52 of SALT’s vessels are fitted with BWTS
BWTS Filtering Unit
14
Fleet Age Profile & Scrapping
Source: Clarksons Research Services, September 2017
Fleet Scrapping Scrapping Avg Age
Fleet Age Profile
(Mill
ion D
WT
)
20
22
24
26
28
30
32
2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
Handymax Panamax
4.6
8.26.1
4.2
0.4 1.0 1.80.5
5.6
10.6
6.6
23.3
33.4
23.2
16.4
30.729.3
10.5
0
5
10
15
20
25
30
35
40
Scrap Price ($/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
Source: Clarksons Research Services, September 2017
$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*
Capesize Panamax Handymax Handysize
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)
Capesize Panamax Handymax Handysize
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.
– 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
$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
Source: Clarksons Research Services, September 2017
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