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Scorpio Bulkers Inc. Announces Financial Results for the First Quarter of 2020 and Declares a Quarterly Cash Dividend

May 11, 2020

MONACO, May 11, 2020 (GLOBE NEWSWIRE) — Scorpio Bulkers Inc. (NYSE: SALT) (“Scorpio Bulkers” or the “Company”), today reported its results for the three months ended March 31, 2020.

The Company also announced that on May 11, 2020, its Board of Directors declared a quarterly cash dividend of $0.05 per share on the Company’s common shares.

Share and per share results included herein have been retroactively adjusted to reflect the one-for-ten reverse stock split of the Company’s common shares, which took effect on April 7, 2020.

Results for the Three Months Ended March 31, 2020 and 2019

For the first quarter of 2020, the Company’s GAAP net loss was $124.7 million, or $18.12 per diluted share, including:

  • a non-cash loss of approximately $89.1 million and cash dividend income of $0.4 million, or $12.88 loss per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.; and
  • a write-down of assets held for sale of approximately $17.0 million, or $2.47 per diluted share, related to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale.

Emanuele A. Lauro, Chairman and Chief Executive Officer, commented “Our first priority is to ensure the safety of our seafarers and shore staff during the COVID-19 pandemic.  Beyond that, we have strengthened our balance sheet by vessel sales and sale leasebacks, we have reduced our capital expenditures by adjusting our scrubber installation schedule, we have reduced our quarterly cash dividend, and we have sold a portion of our shareholding in Scorpio Tankers for net proceeds amounting to $42.7 million. At present, we do not expect to sell any more vessels beyond those assets previously announced as held for sale. We expect to retain our remaining holding of 2.16 million shares in Scorpio Tankers. While the dry bulk market is weak at present, we are confident that rates will strengthen over the remainder of the year and have not hedged or time chartered any of our forward days. We are optimistic about the future of our Company.”

For the same period in 2019, the Company’s GAAP net loss was $3.5 million, or $0.51 per diluted share. These results include a non-cash gain of approximately $15.0 million and cash dividend income of $0.5 million, or $2.30 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc. and a write-down of assets held for sale of approximately $7.5 million, or $1.11 per diluted share.

Total vessel revenues for the first quarter of 2020 were $40.8 million, compared to $50.4 million for the same period in 2019. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first quarter of 2020 was a loss of $100.1 million and EBITDA for the first quarter of 2019 was $25.3 million, respectively (see Non-GAAP Financial Measures below).

For the first quarter of 2020, the Company’s adjusted net loss was $107.7 million, or $15.65 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $17.0 million relating to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale. Adjusted EBITDA for the first quarter of 2020 was a loss of $83.1 million (see Non-GAAP Financial Measures below).

For the first quarter of 2019, the Company’s adjusted net income was $4.0 million, or $0.60 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of $7.5 million. Adjusted EBITDA for the first quarter of 2019 was $32.8 million (see Non-GAAP Financial Measures below).

TCE Revenue

TCE Revenue Earned during the First Quarter of 2020 (see Non-GAAP Financial Measures)

  • Our Kamsarmax fleet (which includes both scrubber fitted and non-scrubber fitted vessels) earned an average of $9,316 revenue per day.
  • Our Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels) earned an average of $8,713 revenue per day.

Voyages Fixed thus far for the Second Quarter of 2020, as of the date hereof

  • Kamsarmax fleet (which includes both scrubber fitted and non-scrubber fitted vessels): approximately $7,149 revenue per day on average for 64% of the days.
  • Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels): approximately $4,076 revenue per day on average for 69% of the days.

Cash and Cash Equivalents

As of May 8, 2020, the Company had approximately $100.8 million in cash and cash equivalents, excluding proceeds from the sale of 0.5 million shares of Scorpio Tankers Inc. for which the trades are expected to settle on May 12, 2020.

Recent Significant Events

COVID-19

The outbreak of the novel COVID-19 virus (“coronavirus”) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in the implementation of numerous actions taken by governments and governmental agencies in an attempt to control or mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. A significant reduction in manufacturing and other economic activities has and is expected to continue to have a materially adverse impact on the global demand for raw materials, coal and other bulk cargoes that our customers transport on our vessels. This significant decline in the demand for dry bulk tonnage may materially and adversely impact our ability to profitably charter our vessels. When these measures and the resulting economic impact will end and what the long-term impact of such measures on the global economy will be are not known at this time. As a result, the extent to which Covid-19 will impact the Company’s results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

Quarterly Cash Dividend

In the first quarter of 2020, the Company’s Board of Directors declared and the Company paid a quarterly cash dividend of $0.20 per share totaling approximately $1.5 million.

On May 11, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on or about June 30, 2020, to all shareholders of record as of June 15, 2020. As of May 11, 2020, 7,247,580 shares were outstanding.

Reverse Stock Split

In April 2020, the Company effected a one-for-ten reverse stock split of the Company’s common shares, par value $0.01 per share, reducing the number of outstanding common shares from approximately 72.5 million shares to approximately 7.2 million shares.   The Company’s authorized common shares was approximately 31.9 million as of April 7, 2020.

IMO 2020

In April 2020, the Company reached an agreement with its counterparties to postpone the delivery of exhaust gas cleaning systems, or scrubbers, on thirteen of its vessels until at least 2021 at no additional cost to the Company. This is expected to delay the payment of between $20.0 million and $25.0 million of expenditures until 2021 at the earliest. Please see the revised estimated installation and payment schedules below.

Investment in Scorpio Tankers Inc.

In May 2020, the Company sold 2.25 million shares of Scorpio Tankers Inc. (NYSE: STNG) for aggregate net proceeds of approximately $42.7 million, of which the trades of 0.5 million shares are expected to settle on May 12, 2020. Following the completion of these sales, the Company will continue to own in aggregate approximately 2.16 million common shares of Scorpio Tankers Inc.

Vessel Sales

In March 2020, the Company entered into agreements with unaffiliated third parties to sell the SBI Jaguar and SBI Taurus, 2014 and 2015 built Ultramax vessels, respectively, and the SBI Bolero, a 2015 built Kamsarmax vessel, for approximately $53.5 million in aggregate. Delivery of the SBI Jaguar and SBI Taurus to their buyers took place in April 2020, while the delivery of the SBI Bolero is expected to take place in May 2020.

It is estimated that the Company’s liquidity will increase by approximately $18.3 million upon the completion of all three sales and after the repayment of associated outstanding debt. The Company recorded a loss of approximately $17.0 million in the first quarter of 2020 related to the sales and expects to write-off $0.3 million of deferred finance charges upon the repayment of the related debt in the second quarter of 2020.

$67.3 Million Lease Financing

During March 2020 and April 2020, the Company closed the transactions to sell and leaseback two Ultramax vessels (SBI Cronos and SBI Achilles) and one Kamsarmax vessel (SBI Lynx) to Ocean Yield ASA. As part of the transaction the Company agreed to bareboat charter-in the SBI Cronos for a period of nine years, the SBI Achilles for a period of ten years and the SBI Lynx for a period of 12 years. The Company has several purchase options during the charter period of each agreement, as well as a purchase option for each vessel upon the expiration of the relevant agreement.

$12.5 Million Credit Facility

This credit facility was repaid in full and terminated upon the closing of the sale and leaseback transaction concerning the SBI Cronos under the $67.3 Million Lease Financing in March 2020.

$27.3 Million Credit Facility

This credit facility was repaid in full and terminated upon the closing of the sale and leaseback transaction concerning the SBI Achilles under $67.3 Million Lease Financing in March 2020.

$12.8 Million Credit Facility

This credit facility was repaid in full and terminated upon the closing of the sale and leaseback transaction concerning the SBI Lynx under $67.3 Million Lease Financing in April 2020.

$38.7 Million Credit Facility

This credit facility was repaid in full and terminated in April 2020 due to the sale of the SBI Jaguar.

$85.5 Million Credit Facility

The Company repaid approximately $11.1 million of this credit facility in April 2020 due to the sale of the SBI Taurus.

Debt Overview

The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of March 31, 2020 and May 8, 2020, are as follows (dollars in thousands):

    As of
March 31, 2020
  As of May 8, 2020   As of May 8, 2020
         
Credit Facility   Amount Outstanding   Amount Committed (1)
$85.5 Million Credit Facility   $ 45,404     $ 37,044     $ 1,464  
$38.7 Million Credit Facility   9,900          
$12.8 Million Credit Facility   11,475          
$30.0 Million Credit Facility   26,642     26,642      
$60.0 Million Credit Facility   26,008     26,008     2,862  
$184.0 Million Credit Facility (2)   161,374     161,374     17,448  
$34.0 Million Credit Facility   33,714     33,714      
$90.0 Million Credit Facility   80,125     80,125     8,706  
$19.6 Million Lease Financing – SBI Rumba   16,570     16,464      
$19.0 Million Lease Financing – SBI Tango   17,008     16,908      
$19.0 Million Lease Financing – SBI Echo   17,116     17,021      
$20.5 Million Lease Financing – SBI Hermes   18,739     18,631      
$21.4 Million Lease Financing – SBI Samba   20,033     19,915      
CMBFL Lease Financing   110,325     110,325     11,842  
$45.0 Million Lease Financing – SBI Virgo & SBI Libra   39,279     39,033     3,000  
AVIC Lease Financing   109,077     107,931     8,200  
$67.3 Million Lease Financing   40,726     62,045     $ 4,500  
Total   $ 783,515     $ 773,180     $ 58,022  
  1. Includes the maximum loan amount available for the installation of scrubbers, following upsizes of certain credit facilities and lease financing arrangements and may not be drawn down in full.
  2. Due to the sale of the SBI Bolero, which is expected to take place in May 2020, approximately $12.5 million of the $184.0 Million Credit Facility is expected to be repaid and the amount of financing committed for the installation of scrubbers is expected to be reduced by approximately $1.5 million.

The Company’s projected quarterly debt repayments on its bank loans and lease financing arrangements through 2021 are as follows (dollars in thousands):

    Principal on Bank Loans   Principal on Lease Financing Arrangements   Total (1)
Q2 2020 (2) (3)   $ 21,182     $ 6,738     $ 27,920  
Q3 2020   8,805     9,611     18,416  
Q4 2020   9,066     9,630     18,696  
Q1 2021   9,066     9,619     18,685  
Q2 2021   9,066     9,653     18,719  
Q3 2021   8,884     9,801     18,685  
Q4 2021   9,486     10,026     19,512  
Total   $ 75,555     $ 65,078     $ 140,633  
  1. Includes estimated repayments on the upsizings of certain credit facilities and lease financing arrangements for the installation of scrubbers, for which the timing of the drawdowns and repayment schedules set forth are estimates only and may vary as the timing of the related installations finalizes.
  2. Relates to payments expected to be made from May 9, 2020 to June 30, 2020.
  3. Includes the repayment of approximately $12.5 million of the $184.0 Million Credit Facility due to the sale of the SBI Bolero, which is expected to take place in May 2020.

IMO 2020

The Company’s projected schedule and estimated payments for the installation of scrubbers on all the owned and finance leased vessels in its fleet is as follows (dollars in thousands). Through May 8, 2020, the Company has completed the installation of scrubbers on 22 (including 9 Kamsarmax vessels and 13 Ultramax vessels) of its vessels.

    Completed Scrubber Installation by Vessel Type   Estimated Payments (1)
    Ultramax   Kamsarmax  
Q2 2020 (2)   4     1     14,115  
Q3 2020   1         7,631  
Q4 2020           2,126  
Q1 2021            
Q2 2021   2     1     9,145  
Q3 2021   2     3     8,613  
Q4 2021   3     2     5,113  
Total   12     7     $ 46,743  
  1. Includes estimated cash payments for scrubbers that are due in advance of the scheduled service and may be scheduled to occur in quarters prior to the actual installation. In addition to these installment payments, these amounts also include estimates of the installation costs of such systems. The timing of the payments set forth are estimates only and may vary as the timing of the related installations finalizes.
  2. Relates to installations expected to be completed and payments expected to be made from May 9, 2020 to June 30, 2020.

Financial Results for the Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

For the first quarter of 2020, the Company’s GAAP net loss was $124.7 million, or $18.12 per diluted share, compared to a net loss of $3.5 million, or $0.51 per diluted share, for the same period in 2019. Results for the first quarter of 2020 include: a non-cash loss of approximately $89.1 million and cash dividend income of $0.4 million, or $12.88 loss per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., and charges of approximately $17.0 million, or $2.47 per diluted share, related to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale. Results for the first quarter of 2019 include non-cash gain of approximately $15.0 million and cash dividend income of $0.5 million, or $2.30 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc. and a write-down of assets held for sale of approximately $7.5 million, or $1.11 per diluted share.

EBITDA for the first quarters of 2020 and 2019 were a loss of $100.1 million and a gain of $25.3 million, respectively (see Non-GAAP Financial Measures below).

For the first quarter of 2020, the Company’s adjusted net loss was $107.7 million, or $15.65 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $17.0 million. Adjusted EBITDA for the first quarter of 2020 was a loss of $83.1 million (see Non-GAAP Financial Measures below).

For the first quarter of 2019, the Company’s adjusted net income was $4.0 million, or $0.60 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of $7.5 million. Adjusted EBITDA for the first quarter of 2019 was $32.8 million (see Non-GAAP Financial Measures below).

Total vessel revenues have been negatively impacted by the significant decline in the demand for dry bulk tonnage and related volatility in dry bulk charter spot rates, resulting from the reduction in global economic activity and demand for raw materials that our customers transport on our vessels. This significant decline in the demand for dry bulk tonnage has resulted in a 19% decrease in the Company’s revenues for the first quarter of 2020 to $40.8 million from $50.4 million in the first quarter of 2019. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the first quarter of 2020 was $39.5 million, a decrease of $10.8 million from the prior year period.

Total operating expenses for the first quarter of 2020 were $66.6 million, including the charge related to the classification of vessels as held for sale of approximately $17.0 million, compared to $56.6 million in the first quarter of 2019, which also included a charge related to the classification of vessels as held for sale of $7.5 million.

Ultramax Operations

  Three Months Ended March 31,        
Dollars in thousands 2020   2019   Change   % Change
TCE Revenue:              
Vessel revenue $ 24,931     $ 31,282     $ (6,351 )   (20 )
Voyage expenses 874     61     813     1,333  
TCE Revenue $ 24,057     $ 31,221     $ (7,164 )   (23 )
Operating expenses:              
Vessel operating costs 16,624     17,637     (1,013 )   (6 )
Charterhire expense 1,137     870     267     31  
Vessel depreciation 7,940     9,197     (1,257 )   (14 )
General and administrative expense 1,116     1,027     89     9  
Loss / write-down on assets held for sale 7,615         7,615     NA
Total operating expenses $ 34,432     $ 28,731     $ 5,701     20  
Operating (loss) income $ (10,375 )   $ 2,490     $ (12,865 )   (517 )

Vessel revenue for the Company’s Ultramax Operations decreased to $24.9 million for the first quarter of 2020 from $31.3 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $24.1 million for the first quarter of 2020 compared to $31.2 million for the prior year period.  The Company’s Ultramax fleet consisted of a day-weighted average of 35 vessels owned or finance leased and one vessel time chartered-in during the first quarter of 2020 and 37 vessels owned or finance leased and one vessel time chartered-in during the first quarter of 2019. TCE revenue per day was $8,713 and $9,177 for the first quarters of 2020 and 2019, respectively.

  Three Months Ended March 31,        
Ultramax Operations: 2020   2019   Change   % Change
TCE Revenue (in thousands) $ 24,057     $ 31,221     $ (7,164 )   (23 )
TCE Revenue / Day $ 8,713     $ 9,177     $ (464 )   (5 )
Revenue Days 2,761     3,402     (641 )   (19 )

The Company’s Ultramax Operations vessel operating costs were $16.6 million for the first quarter of 2020, including approximately $0.8 million of takeover costs and contingency expenses, compared with vessel operating costs of $17.6 million in the prior year period, relating to the 35 and 37 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses for the first quarter of 2020 decreased to $4,955 from $5,005 in the prior year period due primarily to the timing of certain crew costs.

Charterhire expense for the Company’s Ultramax Operations was approximately $1.1 million and $0.9 million for the first quarters of 2020 and 2019, respectively and relates to the vessel the Company time chartered-in at $10,125 per day until September 2019, when the Company exercised its option to extend the time charter for one year at $10,885 per day.

Ultramax Operations depreciation decreased from $9.2 million to $7.9 million as a total of six vessels were classified as held for sale or sold since the end of the first quarter of 2019.

General and administrative expense for the Company’s Ultramax Operations, which consists primarily of administrative service fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions, was approximately $1.1 million for the first quarter of 2020 and $1.0 million in the prior year period.

During the first quarter of 2020, the Company recorded a write-down on assets held for sale of $7.6 million related to the classification of two Ultramax vessels, the SBI Jaguar and SBI Taurus, as held for sale.  The sales were completed in April 2020.

Kamsarmax Operations

  Three Months Ended March 31,        
Dollars in thousands 2020   2019   Change   % Change
TCE Revenue:              
Vessel revenue $ 15,894     $ 19,069     $ (3,175 )   (17 )
Voyage expenses 486     47     439     934  
TCE Revenue $ 15,408     $ 19,022     $ (3,614 )   (19 )
Operating expenses:              
Vessel operating costs 8,060     8,633     (573 )   (7 )
Charterhire expense 3,561     109     3,452     3,167  
Vessel depreciation 4,403     4,722     (319 )   (7 )
General and administrative expense 549     288     261     91  
Loss / write-down on assets held for sale 9,394     7,509     1,885     25  
Total operating expenses $ 25,967     $ 21,261     $ 4,706     22  
Operating loss $ (10,559 )   $ (2,239 )   $ (8,320 )   (372 )

Vessel revenue for the Company’s Kamsarmax Operations decreased to $15.9 million in the first quarter of 2020 from $19.1 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $15.4 million for the first quarter of 2020 associated with a day-weighted average of 17 vessels owned or finance leased and five vessels time chartered-in, compared to $19.0 million for the prior year period associated with a day-weighted average of 19 vessels owned or finance leased. TCE revenue per day was $9,316 and $11,176 for the first quarters of 2020 and 2019, respectively.

  Three Months Ended March 31,        
Kamsarmax Operations: 2020   2019   Change   % Change
TCE Revenue (in thousands) $ 15,408     $ 19,022     $ (3,614 )   (19 )
TCE Revenue / Day $ 9,316     $ 11,176     $ (1,860 )   (17 )
Revenue Days 1,654     1,702     (48 )   (3 )

Kamsarmax Operations vessel operating costs were $8.1 million for the first quarter of 2020, including approximately $0.2 million of takeover costs and contingency expenses, compared with vessel operating costs of $8.6 million in the prior year period, relating to 17 and 19 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses for the first quarter of 2020 decreased to $5,047 from $5,111 in the prior year period due primarily to the timing of certain crew costs.

Kamsarmax Operations charterhire expense was $3.6 million in the first quarter of 2020, relating to five vessels the Company has time chartered-in, the first of which was time chartered-in at the end of the first quarter of 2019.

Kamsarmax Operations depreciation was $4.4 million and $4.7 million in the first quarters of 2020 and 2019, respectively, as the number of vessels owned or finance leased on average decreased to 17 in the first quarter of 2020 from 19 in the first quarter of 2019 due to the sale of two vessels in the third quarter of 2019.

General and administrative expense for the Company’s Kamsarmax Operations was $0.5 million for the first quarter of 2020 and $0.3 million in the first quarter of 2019.  The expense consists primarily of administrative services fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions.

During the first quarter of 2020, the Company recorded a write down on assets held for sale of $9.4 million related to the classification of the SBI Bolero as held for sale.  In the first quarter of 2019, $7.5 million was written down related to the sale of the SBI Electra and SBI Flamenco.

Corporate

Certain general and administrative expenses the Company incurs, as well as all of its financial expenses and investment income or losses, are not attributable to a specific segment. Accordingly, these costs are not allocated to the Company’s segments. These general and administrative expenses, including compensation, audit, legal and other professional fees, as well as the costs of being a public company, such as director fees, were $4.9 million and $6.5 million in the first quarters of 2020 and 2019, respectively. The decrease from the prior year is due primarily to a reduction in compensation costs.

The Company recorded a non-cash loss of approximately $89.1 million for the first quarter of 2020 and received cash dividend income of $0.4 million from its equity investment in Scorpio Tankers Inc. During the first quarter of 2019, the Company recorded a non-cash gain of approximately $15.0 million as well as cash dividend income of $0.5 million also related to its equity investment in Scorpio Tankers Inc.

Financial expenses, net of interest income decreased to $10.2 million in the first quarter of 2020 from $12.7 million in the prior year period due to lower LIBOR rates and the redemption of our 7.50% Senior Unsecured Notes during the third quarter of 2019. The Company expects to write-off $0.3 million of deferred finance charges upon the repayment of the debt related to vessel sales in the second quarter of 2020.


Scorpio Bulkers Inc. and Subsidiaries
Consolidated Statements of Operations
(Amounts in thousands, except per share data)

    Unaudited
    Three Months Ended March 31,
    2020   2019
Revenue:        
Vessel revenue   $ 40,824     $ 50,351  
Operating expenses:        
Voyage expenses   1,360     108  
Vessel operating costs   24,684     26,270  
Charterhire expense   4,698     979  
Vessel depreciation   12,343     13,919  
General and administrative expenses   6,528     7,829  
Loss / write-down on assets sold or held for sale   17,009     7,509  
Total operating expenses   66,622     56,614  
Operating loss   (25,798 )   (6,263 )
Other income (expense):        
Interest income   123     344  
Income from equity investments   (88,631 )   15,503  
Foreign exchange loss   (54 )   (4 )
Financial expense, net   (10,343 )   (13,049 )
Total other (expense) income   (98,905 )   2,794  
Net loss   $ (124,703 )   $ (3,469 )
         
Loss per share:        
Basic   $ (18.12 )   $ (0.51 )
Diluted   $ (18.12 )   $ (0.51 )
         
Basic weighted average number of common shares outstanding   6,883     6,746  
Diluted weighted average number of common shares outstanding   6,883     6,746  


Scorpio Bulkers Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

    Unaudited    
    March 31, 2020   December 31, 2019
Assets        
Current assets        
Cash and cash equivalents   $ 50,209     $ 42,530  
Accounts receivable   21,940     13,209  
Prepaid expenses and other current assets   9,290     9,547  
Total current assets   81,439     65,286  
Non-current assets        
Vessels, net   1,208,105     1,271,993  
Assets held for sale   130,054     77,536  
Equity investments   84,226     173,298  
Deferred financing costs, net   2,781     2,982  
Other assets   67,502     74,464  
Total non-current assets   1,492,668     1,600,273  
Total assets   $ 1,574,107     $ 1,665,559  
         
Liabilities and shareholders’ equity        
Current liabilities        
Bank loans, net   $ 36,634     $ 44,956  
Capital lease obligations   32,779     29,159  
Accounts payable and accrued expenses   43,230     49,718  
Total current liabilities   112,643     123,833  
Non-current liabilities        
Bank loans, net   352,943     332,613  
Capital lease obligations   351,207     321,646  
Other liabilities   6,418     12,500  
Total non-current liabilities   710,568     666,759  
Total liabilities   823,211     790,592  
Shareholders’ equity        
Preferred shares, $0.01 par value per share; 50,000,000 shares authorized; no shares issued or outstanding        
Common shares, $0.01 par value per share; authorized 21,250,000 shares as of March 31, 2020 and December 31, 2019; outstanding 7,247,580 shares as of March 31, 2020 and 7,248,180 as of December 31, 2019   809     809  
Paid-in capital   1,717,776     1,717,144  
Common shares held in treasury, at cost; 856,785 shares at March 31, 2020 and December 31, 2019   (56,720 )   (56,720 )
Accumulated deficit   (910,969 )   (786,266 )
Total shareholders’ equity   750,896     874,967  
Total liabilities and shareholders’ equity   $ 1,574,107     $ 1,665,559  


Scorpio Bulkers Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)

    Three Months Ended March 31,
    2020   2019
Operating activities        
Net loss   $ (124,703 )   $ (3,469 )
Adjustment to reconcile net income (loss) to net cash provided by        
operating activities:        
Restricted share amortization   2,082     2,175  
Vessel depreciation   12,343     13,919  
Amortization of deferred financing costs   1,013     1,270  
Write-off of deferred financing costs        
Loss / write-down on assets held for sale   16,077     6,649  
Net unrealized (gains) losses on investments   89,072     (14,962 )
Dividend income on equity investment   (441 )   (541 )
Drydocking expenditure   (2,207 )    
Changes in operating assets and liabilities:        
(Decrease) increase in accounts receivable   (8,731 )   1,770  
Decrease in prepaid expenses and other assets   5,877     50  
Decrease in accounts payable and accrued expenses   (11,638 )   (2,316 )
Net cash (used in) provided by operating activities   (21,256 )   4,545  
Investing activities        
Dividend income on equity investment   441     541  
Scrubber payments   (14,874 )   (4,325 )
Net cash used in investing activities   (14,433 )   (3,784 )
Financing activities        
Proceeds from issuance of long-term debt   79,000      
Repayments of long-term debt   (34,182 )   (16,011 )
Dividends paid   (1,450 )   (1,424 )
Net cash provided by (used in) financing activities   43,368     (17,435 )
Increase (decrease) in cash and cash equivalents   7,679     (16,674 )
Cash and cash equivalents, beginning of period   42,530     67,495  
Cash and cash equivalents, end of period   $ 50,209     $ 50,821  


Scorpio Bulkers Inc. and Subsidiaries
Other Operating Data (unaudited)

    Three Months Ended March 31,
    2020   2019
Time charter equivalent revenue ($000’s) (1):        
Vessel revenue   $ 40,824     $ 50,351  
Voyage expenses   (1,360 )   (108 )
Time charter equivalent revenue   $ 39,464     $ 50,243  
Time charter equivalent revenue attributable to:        
Kamsarmax   $ 15,408     $ 19,022  
Ultramax   24,057     31,221  
    $ 39,465     $ 50,243  
Revenue days:        
Kamsarmax   1,654     1,702  
Ultramax   2,761     3,402  
Combined   4,415     5,104  
TCE per revenue day (1):        
Kamsarmax   $ 9,316     $ 11,176  
Ultramax   $ 8,713     $ 9,177  
Combined   $ 8,939     $ 9,844  
  1. The Company defines Time Charter Equivalent (TCE) revenue as vessel revenues less voyage expenses.  Such TCE revenue, divided by the number of the Company’s available days during the period, or revenue days, is TCE per revenue day, which is consistent with industry standards.  TCE per revenue day is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per-day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts.

The Company reports TCE revenue, a non-GAAP financial measure, because (i) the Company believes it provides additional meaningful information in conjunction with vessel revenues and voyage expenses, the most directly comparable U.S. GAAP measures, (ii) it assists the Company’s management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance, (iii) it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) the Company believes that it presents useful information to investors. See Non-GAAP Financial Measures below.

Fleet List as of May 8, 2020

Vessel Name   Year Built    DWT    Vessel Type   Scrubber Installed ?
SBI Samba   2015   84,000     Kamsarmax   Yes
SBI Rumba   2015   84,000     Kamsarmax   No
SBI Capoeira   2015   82,000     Kamsarmax   No
SBI Carioca   2015   82,000     Kamsarmax   Yes
SBI Conga   2015   82,000     Kamsarmax   No
SBI Bolero   2015   82,000     Kamsarmax   No
SBI Sousta   2016   82,000     Kamsarmax   No
SBI Rock   2016   82,000     Kamsarmax   No
SBI Lambada   2016   82,000     Kamsarmax   No
SBI Reggae   2016   82,000     Kamsarmax   No
SBI Zumba   2016   82,000     Kamsarmax   Yes
SBI Macarena   2016   82,000     Kamsarmax   Yes
SBI Parapara   2017   82,000     Kamsarmax   Yes
SBI Mazurka   2017   82,000     Kamsarmax   Yes
SBI Swing   2017   82,000     Kamsarmax   Yes
SBI Jive   2017   82,000     Kamsarmax   Yes
SBI Lynx   2018   82,000     Kamsarmax   Yes
Total Kamsarmax       1,398,000          
                 
SBI Antares   2015   61,000     Ultramax   Yes
SBI Athena   2015   64,000     Ultramax   Yes
SBI Bravo   2015   61,000     Ultramax   Yes
SBI Leo   2015   61,000     Ultramax   Yes
SBI Echo   2015   61,000     Ultramax   Yes
SBI Lyra   2015   61,000     Ultramax   No
SBI Tango   2015   61,000     Ultramax   No
SBI Maia   2015   61,000     Ultramax   No
SBI Hydra   2015   61,000     Ultramax   No
SBI Subaru   2015   61,000     Ultramax   No
SBI Pegasus   2015   64,000     Ultramax   No
SBI Ursa   2015   61,000     Ultramax   No
SBI Thalia   2015   64,000     Ultramax   No
SBI Cronos   2015   61,000     Ultramax   No
SBI Orion   2015   64,000     Ultramax   No
SBI Achilles   2016   61,000     Ultramax   No
SBI Hercules   2016   64,000     Ultramax   No
SBI Perseus   2016   64,000     Ultramax   No
SBI Hermes   2016   61,000     Ultramax   No
SBI Zeus   2016   60,200     Ultramax   No
SBI Hera   2016   60,200     Ultramax   No
SBI Hyperion   2016   61,000     Ultramax   No
SBI Tethys   2016   61,000     Ultramax   Yes
SBI Phoebe   2016   64,000     Ultramax   Yes
SBI Poseidon   2016   60,200     Ultramax   Yes
SBI Apollo   2016   60,200     Ultramax   Yes
SBI Samson   2017   64,000     Ultramax   No
SBI Phoenix   2017   64,000     Ultramax   No
SBI Gemini   2015   64,000     Ultramax   Yes
SBI Libra   2017   64,000     Ultramax   Yes
SBI Aries   2015   64,000     Ultramax   Yes
SBI Pisces   2016   64,000     Ultramax   No
SBI Virgo   2017   64,000     Ultramax   Yes
Total Ultramax       2,051,800          
Total Owned or Finance Leased Vessels DWT   3,449,800          

Time chartered-in vessels

The Company currently time charters-in one Ultramax vessel and five Kamsarmax vessels. The terms of the contracts are summarized as follows:

Vessel Type   Year Built   DWT   Country of Build   Daily Base Rate   Earliest Expiry
Ultramax   2017   62,100     Japan   $ 10,885     30-Sep-20   (1)
Kamsarmax   2019   81,100     China   Variable   10-Mar-21   (2)
Kamsarmax   2019   81,100     China   Variable   7-Apr-21   (3)
Kamsarmax   2018   82,000     China   $ 12,000     25-June-21   (4)
Kamsarmax   2018   81,100     China   Variable   13-Jul-21   (5)
Kamsarmax   2015   81,100     China   Variable   22-Jul-21   (6)
Total TC DWT       468,500                  
  1. This vessel was originally time chartered-in for 22 to 24 months at the Company’s option at $10,125 per day.  In September 2019, the Company exercised its option to extend the time charter for one year at $10,885 per day. The vessel was delivered to the Company in September 2017.
  2. This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the Baltic Exchange’s 74,000 DWT Panamax Index, or the BPI. The vessel was delivered to the Company in March 2019.
  3. This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the BPI. The vessel was delivered to the Company in May 2019.
  4. This vessel has been time chartered-in for 24 months at $12,000 per day for the first 12 months and at $12,500 per day for the second 12 months.  The Company has the option to extend this time charter for 12 months at $13,000 per day and an additional 12 months at $14,500 per day.  The vessel was delivered to the Company in July 2019.
  5. This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the BPI. The vessel was delivered to the Company in July 2019.
  6. This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the BPI.  The vessel was delivered to the Company in August 2019.

Conference Call on Results:

A conference call to discuss the Company’s results will be held today, May 11, 2020, at 9:00 AM Eastern Daylight Time / 3:00 PM Central European Summer Time.  Those wishing to listen to the call should dial 1 (866) 219-5268 (U.S.) or 1 (703) 736-7424 (International) at least 10 minutes prior to the start of the call to ensure connection. The conference participant passcode is 3965438.

There will also be a simultaneous live webcast over the internet, through the Scorpio Bulkers Inc. website www.scorpiobulkers.com.  Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Webcast URL: https://edge.media-server.com/mmc/p/uydsfgt8

About Scorpio Bulkers Inc.

Scorpio Bulkers Inc. is a provider of marine transportation of dry bulk commodities. The Company currently has five vessels held for sale. Upon the completion of the sale of the five vessels, Scorpio Bulkers Inc. will have an operating fleet of 51 vessels consisting of 45 wholly-owned or finance leased drybulk vessels (including 16 Kamsarmax vessels and 29 Ultramax vessels), and six time chartered-in vessels (including five Kamsarmax vessels and one Ultramax vessel). The Company’s owned and finance leased fleet will have a total carrying capacity of approximately 3.1 million dwt and all of the Company’s owned vessels will have carrying capacities of greater than 60,000 dwt. Additional information about the Company is available on the Company’s website www.scorpiobulkers.com, which is not a part of this press release.

Non-GAAP Financial Measures

To supplement the Company’s financial information presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”) management uses certain “non-GAAP financial measures” as such term is defined in Regulation G promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with GAAP. Management believes the presentation of these measures provides investors with greater transparency and supplemental data relating to the Company’s financial condition and results of operations, and therefore a more complete understanding of factors affecting its business than GAAP measures alone. In addition, management believes the presentation of these matters is useful to investors for period-to-period comparison of results as the items may reflect certain unique and/or non-operating items such as asset sales, write-offs, contract termination costs or items outside of management’s control.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted net income (loss) and related per share amounts, as well as adjusted EBITDA and TCE Revenue are non-GAAP financial measures that the Company believes provide investors with a means of evaluating and understanding how the Company’s management evaluates the Company’s operating performance.  These non-GAAP financial measures should not be considered in isolation from, as substitutes for, nor superior to financial measures prepared in accordance with GAAP.  Please see below for reconciliations of EBITDA, adjusted net income (loss) and related per share amounts, and adjusted EBITDA.  Please see “Other Operating Data” for a reconciliation of TCE revenue.

EBITDA (unaudited)

  Three Months Ended March 31,
In thousands 2020   2019
Net loss $ (124,703 )   (3,469 )
Add Back:      
Net interest expense 9,206     11,436  
Depreciation and amortization (1) 15,438     17,363  
EBITDA $ (100,059 )   25,330  
  1. Includes depreciation, amortization of deferred financing costs and restricted share amortization.

Adjusted net income (loss) (unaudited)

    Three Months Ended March 31,   Three Months Ended March 31,
In thousands, except per share data   2020   2019
    Amount   Per share   Amount   Per share
Net loss   $ (124,703 )   $ (18.12 )   $ (3,469 )   $ (0.51 )
Adjustments:                
Loss / write-down on assets sold or held for sale   17,009     2.47     7,509     1.11  
Total adjustments   $ 17,009     $ 2.47     $ 7,509     $ 1.11  
Adjusted net (loss) income   $ (107,694 )   $ (15.65 )   $ 4,040     $ 0.60  

Adjusted EBITDA (unaudited)

    Three Months Ended March 31,   Three Months Ended March 31,
In thousands   2020   2019
Net loss   $ (124,703 )   $ (3,469 )
Impact of adjustments   17,009     7,509  
Adjusted net (loss) income   (107,694 )   4,040  
Add Back:        
Net interest expense   9,206     11,436  
Depreciation and amortization (1)   15,438     17,363  
Adjusted EBITDA   $ (83,050 )   $ 32,839  
  1. Includes depreciation, amortization of deferred financing costs and restricted share amortization.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements.  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 press release 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, the length and severity of the recent novel coronavirus (COVID-19) outbreak, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, counterparty performance, ability to obtain financing (including for capital expenditures) and comply with covenants in such financing arrangements, fluctuations in the value of our investments, 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 SEC for a more complete discussion of these and other risks and uncertainties.

 

Contact:

Scorpio Bulkers Inc.
+377-9798-5715 (Monaco)
+1-646-432-1675 (New York)

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Source: Scorpio Bulkers