noble conference presentation - scorpio bulkers...4 raging capital management 4.3% 5 blackrock fund...

Noble Conference PresentationJanuary 30, 2018

2

Company Overview

Scorpio Bulkers Inc. (“Scorpio” or the “Company”) owns

56(1) mid-size dry bulk ‘Eco’ vessels with an average age

of 2.0 years and time charters in one vessel

• Scorpio’s strategy is to:

✓ Capture rising freight rates by employing

vessels in the spot market through the Scorpio

Ultramax and Scorpio Kamsarmax pools

✓ Operate vessels efficiently and minimize costs

✓ Maintain a strong balance sheet through

conservative leverage

✓ Take advantage of market dislocation to

opportunistically grow fleet

• The Company is headquartered in Monaco,

incorporated in the Marshall Islands, exempt from

U.S. income tax, has NYSE-compliant governance

and transparency for foreign private issuers and is

listed under the ticker “SALT”

Key Facts Fleet Profile

Scorpio Average Age vs. Worldwide Fleet

2.11.8

8.28.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Handymax/Ultramax Panamax/Kamsarmax

Scorpio Bulkers Active Fleet

(1) Includes one kamsarmax newbuilding.

37

18

1

1

0

5

10

15

20

25

30

35

40

Ultramax Kamsarmax

Owned TC/BB Chartered-In Newbuilding

3

Market Cap ($m) (2)

Trading Liquidity ($m/day) (2)Stock Price Performance (3)

Company Profile

Current Shareholders (1)

(1) BD Corporate

(2) Fearnley Securities January 22nd, 2018

(3) Yahoo Finance

Shareholders Ownership

Top 10 59.1%

11-20 9.7%

21-30 3.9%

31+ 27.3%

Total 100.0%

# Holder Ownership

1 Scorpio Services Holding Limited 18.7%

2 Grm Investments 17.1%

3 Evermore Global Advisors 8.4%

4 Raging Capital Management 4.3%

5 BlackRock Fund Advisors 3.3%

6 Anchorage Capital Group 1.7%

7 Royce & Associates 1.5%

8 Warlander Asset Management 1.5%

9 Hourglass Capital 1.3%

10 Horseman Capital Management 1.3%

$4

$5

$6

$7

$8

$9

$10

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

GoldenOcean

Star Bulk ScorpioBulkers

Genco Diana EagleBulk

NaviosPartners

SongaBulk

$0

$2

$4

$6

Star Bulk ScorpioBulkers

Diana GoldenOcean

NaviosPartners

Eagle Bulk Genco SongaBulk

4

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%

5

$3,462

$5,335

$7,083 $7,238

$8,230 $8,360

$8,949

$10,495

$3,331

$5,263

$6,349

$7,401

$9,164 $9,273 $9,211

$11,180

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

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

Ultramax Kamsarmax

Quarterly Time Charter Rates

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

supports continued market recovery

February 10, 2016

BDI hits 40 year low

* Projections based on 53% and 52% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of October 20, 2017.

6

Significant Operating Leverage

• Only taking into consideration the Company’s 56 owned vessels, a $1,000/day change in rates equates to $20.4 million

in annualized cash flow or $0.27/share

• Applying the historical one year time charter rates from 2003 to 2017 the company would generate $316.5 million in

revenue or $4.23/share

• This average excludes TC rates from 2007/2008 where supramax and panamax vessels averaged $50,000/day

The one year time charter rate “TC rate” is the rate paid per day to contract a vessel out for one year, and the time charter equivalent rate (“TCE”) which is the earnings per day for a vessel operating in the spot

market.

Source: Clarksons Research Services

Historical One Year TC Rates ($/day): 2003-2017 Implied Revenue from Historical TC Rates

Company Owned Fleet Avg TC Rates Annualized Revenue

Class # of Vessels Days/Yr Total Days ($/day) (Millions $USD)

Ultramax 37 365 13,505 14,930 $202

Kamsarmax 19 365 6,935 16,561 $115

56 20,440 Total Revenue $316.5

Class Min Avg Max

Ultramax $6,495 $14,930 $29,448

Kamsarmax $6,740 $16,561 $34,323$134

$316

$636

$0

$100

$200

$300

$400

$500

$600

$700

Min Avg Max

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 $38.6

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

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

-$28.8

-$19.2

-$16.2-$14.1

-$8.5

-$4.7-$2.6

-$35

-$30

-$25

-$20

-$15

-$10

-$5

$0

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

-$17.0

-$5.8

-$1.3

$0.9

$7.0

$10.9$12.5

-$30

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

$15

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

-$27.5

-$18.1

-$4.5-$2.1 -$1.7

$2.5

$6.1

-$35

-$30

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

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

8

Financial Performance

Figures in $USD millions.

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

Revenues 78.4 10.2 17.4 23.9 26.8 34.7 37.7 38.6

EBITDA (23.1) (17.0) (5.8) (1.3) 0.9 7.0 10.9 12.5

EBIT (78.3) (28.8) (19.2) (16.2) (14.1) (8.5) (4.7) (2.6)

Net Loss (99.9) (33.4) (24.7) (21.3) (20.6) (16.4) (13.4) (10.7)

Balance Sheet FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

Total Assets 1,547.2 1,466.9 1,522.2 1,553.1 1,547.2 1,563.1 1,532.2 1,434.2

PP&E 1,414.1 1,183.3 1,244.8 1,318.3 1,414.1 1,363.5 1,352.5 1,340.3

Cash 101.7 230.2 241.7 200.9 101.7 126.6 149.3 62.4

Equity 956.6 941.5 989.0 972.7 956.6 926.0 916.2 908.5

Debt 579.5 510.0 523.4 570.8 579.5 628.2 606.3 529.6

Cash Flow FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

Cash from operations (52.2) (27.5) (18.1) (4.5) (2.1) (1.7) 2.5 6.1

Cash from investing (235.4) 22.6 (23.0) (128.5) (106.4) (22.4) (1.5) 21.1

Cash in financing 189.0 34.8 97.8 47.0 9.3 49.0 (23.1) (66.5)

9

Market Update

10

Industry Highlights

Asset Values Recover ✓Ultramax and Kamsarmax resale values have increased 14.6% and

16.3% yoy and 37.5% and 23.9% since January 2016, respectively.

TCE Rates Continue to

Improve ✓Seven sequential increases in reported TCE earnings for our Ultramax

and Kamsarmax vessels and are still below historical average

Favorable Supply/Demand

Dynamics ✓For the first time since 2014, dry bulk ton mile demand growth (5.3%)

outpaced fleet supply growth (3.0%)

Low Orderbook & Limited

Newbuild Orders ✓Orderbook as % of the fleet is 9.30% and NB orders in 2017 were 40%

below the 20 year avg

Regulatory requirements ✓SALT is fully compliant with upcoming regulatory requirements which

also are likely to increase scrapping

Positive Demand Outlook ✓ Dry bulk seaborne exports have increased at CAGR of 4.9% since 2009

11

Asset Values

Figures in million US$,

Source: Clarksons Research Services, January 2018

Historical Asset Values

Newbuild & Resale Asset Values

Five Year Old Asset Values

• In the last 12 months asset values have:

– Increased 14.6% 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

$18

$20

$22

$24

$26

$28

$30

Ja

n-1

6

Feb

-16

Mar-

16

Apr-

16

May-1

6

Ju

n-1

6

Ju

l-16

Aug

-16

Sep

-16

Oct-

16

No

v-1

6

De

c-1

6

Ja

n-1

7

Feb

-17

Mar-

17

Apr-

17

May-1

7

Ju

n-1

7

Ju

l-17

Aug

-17

Sep

-17

Oct-

17

No

v-1

7

De

c-1

7

Ja

n-1

8

Ultramax NB Kamsarmax NB

Ultramax Resale Kamsarmax Resale

$0

$10

$20

$30

$40

$50

$60

Ultramax NB Kamsarmax NB Panamax NB

$0

$10

$20

$30

$40

$50

$60

Ultramax NB Kamsarmax NB Panamax NB

12

Time Charter Rates have Increased Y-o-Y

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


Historical Data 2009-2018

Class Current Avg Max Min

Ultramax $11,375 $11,775 $24,375 $4,875

Kamsarmax $13,563 $12,889 $29,625 $5,363

BDI 1,304 1,410 3,941 307

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Kamsarmax (LHS) Ultramax (LHS)

400

600

800

1,000

1,200

1,400

1,600

1,800

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Kamsarmax (LHS) Ultramax (LHS) BDI (RHS)

13

Dry Bulk Demand Outpaces Supply in 2017

Net fleet growth for 2018/2019 assumes scrapping amount as 2017 (14.5 million DWT) and newbuilding vessels deliver as scheduled.

Source: Clarkson Research Services

• For the first time since 2014, dry bulk ton mile demand growth (5.3%) outpaced fleet supply growth (3.0%)

• Increasing ton mile demand and global growth coincided with a limited orderbook provides favorable

supply/demand dynamics

10.8%

5.8%

4.4%

2.4% 2.3%

3.0%2.6%

1.9%

6.4%

4.9%

6.1%

0.9%

2.1%

5.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2012 2013 2014 2015 2016 2017 2018P 2019P

Net Fleet Growth Ton Mile Demand

14

Low Orderbook & Limited Newbuild Ordering


Historically Low Orderbook as % of Fleet Newbuilding Orders (DWT)

• Orderbook as % of the fleet is 9.30%

• Newbuilding orders in 2017 were 32.7m DWT, 40% below the 20 year avg of 45.8m DWT

9.30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

Ja

n-1

7

Ja

n-1

8

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

102.2

41.7

24.4

103.2

63.9

24.8

14.0

32.7

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

20

17

15

25.2 25.4

44.5

81.4

99.9 100.4

63.0

48.4 49.247.2

38.4

33.4

29.7

14.9

-

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020*

Capesize Panamax Handymax Handysize

Favorable Supply Dynamics

(1)Does not assume slippage or scrapping

(2) Assumes newbuildings deliver as scheduled,


Fleet Development Before Scrapping (1)

DW

T (

Mill

ions)

Newbuilding Deliveries Per Year (2)

324.9 340.4 356.0 363.9 365.9

203.0210.6

217.0220.3 220.7

195.2

201.6204.4

205.3 205.3

96.1

100.0

101.2101.8 101.8819.2

852.6

878.7891.3 893.8

-

100

200

300

400

500

600

700

800

900

1,000

Current 2018 2019 2020 2021

DW

T (M

illio

ns)


16

New Sulfur Emission Regulations in 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 is not viable

Historical FO & MGO Prices ($/MT) (1)

Source: Clarksons Research Services/Ocean Connect January 2018

$0

$200

$400

$600

$800

$1,000

$1,200

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Rotterdam Singapore Houston

17

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 photos below that show how large BWTS are)

• Will be substantial ‘push factor’ encouraging scrapping of older vessels

All of SALT’s vessels are fitted with BWTS

BWTS Filtering Unit

18

Scrapping Expected to Increase


Fleet Scrapping (Million DWT) Scrapping Avg Age

Fleet Age Profile Scrap Price ($/ldt)

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

14.5

0

5

10

15

20

25

30

35

40

20

22

24

26

28

30

32

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Handymax Panamax

27% 30% 32%23%

49%36%

40%

43%

14%

15%12%

11%

5%12% 8%

9%

5% 6% 8%15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


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

$230

$445

200

250

300

350

400

450

500

Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18

($/ld

t)

19

Dry Bulk Seaborne Demand


2009-2018

Iron Ore Coal Grains Minor Bulks Total Dry Bulk

CAGR 6.2% 4.7% 5.6% 3.8% 4.9%

Mill

ion

To

nn

es

3,428

3,843

4,077

4,341

4,586

4,834 4,835 4,903 5,109

5,251

-

1,000

2,000

3,000

4,000

5,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f)

Iron Ore Coal Grain Minor Bulk

20

Chinese Coal Inventory at Lowest Since 2012 Indian Coal Inventory at Lowest Level since 2014

50.0

127.5

65.0

40

50

60

70

80

90

100

110

120

130

140

Jan

-10

Jun

-10

Nov-1

0

Ap

r-11

Se

p-1

1

Fe

b-1

2

Jul-1

2

Dec-1

2

Ma

y-1

3

Oct-

13

Ma

r-14

Au

g-1

4

Jan

-15

Jun

-15

Nov-1

5

Ap

r-16

Se

p-1

6

Fe

b-1

7

Jul-1

7

Dec-1

7

8.0

38.9

13.2

-

5

10

15

20

25

30

35

40

45

Jan

-10

Jun

-10

Nov-1

0

Ap

r-11

Se

p-1

1

Fe

b-1

2

Jul-1

2

Dec-1

2

Ma

y-1

3

Oct-

13

Ma

r-14

Au

g-1

4

Jan

-15

Jun

-15

Nov-1

5

Ap

r-16

Se

p-1

6

Fe

b-1

7

Jul-1

7

Dec-1

7

Reduction in Coal Inventories

Figures in Million Tonnes

Source: Bloomberg

21

Ton Mile Demand Continues to Grow

Total Dry Bulk

Grain Minor Bulk

Coal

Figures in Ton Miles (Billions), Source: Clarksons Research Services, January 2018

18,613

21,071 22,347

23,769 24,934

26,456 26,687 27,253 28,716

29,773

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f)

3,446

4,052 4,322

4,844 5,048

5,240 4,977 4,968

5,229 5,315

-

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f)

2,221

2,460 2,398 2,600

2,793 3,001

3,301 3,400

3,705 3,836

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f)

7,586

8,705 9,312

9,624 10,172

10,617 10,761 10,958 11,441

11,938

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f)

22

Company Highlights

Youngest ECO dry bulk

fleet ✓High specification best-in-class fleet built at top tier yards with an

average age of 2.0 years

Industry leading balance

sheet ✓ Low financial leverage secured by most modern assets

Leading the recovery….first

dry bulk company to

reinstate full amortization✓

Restriction on payments of dividends lifted, no unattractive legacy terms

and conditions on financing, and full amortization restored

Compliant with future

regulatory requirements ✓Fuel efficient vessels suitable for new low sulfur fuel regulation and all

fitted with BWTS

Favorable supply dynamics ✓Historically low orderbook as a % of fleet combined with limited

newbuilding orders & continued scrapping of older tonnage

Positive demand outlook ✓ Dry bulk seaborne demand expected to grow 2.8% in 2018

23

Appendix

24

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

25

Fleet List

Owned Vessels

# Name Year Yard Type # Name Year Yard Type

1 SBI Athena 2015 Chengxi Ultramax 29 SBI Aries 2015 Chengxi Ultramax

2 SBI Bravo 2015 Nacks Ultramax 30 SBI Gemini 2015 Chengxi Ultramax

3 SBI Antares 2015 Nacks Ultramax 31 SBI Taurus 2015 Chengxi Ultramax

4 SBI Leo 2015 Dacks Ultramax 32 SBI Pisces 2016 Chengxi Ultramax

5 SBI Echo 2015 Imabari Ultramax 33 SBI Virgo 2017 Chengxi Ultramax

6 SBI Lyra 2015 Dacks Ultramax 34 SBI Libra 2017 Chengxi Ultramax

7 SBI Subaru 2015 Dacks Ultramax 35 SBI Puma 2014 Chengxi Ultramax

8 SBI Tango 2015 Imabari Ultramax 36 SBI Jaguar 2014 Chengxi Ultramax

9 SBI Maia 2015 Nacks Ultramax 37 SBI Cougar 2015 Chengxi Ultramax

10 SBI Hydra 2015 Nacks Ultramax 38 SBI Samba 2015 Imabari Kamsarmax

11 SBI Pegasus 2015 Chengxi Ultramax 39 SBI Rumba 2015 Imabari Kamsarmax

12 SBI Ursa 2015 Dacks Ultramax 40 SBI Capoeira 2015 Hudong Kamsarmax

13 SBI Thalia 2015 Chengxi Ultramax 41 SBI Electra 2015 Yangzijiang Kamsarmax

14 SBI Cronos 2015 Imabari Ultramax 42 SBI Carioca 2015 Hudong Kamsarmax

15 SBI Orion 2015 Chengxi Ultramax 43 SBI Conga 2015 Hudong Kamsarmax

16 SBI Achilles 2016 Imabari Ultramax 44 SBI Flamenco 2015 Hudong Kamsarmax

17 SBI Hercules 2016 Chengxi Ultramax 45 SBI Bolero 2015 Hudong Kamsarmax

18 SBI Perseus 2016 Chengxi Ultramax 46 SBI Sousta 2016 Yangzijiang Kamsarmax

19 SBI Hermes 2016 Imabari Ultramax 47 SBI Rock 2016 Yangzijiang Kamsarmax

20 SBI Zeus 2016 Mitsui Ultramax 48 SBI Lambada 2016 Hudong Kamsarmax

21 SBI Hera 2016 Mitsui Ultramax 49 SBI Reggae 2016 Hudong Kamsarmax

22 SBI Hyperion 2016 Nacks Ultramax 50 SBI Zumba 2016 Hudong Kamsarmax

23 SBI Tethys 2016 Nacks Ultramax 51 SBI Macarena 2016 Hudong Kamsarmax

24 SBI Phoebe 2016 Chengxi Ultramax 52 SBI Parapara 2017 Hudong Kamsarmax

25 SBI Poseidon 2016 Mitsui Ultramax 53 SBI Mazurka 2017 Hudong Kamsarmax

26 SBI Apollo 2016 Mitsui Ultramax 54 SBI Swing 2017 Hudong Kamsarmax

27 SBI Samson 2017 Chengxi Ultramax 55 SBI Jive 2017 Hudong Kamsarmax

28 SBI Phoenix 2017 Chengxi Ultramax 56 TBN SBI Lynx 2018 Yangzijiang Kamsarmax

noble conference presentation - scorpio bulkers...4 raging capital management 4.3% 5 blackrock fund...

Documents