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

Oct 27, 2020

MONACO, Oct. 27, 2020 (GLOBE NEWSWIRE) — Scorpio Bulkers Inc. (NYSE: SALT) (“Scorpio Bulkers” or the “Company”) today reported its results for the three months ended September 30, 2020.

The Company also announced that its Board of Directors has 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 and Nine Months Ended September 30, 2020 and 2019

For the third quarter of 2020, the Company’s GAAP net loss was $36.6 million, or $3.12 per diluted share, including:

  • a non-cash loss of approximately $3.7 million and cash dividend income of $0.2 million, or $0.30 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.; and
  • a write-down of assets of approximately $19.6 million, or $1.67 per diluted share, related to the classification of the SBI Rock as held for sale and the agreement to sell the SBI Sousta, both of which are Kamsarmax vessels.

For the same period in 2019, the Company’s GAAP net loss was $1.9 million, or $0.28 per diluted share. These results include a non-cash gain of approximately $1.0 million and cash dividend income of $0.5 million, or $0.23 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a partial reversal of the write-downs of the SBI Puma and SBI Cougar of approximately $0.2 million, or $0.03 per diluted share, and the write-off of deferred financing costs of approximately $0.5 million, or $0.10 per diluted share.

Total vessel revenues for the third quarter of 2020 were $46.7 million, compared to $63.2 million for the same period in 2019. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the third quarter of 2020 was a loss of $13.9 million and EBITDA for the third quarter of 2019 was $26.3 million, respectively (see Non-GAAP Financial Measures below).

For the third quarter of 2020, the Company’s adjusted net loss was $17.0 million, or $1.45 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $19.6 million relating to the classification of one Kamsarmax vessel as held for sale and the agreement to sell another. Adjusted EBITDA for the third quarter of 2020 was $5.7 million (see Non-GAAP Financial Measures below).

For the third quarter of 2019, the Company’s adjusted net loss was $2.1 million, or $0.31 adjusted per diluted share, which excludes the partial reversal of the write-downs of the SBI Puma and SBI Cougar of approximately $0.2 million. Adjusted EBITDA for the third quarter of 2019 was $26.1 million (see Non-GAAP Financial Measures below). 

For the first nine months of 2020, the Company’s GAAP net loss was $206.4 million, or $23.34 per diluted share, including:

  • a loss of approximately $106.7 million and cash dividend income of $0.9 million, or $12.31 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.;
  • a write-down of assets of approximately $36.6 million, or $4.14 per diluted share, related to the classification of the four vessels as held for sale (SBI Taurus, SBI Bolero, SBI Jaguar and SBI Rock) and the agreement to sell the SBI Sousta; and
  • a write-off of approximately $0.4 million, or $0.04 per diluted share, of deferred financing costs on the credit facilities related to the SBI Taurus, SBI Bolero and SBI Jaguar.

For the first nine months of 2019, the Company’s GAAP net income was $29.6 million, or $4.25 per diluted share. These results include a non-cash gain of approximately $68.6 million and cash dividend income of $1.6 million, or $10.09 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a write-down of assets either sold or held for sale and write-off of related deferred financing costs totaling approximately $12.5 million, or $1.79 per diluted share, and the write-off of deferred financing costs of approximately $3.2 million, or $0.45 per diluted share.

Total vessel revenues for the first nine months of 2020 were $113.7 million, compared to $164.3 million for the same period in 2019.  EBITDA for the first nine months of 2020 was a loss of $134.6 million and EBITDA for the first nine months of 2019 was $116.8 million (see Non-GAAP Financial Measures below).

For the first nine months of 2020, the Company’s adjusted net loss was $169.4 million, or $19.16 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $36.6 million and the write-off of deferred financing costs on credit facilities related to the three sold vessels of approximately $0.4 million. Adjusted EBITDA for the first nine months of 2020 was a loss of $97.9 million (see Non-GAAP Financial Measures below).

For the first nine months of 2019, the Company’s adjusted net income was $42.1 million, or $6.04 adjusted per diluted share, which excludes the impact of the write-down of assets either sold or held for sale of approximately $12.0 million and the write-off of related deferred financing costs of approximately $0.4 million. Adjusted EBITDA for the first nine months of 2019 was $128.9 million (see Non-GAAP Financial Measures below).

TCE Revenue

TCE Revenue Earned during the Third 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 $10,142 revenue per day.
  • Our Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels) earned an average of $8,930 revenue per day.

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

  • Kamsarmax fleet (which includes both scrubber fitted and non-scrubber fitted vessels): approximately $12,740 revenue per day on average for 42% of the days
  • Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels): approximately $11,226 revenue per day on average for 45% of the days

Cash and Cash Equivalents

As of October 26, 2020, the Company had approximately $105.5 million in cash and cash equivalents.

Recent Significant Events

COVID-19

Since the beginning of the calendar year 2020, the ongoing outbreak of the novel coronavirus (COVID-19) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in numerous actions taken by governments and governmental agencies in an attempt to 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 and commodities 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 third quarter of 2020, the Company’s Board of Directors declared and the Company paid a quarterly cash dividend of $0.05 per share totaling approximately $0.6 million.

On October 27, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on or about December 15, 2020, to all shareholders of record as of November 13, 2020. As of October 27, 2020, 12,386,880 shares were outstanding.

Offshore Wind

Our transition continues, and our conviction towards offshore wind is validated constantly. We are witnessing an unprecedented alignment of scientific, political, and commercial forces, leading to accelerated plans around the world to develop wind energy.   Shortly we expect to sign the contract for the construction of our first installation vessel, but other steps will follow. We are re-tooling our organization and our mission to deliver the service that our customers will require.

Vessel Sales

The Company entered into agreements to sell the following vessels to unaffiliated third parties (dollars in thousands).

Vessels for which the sales occurred during the third quarter.

Vessel Vessel Type Year Built Sales Price Credit Facility Related Debt Expected Delivery
SBI Rock (1)(2) Kamsarmax 2016 $ 18,030    $184.0 Million $ 6,015    Delivered October 2020
SBI Sousta Kamsarmax 2016 $ 18,435    $184.0 Million $ 12,684    Q4 2020
Total Sales Price     $ 36,465            

As a result of the classification of the SBI Rock as held for sale and the agreement to sell the SBI Sousta, the Company wrote-down assets by approximately $19.6 million as of September 30, 2020.

Vessels for which the sales occurred from October 1, 2020 through October 26, 2020.

Vessel Vessel Type Year Built Sales Price Credit Facility Related Debt Expected Delivery
SBI Conga (2) Kamsarmax 2015 $ 18,400    $184.0 Million $ 12,009    Q4 2020
SBI Phoenix (2) Ultramax 2017 $ 17,000    $90.0 Million $ 12,313    Q4 2020
SBI Samson (1)(2) Ultramax 2017 $ 17,000    $90.0 Million $ 12,313    Delivered October 2020
SBI Hera Ultramax 2016 $ 18,460    $184.0 Million $ 12,759    Q4 2020
SBI Zeus Ultramax 2016 $ 18,500    $184.0 Million $ 12,759    Q4 2020
SBI Hyperion Ultramax 2016 $ 17,500    $90.0 Million $ 12,313    Q4 2020
Total Sales Price     $ 106,860          
  1. The sale of the SBI Rock and SBI Samson have been completed as of October 26, 2020.
  2. Related debt has been repaid between October 1, 2020 and October 26, 2020.

As a result of the sales of the SBI Conga, SBI Phoenix, SBI Samson, SBI Hera, SBI Zeus and SBI Hyperion announced in October 2020, the Company expects to recognized asset write-downs of approximately $45.2 million in the fourth quarter of 2020.

The Company also expects to write-off approximately $2.0 million of deferred financing costs when the related debt is repaid in the fourth quarter of 2020.

In addition, the available credit under the Company’s revolving line of credit has been permanently reduced by approximately $6.7 million in aggregate related to the sale of the SBI Rock.

Debt and Liquidity

Amendment of Minimum Liquidity Covenant

The Company has agreed with its lenders and a finance lessor to permanently reduce the level of the minimum liquidity covenant under the relevant debt financings from the greater of: (i) $25.0 million or (ii) $700,000 per owned vessel, to the greater of: (i) $25.0 million or (ii) $500,000 per owned vessel. As a result, on the basis of the current owned or finance leased fleet size of 47 vessels, the minimum liquidity requirement is $25.0 million (a reduction from $32.9 million).

In consideration for the above amendment, the Company has made advance principal repayments of approximately $7.7 million in aggregate in the third quarter of 2020 that would have fallen due in the third quarter of 2021.

Payment Holiday on Certain Future Principal Repayments

The Company has agreed with its lenders to reduce future principal repayments of approximately $29.8 million in aggregate due under six credit facilities in exchange for advance principal repayments of 50% of these future principal repayments (approximately $14.9 million in aggregate) that were made in the third quarter of 2020. The remaining future principal repayments of $14.9 million will be added to the balloon amount due at maturity for the respective credit facilities. As a result of these agreements, the Company will not have to make certain installment payments on these facilities through the end of the second quarter of 2021 totaling $29.8 million. Given the above-mentioned announced vessel sales, the amount of such future benefits is lower as a portion of the debt was prepaid in full related to the vessel sales.

The advance principal payments made during the third quarter of 2020 related to the amendment of the minimum liquidity covenant and payment holidays by credit facility are as follows (dollars in thousands):

  Amendment of Minimum
Liquidity Covenant
  Payment Holiday on
Certain Future Principal
Repayments
           
$85.5 Million Credit Facility $ 820   $ 1,093
$30.0 Million Credit Facility   555     1,111
$60.0 Million Credit Facility   565     565
$184.0 Million Credit Facility   3,479     6,958
$34.0 Million Credit Facility   607     1,214
$90.0 Million Credit Facility   1,650     3,950
Total $ 7,676   $ 14,891

In addition, the Company agreed with a specific finance lessor to defer two quarterly installment payments (i.e. Q1 2021 and Q2 2021) to the subsequent eight quarters (in equal payments). As a result, the Company will not have to make certain quarterly installment payments on this lease financing totaling approximately $4.6 million that would have fallen due during the first half of 2021.

Debt Overview

The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of September 30, 2020 and October 26, 2020, are as follows (dollars in thousands):

    As of
September 30,
2020
  As of October 26,
2020
     
Credit Facility   Amount Outstanding
$85.5 Million Credit Facility   $ 33,531     $ 33,531  
$30.0 Million Credit Facility   26,166     26,166  
$60.0 Million Credit Facility   24,029     24,029  
$184.0 Million Credit Facility (1) (2)   66,552     115,661  
$34.0 Million Credit Facility   30,786     30,786  
$90.0 Million Credit Facility (1)   72,550     47,924  
$19.6 Million Lease Financing – SBI Rumba   15,935     15,829  
$19.0 Million Lease Financing – SBI Tango   16,412     16,309  
$19.0 Million Lease Financing – SBI Echo   16,548     16,453  
$20.5 Million Lease Financing – SBI Hermes   18,091     17,983  
$21.4 Million Lease Financing – SBI Samba   19,322     19,203  
CMBFL Lease Financing   104,963     104,963  
$45.0 Million Lease Financing – SBI Virgo & SBI Libra   40,383     40,035  
AVIC Lease Financing   104,330     103,184  
$67.3 Million Lease Financing   61,197     60,719  
Total   $ 650,795     $ 672,775  

(1) Debt outstanding as of October 26, 2020 to be repaid as per the summary of vessel sales table above.  As of October 26, 2020, the debt related to the SBI Rock, SBI Samson, SBI Phoenix and SBI Conga has been repaid.
(2) Drew down $67.1 million of credit available under the revolving line of credit during October 2020.

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
Q4 2020 (1)(2)   $ 51,880     $ 6,593     $ 58,473  
Q1 2021   1,305     6,782     8,087  
Q2 2021   1,305     6,817     8,122  
Q3 2021   749     9,716     10,465  
Q4 2021   6,027     9,736     15,763  
Total   $ 61,266     $ 39,644     $ 100,910  

(1) Relates to payments expected to be made from October 27, 2020 to December 31, 2020.
(2) Includes the repayment of approximately $50.5 million of the $184.0 Million Credit Facility and $90.0 Million Credit Facility as per the above summary of vessel sales table above (i.e. whose related debt has not been repaid as of October 26,2020).

IMO 2020

As of October 26, 2020, the Company has completed the installation of scrubbers on 17 Ultramax vessels and 10 Kamsarmax vessels and expects installation to be completed on another Ultramax vessel in November 2020. In April 2020, the Company reached an agreement with its counterparties to postpone the installment of scrubbers on thirteen vessels until at least 2021 at no additional cost to the Company.

Financial Results for the Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019 

For the third quarter of 2020, the Company’s GAAP net loss was $36.6 million, or $3.12 per diluted share, compared to a GAAP net loss of $1.9 million, or $0.28 per diluted share, for the same period in 2019. Results for the third quarter of 2020 include: a non-cash loss of approximately $3.7 million and cash dividend income of $0.2 million, or $0.30 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., and charges of approximately $19.6 million, or $1.67 per diluted share, related to write-downs of the SBI Rock upon its classification as held for sale and the SBI Sousta, which the Company agreed to sell. Results for the third quarter of 2019 include a non-cash gain of approximately $1.0 million and cash dividend income of $0.5 million, or $0.23 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a partial reversal of the write-downs of the SBI Puma and SBI Cougar of approximately $0.2 million, or $0.03 per diluted share, and the write-off of deferred financing costs of approximately $0.5 million, or $0.10 per diluted share.

EBITDA for the third quarters of 2020 and 2019 were a loss of $13.9 million and a gain of $26.3 million, respectively (see Non-GAAP Financial Measures below).

For the third quarter of 2020, the Company’s adjusted net loss was $17.0 million, or $1.45 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $19.6 million. Adjusted EBITDA for the third quarter of 2020 was $5.7 million (see Non-GAAP Financial Measures below).

For the third quarter of 2019, the Company’s adjusted net loss was $2.1 million, or $0.31 adjusted per diluted share, which excludes the partial reversal of the write-downs of the SBI Puma and SBI Cougar of approximately $0.2 million. Adjusted EBITDA for the third quarter of 2019 was $26.1 million (see Non-GAAP Financial Measures below).

The Company’s vessel revenues for the third quarter of 2020 were $46.7 million, compared to $63.2 million in the third quarter of 2019. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the third quarter of 2020 was $45.0 million, a decrease of $17.7 million from the prior year period.

Total operating expenses for the third quarter of 2020 were $72.5 million, including the charge related to the classification of the SBI Rock as held for sale and the agreement to sell the SBI Sousta of approximately $19.6 million, compared to total operating expenses of $54.5 million in the third quarter of 2019, which also included a partial reversal of the write-downs of the SBI Puma and SBI Cougar of approximately $0.2 million.

Ultramax Operations

  Three Months Ended September 30,        
Dollars in thousands 2020   2019   Change   % Change
TCE Revenue:              
Vessel revenue $ 27,701     $ 41,257     $ (13,556 )   (33 )
Voyage expenses 1,420     240     1,180     492  
TCE Revenue $ 26,281     $ 41,017     $ (14,736 )   (36 )
Operating expenses:              
Vessel operating costs 16,508     16,798     (290 )   (2 )
Charterhire expense 520     936     (416 )   (44 )
Vessel depreciation 9,369     9,000     369     4  
General and administrative expense 937     1,070     (133 )   (12 )
Loss / write-down on assets held for sale     (194 )   194     NA  
Total operating expenses $ 27,334     $ 27,610     $ (276 )   (1 )
Operating (loss) income $ (1,053 )   $ 13,407     $ (14,460 )   (108 )

Vessel revenue for the Company’s Ultramax Operations decreased to $27.7 million for the third quarter of 2020 from $41.3 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $26.3 million for the third quarter of 2020 compared to $41.0 million for the prior year period.  The Company’s Ultramax fleet consisted of a day-weighted average of 33 vessels owned or finance leased and one vessel time chartered-in during the third quarter of 2020 and 37 vessels owned or finance leased and one vessel time chartered-in during the third quarter of 2019. TCE revenue per day was $8,930 and $11,824 for the third quarters of 2020 and 2019, respectively. 

  Three Months Ended September 30,        
Ultramax Operations: 2020   2019   Change   % Change
TCE Revenue (in thousands) $ 26,281     $ 41,017     $ (14,736 )   (36 )
TCE Revenue / Day $ 8,930     $ 11,824     $ (2,894 )   (24 )
Revenue Days 2,943     3,469     (526 )   (15 )

The Company’s Ultramax Operations vessel operating costs were $16.5 million for the third quarter of 2020, including approximately $0.9 million of takeover costs and contingency expenses, compared with vessel operating costs of $16.8 million in the prior year period, relating to the 33 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 third quarter of 2020 increased to $5,150 from $4,796 in the prior year period due primarily to an increase in crew related costs resulting from the outbreak of COVID-19. COVID-19 related restrictions were relaxed in some countries and the Company was able to move crews, albeit at a higher cost. In addition, crews were and still are often required to self-isolate in hotels prior to joining or upon completion of their shift, requiring additional accommodation and medical test expenses.

Charterhire expense for the Company’s Ultramax Operations was approximately $0.5 million and $0.9 million for the third quarters of 2020 and 2019, respectively, and relates to the vessel that the Company time chartered-in until August 2020 when the vessel was redelivered to its owner.

Ultramax Operations depreciation increased from $9.0 million to $9.4 million in the third quarters of 2019 and 2020 respectively, despite the decrease in owned vessels as vessels were drydocked and/or had scrubbers installed.

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 $0.9 million for the third quarter of 2020 and $1.1 million in the prior year period.

During the third quarter of 2019, a partial reversal of the write-downs of the SBI Puma and SBI Cougar of approximately $0.2 million was recorded.

Kamsarmax Operations

  Three Months Ended September 30,        
Dollars in thousands 2020   2019   Change   % Change
TCE Revenue:              
Vessel revenue $ 18,989     $ 21,970     $ (2,981 )   (14 )
Voyage expenses 277     261     16     6  
TCE Revenue $ 18,712     $ 21,709     $ (2,997 )   (14 )
Operating expenses:              
Vessel operating costs 7,979     8,398     (419 )   (5 )
Charterhire expense 5,854     6,552     (698 )   (11 )
Vessel depreciation 4,721     4,533     188     4  
General and administrative expense 457     482     (25 )   (5 )
Loss / write-down on assets held for sale 19,598         19,598     NA  
Total operating expenses $ 38,609     $ 19,965     $ 18,644     93  
Operating loss $ (19,897 )   $ 1,744     $ (21,641 )   1,241  

Vessel revenue for the Company’s Kamsarmax Operations decreased to $19.0 million in the third quarter of 2020 from $22.0 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $18.7 million for the third quarter of 2020 associated with a day-weighted average of 16 vessels owned or finance leased and five vessels time chartered-in, compared to $21.7 million for the prior year period associated with a day-weighted average of 17 vessels owned or finance leased and four vessels time chartered-in. TCE revenue per day was $10,142 and $13,149 for the third quarters of 2020 and 2019, respectively.

  Three Months Ended September 30,        
Kamsarmax Operations: 2020   2019   Change   % Change
TCE Revenue (in thousands) $ 18,712     $ 21,709     $ (2,997 )   (14 )
TCE Revenue / Day $ 10,142     $ 13,149     $ (3,007 )   (23 )
Revenue Days 1,845     1,651     194     12  

Kamsarmax Operations vessel operating costs were $8.0 million for the third quarter of 2020, including approximately $0.6 million of takeover costs and contingency expenses, compared with vessel operating costs of $8.4 million in the prior year period, relating to 16 and 17 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 third quarter of 2020 increased to $5,043 from $4,968 in the prior year period due primarily to an increase in crew related costs resulting from the outbreak of COVID-19. COVID-19 related restrictions were relaxed in some countries and the Company was able to move crews, albeit at a higher cost. In addition, crews were and still are often required to self-isolate in hotels prior to joining or upon completion of their shift, requiring additional accommodation and medical test expenses.

Kamsarmax Operations charterhire expense was $5.9 million in the third quarter of 2020, compared to $6.6 million in the prior year period. Five vessels were time chartered-in during both periods, however four of them are chartered-in at index linked rates, which were lower in the third quarter of 2020 than in the third quarter of 2019.

Kamsarmax Operations depreciation was $4.7 million and $4.5 million in the third quarters of 2020 and 2019, respectively, despite the decrease in the number of vessels owned or finance leased on average to 16 in the third quarter of 2020 from 17 in the third quarter of 2019 as vessels were drydocked and/or had scrubbers installed during 2020.

General and administrative expense for the Company’s Kamsarmax Operations was $0.5 million for both the third quarters of 2020 and 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 third quarter of 2020, the Company recorded a write down on assets held for sale of $19.6 million related to the classification of the SBI Rock as held for sale and the agreement to sell the SBI Sousta.

Corporate

Certain general and administrative expenses that 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 $6.4 million in the third 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 loss of approximately $3.7 million for the third quarter of 2020 and received cash dividend income of $0.2 million from its equity investment in Scorpio Tankers Inc. During the third quarter of 2019, the Company recorded a non-cash gain of approximately $1.0 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 $7.2 million in the third quarter of 2020 from $12.3 million in the prior year period due to lower LIBOR rates.

Financial Results for the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019

For the first nine months of 2020, the Company’s GAAP net loss was $206.4 million, or $23.34 per diluted share, including a loss of approximately $106.7 million and cash dividend income of $0.9 million, or $12.31 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a write-down of assets of approximately $36.6 million, or $4.14 per diluted share, related to the classification of four vessels (SBI Taurus, SBI Bolero, SBI Jaguar and SBI Rock) as held for sale and the agreement to sell the SBI Sousta and a write-off of approximately $0.4 million, or $0.04 per diluted share, of deferred financing costs on the credit facilities related to three vessels that were sold in the first nine months of 2020 (SBI Taurus, SBI Bolero and SBI Jaguar). For the first nine months of 2019, the Company’s GAAP net income was $29.6 million, or $4.25 per diluted share. These results include a non-cash gain of approximately $68.6 million and cash dividend income of $1.6 million, or $10.09 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a write-down of assets either sold or held for sale and write-off of related deferred financing costs totaling approximately $12.5 million, or $1.79 per diluted share, and the write-off of deferred financing costs of approximately $3.2 million, or $0.45 per diluted share.

EBITDA for the first nine months of 2020 and 2019 were a loss of $134.6 million and a gain of $116.8 million, respectively (see Non-GAAP Financial Measures below).

For the first nine months of 2020, the Company’s adjusted net loss was $169.4 million, or $19.16 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $36.6 million and the write-off of deferred financing costs on credit facilities related to the three vessels sold of approximately $0.4 million. Adjusted EBITDA for the first nine months of 2020 was a loss of $97.9 million (see Non-GAAP Financial Measures below).

For the first nine months of 2019, the Company’s adjusted net income was $42.1 million, or $6.04 adjusted per diluted share, which excludes the impact of the write-down of assets either sold or held for sale of approximately $12.0 million and the write-off of related deferred financing costs of approximately $0.4 million. Adjusted EBITDA for the first nine months of 2019 was $128.9 million (see Non-GAAP Financial Measures below).

The Company’s vessel revenues for the first nine months of 2020 were $113.7 million compared to $164.3 million in the first nine months of 2019. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the first nine months of 2020 was $109.2 million, a decrease of $54.3 million from the prior year period.

Total operating expenses for the first nine months of 2020 were $186.8 million, including the write-down of vessels of approximately $36.6 million, compared to $165.2 million in the first nine months of 2019, which included a charge related to the classification of vessels as sold or held for sale of approximately $12.0 million.

Ultramax Operations

  Nine Months Ended September 30,        
Dollars in thousands 2020   2019   Change   % Change
TCE Revenue:              
Vessel revenue $ 66,744     $ 103,234     $ (36,490 )   (35 )
Voyage expenses 2,787     438     2,349     536  
TCE Revenue $ 63,957     $ 102,796     $ (38,839 )   (38 )
Operating expenses:              
Vessel operating costs 47,813     50,962     (3,149 )   (6 )
Charterhire expense 2,487     2,731     (244 )   (9 )
Vessel depreciation 25,499     27,108     (1,609 )   (6 )
General and administrative expense 2,993     3,131     (138 )   (4 )
Loss / write-down on assets held for sale 7,615     4,688     2,927     62  
Total operating expenses $ 86,407     $ 88,620     $ (2,213 )   (2 )
Operating (loss) income $ (22,450 )   $ 14,176     $ (36,626 )   (258 )

Vessel revenue for the Company’s Ultramax Operations decreased to $66.7 million for the first nine months of 2020 from $103.2 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $64.0 million for the first nine months of 2020 compared to $102.8 million for the prior year period.  The Company’s Ultramax fleet consisted of a day-weighted average of 34 vessels owned or finance leased and one vessel time chartered-in during the first nine months of 2020 and 37 vessels owned or finance leased and one vessel time chartered-in during the first nine months of 2019. TCE revenue per day was $7,604 and $10,010 for the first nine months of 2020 and 2019, respectively. 

  Nine Months Ended September 30,        
Ultramax Operations: 2020   2019   Change   % Change
TCE Revenue (in thousands) $ 63,957     $ 102,796     $ (38,839 )   (38 )
TCE Revenue / Day $ 7,604     $ 10,010     $ (2,406 )   (24 )
Revenue Days 8,411     10,269     (1,858 )   (18 )

The Company’s Ultramax Operations vessel operating costs were $47.8 million for the first nine months of 2020, including approximately $2.6 million of takeover costs and contingency expenses, compared with vessel operating costs of $51.0 million in the prior year period, relating to the 34 and 37 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to primarily to the reduction in fleet size and the outbreak of the COVID-19, which for most of the year reduced crew travel and the purchase of stores and spares and the performance of repairs. Daily operating costs excluding takeover costs and contingency expenses for the first nine months of 2020 remained flat at $4,888 compared to $4,873 in the prior year period.

Charterhire expense for the Company’s Ultramax Operations was approximately $2.4 million and $2.7 million for the first nine months of 2020 and 2019, respectively, and relates to the vessel that the Company time chartered-in until August 2020 when the vessel was redelivered to its owner.

Ultramax Operations depreciation decreased from $27.1 million to $25.5 million due to the decrease in fleet size and the classification of vessels as held for sale (upon which depreciation ceases).

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 $3.0 million for the first nine months of 2020 and $3.1 million in the prior year period.

During the first nine months 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. During the first nine months of 2019, the Company recorded a write-down on assets held for sale related to the classification of the SBI Cougar and SBI Puma as held for sale. The sale of the vessels was completed in October 2019.

Kamsarmax Operations

  Nine Months Ended September 30,        
Dollars in thousands 2020   2019   Change   % Change
TCE Revenue:              
Vessel revenue $ 46,935     $ 61,081     $ (14,146 )   (23 )
Voyage expenses 1,730     408     1,322     324  
TCE Revenue $ 45,205     $ 60,673     $ (15,468 )   (25 )
Operating expenses:              
Vessel operating costs 23,609     25,730     (2,121 )   (8 )
Charterhire expense 13,061     8,039     5,022     62  
Vessel depreciation 13,614     13,695     (81 )   (1 )
General and administrative expense 1,468     1,594     (126 )   (8 )
Loss / write-down on assets held for sale 28,992     7,353     21,639     294  
Total operating expenses $ 80,744     $ 56,411     $ 24,333     43  
Operating loss $ (35,539 )   $ 4,262     $ (39,801 )   934  

Vessel revenue for the Company’s Kamsarmax Operations decreased to $46.9 million in the first nine months of 2020 from $61.1 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $45.2 million for the first nine months of 2020 associated with a day-weighted average of 17 vessels owned or finance leased and five vessels time chartered-in, compared to $60.7 million for the prior year period associated with a day-weighted average of 19 vessels owned or finance leased. TCE revenue per day was $8,640 and $11,672 for the first nine months of 2020 and 2019, respectively.

  Nine Months Ended September 30,        
Kamsarmax Operations: 2020   2019   Change   % Change
TCE Revenue (in thousands) $ 45,205     $ 60,673     $ (15,468 )   (25 )
TCE Revenue / Day $ 8,640     $ 11,672     $ (3,032 )   (26 )
Revenue Days 5,232     5,198     34     1  

Kamsarmax Operations vessel operating costs were $23.6 million for the first nine months of 2020, including approximately $1.3 million of takeover costs and contingency expenses, compared with vessel operating costs of $25.7 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 primarily to the reduction in fleet size and the outbreak of COVID-19, which for most of the year reduced crew travel and the purchase of stores and spares and the performance of repairs. Daily operating costs excluding takeover costs and contingency expenses for the first nine months of 2020 decreased to $4,929 from $4,990 in the prior year period.

Kamsarmax Operations charterhire expense was $13.0 million in the first nine months of 2020, relating to five vessels the Company began time chartering-in during 2019.  The year over year increase reflects the full year impact of the cost in 2020.

Kamsarmax Operations depreciation was $13.6 million and $13.7 million in the first nine months of 2020 and 2019, respectively. While the fleet size decreased, vessels were drydocked or had scrubbers installed both of which added to the costs being depreciated.

General and administrative expense for the Company’s Kamsarmax Operations was $1.5 million for the first nine months of 2020 and $1.6 million in the first nine months 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 nine months of 2020, the Company recorded a write down on assets held for sale of $29.0 million related to the classification of two vessels (SBI Bolero and SBI Rock) as held for sale and the agreement to sell the SBI Sousta at September 30, 2020.  In the first nine months of 2019, $7.4 million was written down related to assets either sold or held for sale.

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 $15.1 million and $19.3 million in the first nine months 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 $106.7 million for the first nine months of 2020 and received cash dividend income of $0.9 million from its equity investment in Scorpio Tankers Inc. During the first nine months of 2019, the Company recorded a non-cash gain of approximately $68.6 million as well as cash dividend income of $1.6 million also related to its equity investment in Scorpio Tankers Inc.

Financial expenses, net of interest income decreased to $27.2 million in the first nine months of 2020 from $39.8 million in the prior year period due to lower LIBOR rates and the redemption of the Company’s 7.50% Senior Unsecured Notes in August of 2019.

 

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

    Unaudited
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2020   2019   2020   2019
Revenue:                
Vessel revenue   $ 46,690     $ 63,227     $ 113,679     $ 164,315  
Operating expenses:                
Voyage expenses   1,697     501     4,517     846  
Vessel operating costs   24,487     25,196     71,422     76,692  
Charterhire expense   6,374     7,488     15,548     10,770  
Vessel depreciation   14,090     13,533     39,113     40,803  
General and administrative expenses   6,285     7,941     19,589     24,001  
Loss / write-down on assets sold or held for sale   19,598     (194 )   36,607     12,041  
Total operating expenses   72,531     54,465     186,796     165,153  
Operating loss (income)   (25,841 )   8,762     (73,117 )   (838 )
Other income (expense):                
Interest income   18     553     190     1,227  
(Loss) income from equity investments   (3,534 )   1,582     (105,858 )   70,227  
Foreign exchange (loss) income   (113 )   18     (243 )   (33 )
Financial expense, net   (7,155 )   (12,843 )   (27,352 )   (41,013 )
Total other (expense) income   (10,784 )   (10,690 )   (133,263 )   30,408  
Net loss   $ (36,625 )   $ (1,928 )   $ (206,380 )   $ 29,570  
                 
(Loss) earnings per share:                
Basic   $ (3.12 )   $ (0.28 )   $ (23.34 )   $ 4.36  
Diluted   $ (3.12 )   $ (0.28 )   $ (23.34 )   $ 4.25  
                 
Basic weighted average number of common shares outstanding   11,724     6,846     8,843     6,789  
Diluted weighted average number of common shares outstanding   11,724     6,846     8,843     6,961  
                         

 

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

    Unaudited    
    September 30, 2020   December 31, 2019
Assets        
Current assets        
Cash and cash equivalents   $ 40,220     $ 42,530  
Accounts receivable   21,142     13,209  
Prepaid expenses and other current assets   7,147     9,547  
Total current assets   68,509     65,286  
Non-current assets        
Vessels, net   1,277,383     1,271,993  
Assets held for sale   17,500     77,536  
Equity investments   23,857     173,298  
Deferred financing costs, net   2,410     2,982  
Other assets   39,056     74,464  
Total non-current assets   1,360,206     1,600,273  
Total assets   $ 1,428,715     $ 1,665,559  
         
Liabilities and shareholders’ equity        
Current liabilities        
Bank loans, net   $ 4,809     $ 44,956  
Capital lease obligations   35,940     29,159  
Accounts payable and accrued expenses   32,805     49,718  
Total current liabilities   73,554     123,833  
Non-current liabilities        
Bank loans, net   244,545     332,613  
Capital lease obligations   356,693     321,646  
Other liabilities   135     12,500  
Total non-current liabilities   601,373     666,759  
Total liabilities   674,927     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 31,875,000 and 21,250,000 shares as of September 30, 2020 and December 31, 2019; outstanding 12,386,880 shares as of September 30, 2020 and 7,248,180 as of December 31, 2019   858     809  
Paid-in capital   1,802,296     1,717,144  
Common shares held in treasury, at cost; 856,785 shares at September 30, 2020 and December 31, 2019   (56,720 )   (56,720 )
Accumulated deficit   (992,646 )   (786,266 )
Total shareholders’ equity   753,788     874,967  
Total liabilities and shareholders’ equity   $ 1,428,715     $ 1,665,559  
                 

 

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

    Nine Months Ended September 30,
    2020   2019
Operating activities        
Net (loss) income   $ (206,380 )   $ 29,570  
Adjustment to reconcile net (loss) income to net cash provided by        
operating activities:        
Restricted share amortization   5,552     6,674  
Vessel depreciation   39,113     40,803  
Amortization of deferred financing costs   2,880     5,941  
Write-off of deferred financing costs   366     446  
Loss / write-down on assets held for sale   33,894     10,385  
Net unrealized losses (gains) on investments   106,730     (68,606 )
Dividend income on equity investment   (872 )   (1,623 )
Drydocking expenditure   (16,606 )   (2,265 )
Changes in operating assets and liabilities:        
Increase in accounts receivable   (7,933 )   (1,199 )
Decrease (increase) in prepaid expenses and other assets   23,421     (4,241 )
(Decrease) increase in accounts payable and accrued expenses   (27,817 )   6,795  
Net cash (used in) provided by operating activities   (47,652 )   22,680  
Investing activities        
Equity investment       (1,500 )
Sale of equity investment   42,711      
Dividend income on equity investment   872     1,623  
Proceeds from sale of assets held for sale   52,518     47,302  
Scrubber payments   (42,495 )   (16,678 )
Net cash used in investing activities   53,606     30,747  
Financing activities        
Proceeds from issuance of common stock   82,254      
Proceeds from issuance of long-term debt   132,708     300,070  
Repayments of long-term debt   (220,620 )   (332,052 )
Dividends paid   (2,606 )   (4,298 )
Debt issue costs paid       (4,508 )
Net cash provided by (used in) financing activities   (8,264 )   (40,788 )
(Decrease) increase in cash and cash equivalents   (2,310 )   12,639  
Cash and cash equivalents, beginning of period   42,530     67,495  
Cash and cash equivalents, end of period   $ 40,220     $ 80,134  
                 

 

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

    Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2020   2019   2020   2019
Time charter equivalent revenue ($000’s) (1):                
Vessel revenue   $ 46,690     $ 63,227     $ 113,679     $ 164,315  
Voyage expenses   (1,697 )   (501 )   (4,517 )   (846 )
Time charter equivalent revenue   $ 44,993     $ 62,726     $ 109,162     $ 163,469  
Time charter equivalent revenue attributable to:                
Kamsarmax   $ 18,712     $ 21,709     $ 45,205     $ 60,673  
Ultramax   26,281     41,017     63,957     102,796  
    $ 44,993     $ 62,726     $ 109,162     $ 163,469  
Revenue days:                
Kamsarmax   1,845     1,651     5,232     5,198  
Ultramax   2,943     3,469     8,411     10,269  
Combined   4,788     5,120     13,643     15,467  
TCE per revenue day (1):                
Kamsarmax   $ 10,142     $ 13,149     $ 8,640     $ 11,672  
Ultramax   $ 8,930     $ 11,824     $ 7,604     $ 10,010  
Combined   $ 9,397     $ 12,251     $ 8,001     $ 10,569  

(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 October 26, 2020 

Vessel Name   Year Built    DWT    Vessel Type   Scrubber Installed ?
SBI Samba   2015   84,000     Kamsarmax   Yes
SBI Rumba   2015   84,000     Kamsarmax   Yes
SBI Capoeira   2015   82,000     Kamsarmax   No
SBI Carioca   2015   82,000     Kamsarmax   Yes
SBI Conga   2015   82,000     Kamsarmax   No
SBI Sousta   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       1,234,000          
                 
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   Yes
SBI Tango   2015   61,000     Ultramax   No
SBI Maia   2015   61,000     Ultramax   Yes
SBI Hydra   2015   61,000     Ultramax   Yes
SBI Subaru   2015   61,000     Ultramax   Yes
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 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       1,987,800          
Total Owned or Finance Leased Vessels DWT   3,221,800          

Time chartered-in vessels

The Company currently time charters-in 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
Kamsarmax   2019   81,100     China   Variable   10-Mar-21   (1 )
Kamsarmax   2019   81,100     China   Variable   7-Apr-21   (2 )
Kamsarmax   2018   82,000     China   $ 12,500     25-June-21   (3 )
Kamsarmax   2018   81,100     China   Variable   13-Jul-21   (4 )
Kamsarmax   2015   81,100     China   Variable   22-Jul-21   (5 )
Total TC DWT       406,400                  

(1) 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.
(2) 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.
(3) 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.
(4) 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.
(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 August 2019.

Conference Call on Results:

A conference call to discuss the Company’s results will be held at 9:00 AM Eastern Daylight Time / 2:00 PM Central European Time on October 27, 2020.  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 7883425.  The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

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/6prhigw4

About Scorpio Bulkers Inc.

Scorpio Bulkers Inc. is a provider of marine transportation of dry bulk commodities, and is investing in the next generation of wind turbine installation vessels. The Company has recently sold two vessels and has contracted to sell six additional vessels, which are expected to close in the fourth quarter of 2020. Upon the completion of the announced vessel sales, Scorpio Bulkers Inc. will have an operating fleet of 46 vessels consisting of 41 wholly-owned or finance leased drybulk vessels (including 13 Kamsarmax vessels and 28 Ultramax vessels), and five time chartered-in Kamsarmax vessels. In addition to its dry bulk fleet, the Company has signed a letter of intent to enter into a shipbuilding contract with Daewoo Shipbuilding and Marine Engineering Inc. to build a wind turbine installation vessel to be delivered in 2023, with options to build three further similar vessels. The Company’s owned and finance leased fleet will have a total carrying capacity of approximately 2.8 million dwt and all of the Company’s owned and finance leased 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
September 30,
  Nine Months Ended
September 30,
In thousands 2020   2019   2020   2019
Net (loss) income $ (36,625 )   (1,928 )   $ (206,380 )   $ 29,570  
Add Back:              
Net interest expense 6,279     10,779     23,915     33,399  
Depreciation and amortization (1) 16,482     17,421     47,912     53,864  
EBITDA $ (13,864 )   26,272     $ (134,553 )   $ 116,833  

(1) Includes depreciation, amortization of deferred financing costs and restricted share amortization.

Adjusted net (loss) income (unaudited)

  Three Months Ended
September 30,
  Three Months Ended
September 30,
In thousands, except per share data 2020   2019
  Amount   Per share   Amount   Per share
Net loss $ (36,625 )   $ (3.12 )   $ (1,928 )   $ (0.28 )
Adjustments:              
Loss / write-down on assets 19,598     1.67     (194 )   (0.03 )
Total adjustments $ 19,598     $ 1.67     $ (194 )   $ (0.03 )
Adjusted net loss $ (17,027 )   $ (1.45 )   $ (2,122 )   $ (0.31 )

 

  Nine Months Ended
September 30,
  Nine Months Ended
September 30,
In thousands, except per share data 2020   2019
  Amount   Per share   Amount   Per share
Net (loss) income $ (206,380 )   $ (23.34 )   $ 29,570     $ 4.25
Adjustments:              
Loss / write-down on assets 36,607     4.14     12,041     1.73
Write-off of deferred financing cost 366     0.04     446     0.06
Total adjustments $ 36,973     $ 4.18     $ 12,487     $ 1.79
Adjusted net (loss) income $ (169,407 )   $ (19.16 )   $ 42,057     $ 6.04

Adjusted EBITDA (unaudited)

  Three Months Ended
September 30,
   Nine Months Ended
September 30,
In thousands 2020   2019   2020   2019
Net (loss) income $ (36,625 )   $ (1,928 )   $ (206,380 )   $ 29,570
Impact of adjustments 19,598     (194 )   36,973     12,487
Adjusted net (loss) income (17,027 )   (2,122 )   (169,407 )   42,057
Add Back:              
Net interest expense 6,279     10,779     23,915     33,399
Depreciation and amortization (1) 16,482     17,421     47,546     53,417
Adjusted EBITDA $ 5,734     $ 26,078     $ (97,946 )   $ 128,873

(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. We undertake no obligation, and specifically decline any obligation, except as required by law, to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.

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 ongoing novel coronavirus (COVID-19) outbreak, including its effects on demand for dry bulk products and the transportation thereof, 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 and the availability of capital resources (including for capital expenditures) and comply with covenants in such financing arrangements, planned capital expenditures, our ability to successfully identify, consummate, integrate and realize the expected benefits from acquisitions and changes to our business strategy, 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