UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

For the month of October 2019

Commission File Number: 001-36231
 

SCORPIO BULKERS INC.
(Translation of registrant's name into English)
 

9, Boulevard Charles III, Monaco 98000
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x   Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o.

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o.

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.















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INFORMATION CONTAINED IN THIS FORM 6-K REPORT
 
Attached as Exhibit 99.1 to this Report on Form 6-K is a copy of the press release of Scorpio Bulkers Inc. (the “Company”), dated October 23, 2019, announcing the Company's financial results for the third quarter of 2019.

Attached as Exhibit 99.2 is a discussion of the material Marshall Islands and U.S. federal income tax considerations with respect to the special stock dividend of common shares of Scorpio Tankers Inc.













SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
                    
 
 
 SCORPIO BULKERS INC.
 
 
(registrant)
 
 
 
 
 
 
Dated:
October 23, 2019
By: /s/ Hugh Baker
 
 
Hugh Baker
 
 
Chief Financial Officer
 
 
 



Exhibit
EXHIBIT 99.1


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13158866&doc=4
Scorpio Bulkers Inc. Announces Financial Results for the Third Quarter of 2019 and Declares a Quarterly Cash Dividend and a Special Stock Dividend
MONACO - October 23, 2019 (GLOBE NEWSWIRE) - Scorpio Bulkers Inc. (NYSE: SALT) (“Scorpio Bulkers”, or the “Company”), today reported its results for the three months ended September 30, 2019.
The Company also announced that on October 22, 2019, its Board of Directors declared:
a quarterly cash dividend of $0.02 per share on the Company’s common shares; and
a one-time special stock dividend to the shareholders of the Company of an aggregate of one million shares of common stock of Scorpio Tankers Inc.
Results for the Three and Nine Months Ended September 30, 2019 and 2018
For the third quarter of 2019, the Company’s GAAP net loss was $1.9 million, or $0.03 per diluted share, including:
a non-cash gain of approximately $1.0 million and cash dividend income of $0.5 million, or $0.02 earnings per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc.;
a partial reversal of the write-down of assets held for sale of approximately $0.2 million related to the sale of the SBI Cougar and SBI Puma; and
the write-off of deferred financing costs of approximately $0.5 million, or $0.01 per diluted share, related to the refinancing of existing debt.
For the same period in 2018, the Company’s GAAP net loss was $0.4 million, or $0.01 per diluted share.
Total vessel revenues for the third quarter of 2019 were $63.2 million, compared to $62.5 million for the same period in 2018. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the third quarters of 2019 and 2018 were $26.3 million and $28.8 million, respectively (see Non-GAAP Financial Measures below).
For the third quarter of 2019, the Company’s adjusted net loss was $2.1 million, or $0.03 adjusted loss per diluted share, which excludes the impact of the partial reversal of the write-down of assets held for sale of $0.2 million relating to the SBI Cougar and SBI Puma. Adjusted EBITDA for the third quarter of 2019 was $26.1 million. There were no such non-GAAP adjustments to net loss in the third quarter of 2018 (see Non-GAAP Financial Measures below).
For the first nine months of 2019, the Company’s GAAP net income was $29.6 million, or $0.42 per diluted share, including:
a non-cash gain of approximately $68.6 million and cash dividend income of $1.6 million, or $1.01 earnings per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc.;
a write-down of assets either sold or held for sale of approximately $12.5 million, or $0.18 per diluted share, related to the sales of the SBI Electra, SBI Flamenco, SBI Cougar and SBI Puma and the write-off of deferred financing costs on the credit facilities related to the SBI Electra and SBI Flamenco; and
the write-off of deferred financing costs of approximately $3.2 million, or $0.05 per diluted share, related to the refinancing of existing debt.
For the same period in 2018, the Company’s GAAP net loss was $5.3 million, or $0.07 per diluted share.

1



Total vessel revenues for the first nine months of 2019 were $164.3 million, compared to $177.3 million for the same period in 2018. EBITDA for the first nine months of 2019 and 2018 were $116.8 million and $77.2 million, respectively (see Non-GAAP Financial Measures below).
For the first nine months of 2019, the Company’s adjusted net income was $42.1 million, or $0.60 adjusted earnings per diluted share, which excludes the impact of the write-down of assets either sold or held for sale of $12.0 million and the write-off of deferred financing costs on the credit facilities relating to the SBI Electra and SBI Flamenco of $0.4 million. Adjusted EBITDA for the first nine months of 2019 was $128.9 million. There were no such non-GAAP adjustments to net loss in the first nine months of 2018 (see Non-GAAP Financial Measures below).
TCE Revenue
TCE Revenue Earned during the Third Quarter of 2019 (see Non-GAAP Financial Measures)

Our Kamsarmax fleet earned an average of $13,149 per day
Our Ultramax fleet earned an average of $11,824 per day
Voyages Fixed thus far for the Fourth Quarter of 2019, as of the date hereof
Kamsarmax fleet: approximately $14,083 per day on average for 50% of the days
Ultramax fleet: approximately $13,450 per day on average for 39% of the days
Cash and Cash Equivalents
As of October 18, 2019, the Company had approximately $89.6 million in cash and cash equivalents.
Recent Significant Events
Special Stock Dividend
On October 22, 2019, the Company’s Board of Directors declared a one-time special stock dividend to the shareholders of the Company of an aggregate of one million shares of common stock of Scorpio Tankers Inc. (NYSE:STNG), a related party. For each common share that a shareholder holds in the Company that shareholder will receive 0.0138 shares of common stock of Scorpio Tankers Inc., payable on or about December 13, 2019 to all shareholders of record as of November 15, 2019 (the “Record Date”). The Scorpio Tankers Inc. common shares to be distributed in the special dividend were acquired from Scorpio Tankers Inc. in a registered underwritten public offering of its common shares in October 2018. Following the payment of the special dividend, the Company will continue to own approximately 4.4 million common shares of Scorpio Tankers Inc.
No fractional shares of Scorpio Tankers Inc. will be issued in connection with the special dividend, and instead the Company’s shareholders will receive cash in lieu of any fractional shares. For a discussion of the material tax consequences related to this special stock dividend, please see the Company’s Report on Form 6-K filed with the Securities and Exchange Commission on the date hereof.
Emanuele A. Lauro, the Company’s Chairman and CEO, commented “We will continue to manage Scorpio Bulkers to best effect as we identify changes in the global marketplace.  Of note, the special dividend of a portion of our shareholding in Scorpio Tankers is an appropriate step at this time.  We believe in sharing the benefit of recent improvement of product tanker fundamentals with our shareholders, while we believe that the investment thesis around IMO 2020 still has much room to run. Separately, our core business continues to benefit from a number of short- and medium-term catalysts.  Demand for Ultramax and Kamsarmax vessels has been resilient, particularly in light of expanded ton-miles from new, or renewed, supply lines from West to East.  In addition, regulators and our core customers alike are defining significant benefits for modern, fuel-efficient vessels like ours.  Notwithstanding the short-term costs of positioning new vessels or outfitting them with scrubbers, we are as confident as ever that our strategy confers sustained benefits as the regulatory and competitive environment evolves.”
Quarterly Cash Dividend
In the third quarter of 2019, the Company’s Board of Directors declared and the Company paid a quarterly cash dividend of $0.02 per share totaling approximately $1.4 million.
On October 22, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per share, payable on or about December 13, 2019, to all shareholders of record as of November 15, 2019. As of October 22, 2019, 72,487,958 shares were outstanding.

2



Vessel Sales
On September 17, 2019, the Company agreed to sell the SBI Puma and SBI Cougar, 2014 and 2015 built Ultramax vessels, respectively, for approximately $37.9 million in aggregate to an unaffiliated third party. The sale closed on October 8, 2019 and generated $16.0 million of additional liquidity after the repayment of $21.9 million of outstanding debt. As of June 30, 2019, these vessels were classified as held for sale. The Company recorded a loss of approximately $4.9 million in the second quarter of 2019 and wrote-off deferred financing costs of $0.2 million in October 2019 upon the repayment of $21.9 million of outstanding debt.
Debt

Senior Unsecured Notes Due September 2019

On August 2, 2019, the Company redeemed the entire outstanding balance of its Senior Unsecured Notes Due September 2019 of $73.6 million. The redemption price of the Senior Unsecured Notes Due September 2019 was equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, August 2, 2019.

AVIC Lease Financing
In July 2019, the Company closed the transaction to sell and leaseback three Ultramax vessels (SBI Hydra, SBI Lyra and SBI Maia) to AVIC International Leasing Co., Ltd. As part of this transaction, the Company has agreed to bareboat charter-in the vessels for a period of eight years and has purchase options beginning after the end of the second year of each bareboat charter agreement. The Company also has a purchase obligation for each vessel upon the expiration of each bareboat charter agreement.
$330.0 Million Credit Facility
During July 2019, the Company prepaid approximately $30.9 million of its $330.0 Million Credit Facility and wrote-off deferred financing costs of approximately $0.4 million as part of the refinancing of the three vessels now financed by the AVIC Lease Financing (SBI Hydra, SBI Lyra and SBI Maia). As such, the $330.0 Million Credit Facility was repaid in full and terminated.
$38.7 Million Credit Facility
During October 2019, the Company prepaid approximately $21.9 million of its $38.7 Million Credit Facility and wrote-off approximately $0.2 million of deferred financing costs as part of the sale of the SBI Puma and SBI Cougar.
Vessels Time Chartered-In
During August 2019, the Company time chartered-in one Kamsarmax vessel for approximately 24 to 27 months at 118% of the Baltic Exchange 74,000 DWT Panamax Index (“BPI”). The Company simultaneously time chartered this vessel out to the Scorpio Kamsarmax Pool under matching terms.
In September 2019, the Company exercised its option to extend the time charter-in agreement of the 2017 built Ultramax vessel for one year at $10,885 per day.
Debt Overview

The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of September 30, 2019 and October 18, 2019, are as follows (dollars in thousands):


3



 
 
As of
September 30, 2019
 
As of October 18, 2019
 
As of October 18, 2019
Credit Facility
 
Amount Outstanding
 
Amount Committed (1)
Senior Notes
 
$

 
$

 
$

$330 Million Credit Facility
 

 

 

$12.5 Million Credit Facility
 
8,813

 
8,813

 

$27.3 Million Credit Facility
 
9,008

 
8,813

 

$85.5 Million Credit Facility
 
47,594

 
47,594

 
5,712

$38.7 Million Credit Facility
 
32,400

 
10,500

 

$12.8 Million Credit Facility
 
11,900

 
11,900

 
1,398

$30.0 Million Credit Facility
 
27,753

 
27,753

 
2,585

$60.0 Million Credit Facility
 
27,138

 
27,138

 
2,862

$184.0 Million Credit Facility
 
168,916

 
168,916

 
17,448

$34.0 Million Credit Facility
 
32,179

 
32,179

 
3,000

$90.0 Million Credit Facility
 
82,100

 
82,100

 
8,706

$19.6 Million Lease Financing - SBI Rumba
 
17,191

 
17,191

 

$19.0 Million Lease Financing - SBI Tango
 
17,593

 
17,498

 

$19.0 Million Lease Financing - SBI Echo
 
17,671

 
17,580

 

$20.5 Million Lease Financing - SBI Hermes
 
19,372

 
19,269

 

$21.4 Million Lease Financing - SBI Samba
 
20,726

 
20,613

 

CMBFL Lease Financing
 
115,688

 
115,688

 
11,842

$45.0 Million Lease Financing - SBI Virgo & SBI Libra
 
40,783

 
40,529

 
3,000

AVIC Lease Financing
 
112,183

 
111,038

 
9,840

Total
 
$
809,008

 
$
785,112

 
$
66,393

(1)
Includes the maximum loan amount available for the installation of scrubbers following upsizes of certain credit facilities.

The Company’s projected quarterly debt repayments on its bank loans and lease financing arrangements through 2020 are as follows (dollars in thousands):
        
 
 
Principal on Bank Loans
 
Principal on Lease Financing Arrangements
 
Total (1)
Q4 2019 (2)
 
7,515

 
4,955

 
12,470

Q1 2020
 
10,082

 
7,562

 
17,644

Q2 2020
 
10,815

 
7,853

 
18,668

Q3 2020
 
10,489

 
8,320

 
18,809

Q4 2020 (3)
 
19,095

 
8,339

 
27,434

Total
 
$57,996
 
$37,029
 
$95,025
(1)
Includes estimated repayments on the upsizings of certain credit facilities 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 finalize.
(2)
Relates to payments expected to be made from October 19, 2019 to December 31, 2019.
(3)
Includes $8.0 million repayment of the $12.5 Million Credit Facility due at maturity.
IMO 2020

4



The Company’s projected schedule and estimated payments for the installation of scrubbers on all the owned and finance leased vessels in the Company’s fleet is as follows (dollars in thousands). Through October 18, 2019, the Company has paid $17.3 million towards the purchase of the scrubbers.
 
 
Number of Vessels by Type
 
Estimated Payments (1)
 
 
 
Ultramax
 
Kamsarmax
 
 
Q4 2019 (2)
 
7

 
4

 
21,853

 
Q1 2020
 
10

 
2

 
27,802

 
Q2 2020
 
8

 
4

 
24,118

 
Q3 2020
 
3

 
4

 
13,927

 
Q4 2020
 
4

 

 
11,283

 
Q1 2021
 

 

 
4,281

 
Total
 
32

 
14

 
$
103,264

 
(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 finalize.
(2)
Relates to payments expected to be made from October 19, 2019 to December 31, 2019.

Financial Results for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018
For the third quarter of 2019, the Company’s GAAP net loss was $1.9 million, or $0.03 per diluted share, compared to a net loss of $0.4 million, or $0.01 per diluted share, for the same period in 2018. 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 $0.02 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc., a reversal of charges of approximately $0.2 million related to the sale of the SBI Cougar and SBI Puma and the write-off of deferred financing costs of approximately $0.5 million, or $0.01 per diluted share, related to the refinancing of existing debt. EBITDA for the third quarters of 2019 and 2018 were $26.3 million and $28.8 million, respectively (see Non-GAAP Financial Measures below).
For the third quarter of 2019, the Company’s adjusted net loss was $2.1 million, or $0.03 per diluted share, which excludes the impact of the reversal to the write-down of assets held for sale of $0.2 million. Adjusted EBITDA for the third quarter of 2019 was $26.1 million. There were no such non-GAAP adjustments to net loss in the third quarter of 2018 (see Non-GAAP Financial Measures below).
Total vessel revenues for the third quarter of 2019 were $63.2 million compared to $62.5 million in the third quarter of 2018. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the third quarter of 2019 was $62.7 million, an increase of $0.3 million from the prior year period due primarily to higher indices, the impact of which was offset by a decrease in revenue days related the sale of two Kamsarmax vessels and scheduled drydocking.
Total operating expenses for the third quarter of 2019 were $54.5 million, including the reversal of charges related to the sale of the SBI Cougar and SBI Puma of $0.2 million, compared to $49.5 million in the third quarter of 2018.

5



Ultramax Operations
 
Three Months Ended September 30,
 
 
 
 
Dollars in thousands
2019
 
2018
 
Change
 
% Change
TCE Revenue:
 
 
 
 
 
 
 
Vessel revenue
$
41,257

 
$
39,722

 
$
1,535

 
4

Voyage expenses
240

 
80

 
160

 
200

TCE Revenue
$
41,017

 
$
39,642

 
$
1,375

 
3

Operating expenses:
 
 
 
 

 

Vessel operating costs
16,798

 
18,178

 
(1,380
)
 
(8
)
Charterhire expense
936

 
936

 

 

Vessel depreciation
9,000

 
9,399

 
(399
)
 
(4
)
General and administrative expense
1,070

 
1,109

 
(39
)
 
(4
)
Loss / write-down on assets held for sale
(194
)
 

 
(194
)
 
NA

Total operating expenses
$
27,610

 
$
29,622

 
$
(2,012
)
 
(7
)
Operating income
$
13,407

 
$
10,020

 
$
3,387

 
34

Vessel revenue for the Company’s Ultramax Operations increased to $41.3 million for the third quarter of 2019 from $39.7 million in the prior year period. The weakness in rates experienced in the first half of the year was reversed in the third quarter of 2019 due to an extended South American grain season as Chinese buyers were forced to continue to source agricultural commodities from Brazil and Argentina rather than the United States.  The strength of Atlantic rates created a large value imbalance between the two basins, encouraging vessels to ballast.  Global Ultramax supply has moved to a more balanced split between the Atlantic and Pacific basins due to the start of our fleet’s drydock and scrubber fitting program.
TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $41.0 million for the third quarter of 2019 compared to $39.6 million for the prior year period. During both periods, the Company’s Ultramax fleet consisted of a day-weighted average of 37 vessels owned or finance leased and one vessel time chartered-in. TCE revenue per day was $11,824 and $11,342 for the third quarters of 2019 and 2018, respectively.
 
Three Months Ended September 30,
 
 
 
 
Ultramax Operations:
2019
 
2018
 
Change
 
% Change
TCE Revenue (in thousands)
$
41,017

 
$
39,642

 
$
1,375

 
3

TCE Revenue / Day
$
11,824

 
$
11,342

 
$
482

 
4

Revenue Days
3,469

 
3,495

 
(26
)
 
(1
)
The Company’s Ultramax Operations vessel operating costs were $16.8 million for the third quarter of 2019, including approximately $0.5 million of takeover costs and contingency expenses, compared with vessel operating costs of $18.2 million in the prior year period, relating to the 37 vessels owned or finance leased on average during both periods. Daily operating costs excluding takeover costs and contingency expenses for the third quarters of 2019 and 2018 were $4,796 and $5,037, respectively. Daily operating costs for the third quarter of 2019 decreased from the third quarter of 2018 due primarily to the timing of repairs and the purchase of spares and stores.
Charterhire expense for the Company’s Ultramax Operations was approximately $0.9 million for both the third quarters of 2019 and 2018 and relates to the vessel the Company time chartered-in 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.
Ultramax Operations depreciation decreased slightly from $9.4 million to $9.0 million as the SBI Cougar and SBI Puma were classified as held for sale since the second quarter of 2019 and therefore were not depreciated. The sale of these vessels was completed in October 2019.

6



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 $1.1 million for both the third quarters of 2019 and 2018.
Kamsarmax Operations
 
Three Months Ended September 30,
 
 
 
 
Dollars in thousands
2019
 
2018
 
Change
 
% Change
TCE Revenue:
 
 
 
 
 
 
 
Vessel revenue
$
21,970

 
$
22,743

 
$
(773
)
 
(3
)
Voyage expenses
261

 
4

 
257

 
6,425

TCE Revenue
$
21,709

 
$
22,739

 
$
(1,030
)
 
(5
)
Operating expenses:
 
 
 
 

 

Vessel operating costs
8,398

 
8,833

 
(435
)
 
(5
)
Charterhire expense
6,552

 
108

 
6,444

 
5,967

Vessel depreciation
4,533

 
4,899

 
(366
)
 
(7
)
General and administrative expense
482

 
542

 
(60
)
 
(11
)
Total operating expenses
$
19,965

 
$
14,382

 
$
5,583

 
39

Operating income
$
1,744

 
$
8,357

 
$
(6,613
)
 
(79
)
Vessel revenue for the Company’s Kamsarmax Operations decreased to $22.0 million in the third quarter of 2019 from $22.7 million in the prior year period due primarily to a decrease in revenue days related to the sale of two Kamsarmax vessels and scheduled drydocking.
TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $21.7 million for the third quarter of 2019 associated with a day-weighted average of 17 vessels owned or finance leased and four vessels time chartered-in, compared to $22.7 million for the prior year period associated with a day-weighted average of 19 vessels owned or finance leased. TCE revenue per day was $13,149 and $13,649 for the third quarters of 2019 and 2018, respectively. Constraints on vessel supply in the Atlantic basin were supportive of freight rates throughout the quarter.  Chinese buyers were forced to source agricultural commodities from Brazil and Argentina rather than the United States.  In addition, Brazilian miner Vale resumed its export program after a prolonged disruption from dam failures. These ‘fronthaul’ voyages, and a significant number of larger dry cargo vessels fitting exhaust gas cleaning systems, or ‘scrubbers’, in drydocks in Asia pushed rates to recent highs.
 
Three Months Ended September 30,
 
 
 
 
Kamsarmax Operations:
2019
 
2018
 
Change
 
% Change
TCE Revenue (in thousands)
$
21,709

 
$
22,739

 
$
(1,030
)
 
(5
)
TCE Revenue / Day
$
13,149

 
$
13,649

 
$
(500
)
 
(4
)
Revenue Days
1,651

 
1,666

 
(15
)
 
(1
)
Kamsarmax Operations vessel operating costs were $8.4 million for the third quarter of 2019, including approximately $0.6 million of takeover costs and contingency expenses, compared with vessel operating costs of $8.8 million in the prior year period, relating to 17 and 19 vessels owned or finance leased on average, respectively, during the periods. Daily operating costs excluding takeover costs and contingency expenses for the third quarters of 2019 and 2018 were relatively flat at $4,968 and $4,931, respectively.
Kamsarmax Operations charterhire expense was $6.6 million in the third quarter of 2019, relating to five vessels the Company time chartered-in during the period. While the Company did not time charter-in any Kamsarmax vessels in the third quarter of 2018, it had a profit and loss sharing agreement with a third party related to one Kamsarmax vessel for which it recorded its residual share of the loss in the third quarter of 2018.

7



Kamsarmax Operations depreciation was $4.5 million and $4.9 million in the third quarters of 2019 and 2018, respectively, as the number of vessels owned or finance leased on average decreased to 17 in the third quarter of 2019 from 19 in the third quarter of 2018 due to the sale of the SBI Electra and SBI Flamenco.
General and administrative expense for the Company’s Kamsarmax Operations was $0.5 million for both the third quarters of 2019 and 2018. 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.
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 $6.4 million and $5.4 million in the third quarters of 2019 and 2018, respectively. The quarter over quarter increase is due primarily to an increase in non-cash restricted stock amortization.
The Company recorded a non-cash gain of approximately $1.0 million for the third quarter of 2019 and a cash dividend of $0.5 million primarily from its equity investment in Scorpio Tankers Inc.
Financial expenses, net of interest income decreased to $12.3 million in the third quarter of 2019 from $13.3 million in the prior year period due to a write-off of $2.0 million of deferred financing costs charges related to then existing debt in the third quarter of 2018, offset in part by higher levels of debt in the third quarter of 2019. In the third quarter of 2019, approximately $0.4 million of deferred financing costs were written off related to debt refinancings under the Company’s new sale and leaseback transactions. In October 2019, the Company wrote-off approximately $0.2 million upon the repayment of the existing debt on the SBI Cougar and SBI Puma which were sold.
Financial Results for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018
For the first nine months of 2019, the Company’s GAAP net income was $29.6 million, or $0.42 per diluted share, compared to a GAAP net loss of $5.3 million, or $0.07 loss per diluted share, for the same period in 2018. Results for the first nine months of 2019 include: a non-cash gain of approximately $68.6 million and cash dividend income of $1.6 million, or $1.01 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc., charges of approximately $12.5 million, or $0.18 per diluted share, related to the sales of the SBI Electra, SBI Flamenco, SBI Cougar and SBI Puma and the write-off of deferred financing costs on the credit facilities related to the SBI Electra and SBI Flamenco, and the write-off of deferred financing costs of approximately $3.2 million, or $0.05 per diluted share, related to the refinancing of existing debt. EBITDA for the first nine months of 2019 and 2018 were $116.8 million and $77.2 million, respectively (see Non-GAAP Financial Measures below).
For the first nine months of 2019, the Company’s adjusted net income was $42.1 million, or $0.60 adjusted earnings per diluted share, which excludes the impact of the write-down of assets either sold or held for sale and the write-off of related deferred financing costs totaling $12.5 million. Adjusted EBITDA for the first nine months of 2019 was $128.9 million. There were no such non-GAAP adjustments to net loss in the first nine months of 2018 (see Non-GAAP Financial Measures below).
Total vessel revenues for the first nine months of 2019 were $164.3 million compared to $177.3 million in the prior year period. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the first nine months of 2019 was $163.5 million, a decrease of $13.5 million from the prior year period. The first half of 2019 proved challenging with a loss of iron exports mainly due to Vale’s dam failure and continued disruptions from the U.S. - China trade war. A strong South American and Black Sea grain season, increasing coal exports to India and China’s resumption of coal buying occurred in tandem with a rise in Atlantic cape rates. A restart of the Brazilian iron ore export program provided additional support to already rising Ultramax and Kamsarmax rates during the third quarter of 2019.
Total operating expenses for the first nine months of 2019 were $165.2 million, including the write-down of assets either sold or held for sale of $12.0 million, compared to $147.8 million in the first nine months of 2018.

8



Ultramax Operations
 
Nine Months Ended September 30,
 
 
 
 
Dollars in thousands
2019
 
2018
 
Change
 
% Change
TCE Revenue:
 
 
 
 
 
 
 
Vessel revenue
$
103,234

 
$
112,778

 
$
(9,544
)
 
(8
)
Voyage expenses
438

 
264

 
174

 
66

TCE Revenue
$
102,796

 
$
112,514

 
$
(9,718
)
 
(9
)
Operating expenses:
 
 
 
 

 

Vessel operating costs
50,962

 
53,430

 
(2,468
)
 
(5
)
Charterhire expense
2,731

 
2,773

 
(42
)
 
(2
)
Vessel depreciation
27,108

 
27,887

 
(779
)
 
(3
)
General and administrative expense
3,131

 
3,255

 
(124
)
 
(4
)
Loss / write-down on assets held for sale
4,688

 

 
4,688

 
NA

Total operating expenses
$
88,620

 
$
87,345

 
$
1,275

 
1

Operating income
$
14,176

 
$
25,169

 
$
(10,993
)
 
(44
)
Vessel revenue for the Company’s Ultramax Operations decreased to $103.2 million for the first nine months of 2019 from $112.8 million in the prior year period. The year suffered a slow start due to coal import restrictions by China and the sentiment from a limited U.S. Gulf grain season from 2018. Since then grain trades with support from Chinese and Indian coal buying provided the catalyst for the long and slow recovery which ended in the recent high in the Ultramax segment during the third quarter of 2019.
TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $102.8 million for the first nine months of 2019 compared to $112.5 million for the prior year period. During both periods, the Company’s Ultramax fleet consisted of a day-weighted average of 37 vessels owned or finance leased and one vessel time chartered-in. TCE revenue per day was $10,010 and $10,895 for the first nine months of 2019 and 2018, respectively.
 
Nine Months Ended September 30,
 
 
 
 
Ultramax Operations:
2019
 
2018
 
Change
 
% Change
TCE Revenue (in thousands)
$
102,796

 
$
112,514

 
$
(9,718
)
 
(9
)
TCE Revenue / Day
$
10,010

 
$
10,895

 
$
(885
)
 
(8
)
Revenue Days
10,269

 
10,327

 
(58
)
 
(1
)
The Company’s Ultramax Operations vessel operating costs were $51.0 million for the first nine months of 2019, including approximately $1.7 million of takeover costs and contingency expenses, compared with vessel operating costs of $53.4 million in the prior year period, relating to the 37 vessels owned or finance leased on average during both periods. Daily operating costs excluding takeover costs and contingency expenses for the first nine months of 2019 of $4,873 were down slightly from the prior year period of $4,983 due to the timing of repairs and the purchase of spares and stores.
Charterhire expense for the Company’s Ultramax Operations was approximately $2.7 million for first nine months of 2019 and $2.8 million for the same period in 2018 and relates to the vessel the Company time chartered-in 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.
Ultramax Operations depreciation decreased from $27.9 million in the first nine months of 2018 to $27.1 million in the first nine months of 2019 as the SBI Cougar and SBI Puma were classified as held for sale since the second quarter of 2019 and subsequently sold in October 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 $3.1 million for the first nine months of 2019 and $3.3 million for the same period in 2018.

9



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
2019
 
2018
 
Change
 
% Change
TCE Revenue:
 
 
 
 
 
 
 
Vessel revenue
$
61,081

 
$
64,552

 
$
(3,471
)
 
(5
)
Voyage expenses
408

 
107

 
301

 
281

TCE Revenue
$
60,673

 
$
64,445

 
$
(3,772
)
 
(6
)
Operating expenses:
 
 
 
 

 

Vessel operating costs
25,730

 
25,458

 
272

 
1

Charterhire expense
8,039

 
318

 
7,721

 
2,428

Vessel depreciation
13,695

 
14,306

 
(611
)
 
(4
)
General and administrative expense
1,594

 
1,515

 
79

 
5

Loss / write-down on assets held for sale
7,353

 

 
7,353

 
NA

Total operating expenses
$
56,411

 
$
41,597

 
$
14,814

 
36

Operating income
$
4,262

 
$
22,848

 
$
(18,586
)
 
(81
)
Vessel revenue for the Company’s Kamsarmax Operations decreased to $61.1 million in the first nine months of 2019 from $64.6 million in the prior year period. The year had a slow start due to limited coal imports with restrictions in China and increased LNG consumptions in Europe, as well as an abrupt drop in iron ore exports after Vale’s dam failure. Rates recovered slowly until the end of the second quarter of 2019, helped by a sustained South American grain export campaign and steady Indian coal imports. At the start of the third quarter of 2019, the lack of ships in the Atlantic and the cape rates created a rally which lasted until September.
TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $60.7 million for the first nine months of 2019 associated with a day-weighted average of 19 vessels owned or finance leased and two vessels time chartered-in, compared to $64.4 million for the prior year period associated with a day-weighted average of 18 vessels owned or finance leased. TCE revenue per day was $11,672 and $13,123 for the first nine months of 2019 and 2018, respectively.
 
Nine Months Ended September 30,
 
 
 
 
Kamsarmax Operations:
2019
 
2018
 
Change
 
% Change
TCE Revenue (in thousands)
$
60,673

 
$
64,445

 
$
(3,772
)
 
(6
)
TCE Revenue / Day
$
11,672

 
$
13,123

 
$
(1,451
)
 
(11
)
Revenue Days
5,198

 
4,911

 
287

 
6

Kamsarmax Operations vessel operating costs were $25.7 million for the first nine months of 2019, including approximately $0.8 million of takeover costs and contingency expenses, compared with vessel operating costs of $25.5 million in the prior year period, relating to 19 and 18 vessels owned or finance leased on average, respectively, during the periods. Daily operating costs excluding takeover costs and contingency expenses were relatively flat for the first nine months of 2019 and 2018 at $4,990 and $4,970, respectively.
Kamsarmax Operations charterhire expense was $8.0 million in the first nine months of 2019, relating to five vessels the Company began time chartering-in during 2019. Prior to that, a profit and loss sharing agreement with a third party related to one Kamsarmax vessel for which the Company recorded its residual share of the profit or loss.

10



Kamsarmax Operations depreciation was $13.7 million and $14.3 million in the first nine months of 2019 and 2018, respectively reflecting the decrease in vessels owned or finance leased due to the sale of the SBI Electra and SBI Flamenco.
General and administrative expense for the Company’s Kamsarmax Operations was $1.6 million and $1.5 million for the first nine months of 2019 and 2018, respectively. 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 2019, the Company recorded write-downs of assets held for sale related to the sale of the SBI Electra and SBI Flamenco totaling approximately $7.4 million.
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 $19.3 million and $18.5 million in the first nine months of 2019 and 2018, respectively. The quarter over quarter increase is due primarily to an increase in non-cash restricted stock amortization.
The Company recorded a non-cash gain of approximately $68.6 million and a cash dividend of $1.6 million for the first nine months of 2019 primarily from its equity investment in Scorpio Tankers Inc.
Financial expenses, net of interest income increased to $39.8 million in the first nine months of 2019 from $34.8 million in the prior year period due to higher levels of debt. In the first nine months of 2019, approximately $3.6 million of deferred financing costs were written off related to vessel sales and debt refinancings under the Company’s new sale and leaseback transactions. In October 2019, we wrote-off approximately $0.2 million upon the repayment of the existing debt on the SBI Cougar and SBI Puma which were sold.


11

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,
 
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
 
Vessel revenue
 
$
63,227

 
$
62,465

 
$
164,315

 
$
177,331

Operating expenses:
 


 


 


 


Voyage expenses
 
501

 
84

 
846

 
372

Vessel operating costs
 
25,196

 
27,011

 
76,692

 
78,888

Charterhire expense
 
7,488

 
1,044

 
10,770

 
3,091

Vessel depreciation
 
13,533

 
14,298

 
40,803

 
42,193

General and administrative expenses
 
7,941

 
7,043

 
24,001

 
23,283

(Reversal of) loss / write-down on assets sold or held for sale
 
(194
)
 

 
12,041

 

Total operating expenses
 
54,465

 
49,480

 
165,153

 
147,827

Operating income (loss)
 
8,762

 
12,985

 
(838
)
 
29,504

Other income (expense):
 
 

 
 
 
 

 
 

Interest income
 
553

 
327

 
1,227

 
756

Income from equity investments
 
1,582

 

 
70,227

 

Foreign exchange gain (loss)
 
18

 
(31
)
 
(33
)
 
(73
)
Financial expense, net
 
(12,843
)
 
(13,635
)
 
(41,013
)
 
(35,512
)
Total other (expense) income
 
(10,690
)
 
(13,339
)
 
30,408

 
(34,829
)
Net (loss) income
 
$
(1,928
)
 
$
(354
)
 
$
29,570

 
$
(5,325
)
 
 
 
 
 
 
 
 
 
(Loss) earnings per share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.03
)
 
$
(0.01
)
 
$
0.44

 
$
(0.07
)
Diluted
 
$
(0.03
)
 
$
(0.01
)
 
$
0.42

 
$
(0.07
)
 
 
 
 
 
 
 
 
 
Basic weighted average number of common shares outstanding
 
68,462

 
72,749

 
67,889

 
72,649

Diluted weighted average number of common shares outstanding
 
68,462

 
72,749

 
69,610

 
72,649



12

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

 
 
Unaudited
 
 
 
 
September 30, 2019
 
December 31, 2018
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
80,134

 
$
67,495

Accounts receivable
 
11,489

 
10,290

Prepaid expenses and other current assets
 
11,184

 
6,314

Total current assets
 
102,807

 
84,099

Non-current assets
 
 

 
 

Vessels, net
 
1,379,057

 
1,507,918

Assets held for sale
 
36,939

 

Equity investments
 
162,387

 
92,281

Deferred financing costs, net
 
3,151

 
3,706

Other assets
 
73,771

 
15,822

Total non-current assets
 
1,655,305

 
1,619,727

Total assets
 
$
1,758,112

 
$
1,703,826

 
 
 
 
 
Liabilities and shareholders’ equity
 
 

 
 

Current liabilities
 
 

 
 

Bank loans, net
 
$
37,573

 
$
60,310

Capital lease obligations
 
28,745

 
4,594

Senior Notes, net
 

 
73,253

Accounts payable and accrued expenses
 
48,076

 
14,457

Total current liabilities
 
114,394

 
152,614

Non-current liabilities
 
 

 
 

Bank loans, net
 
403,997

 
621,179

Capital lease obligations
 
327,482

 
69,229

Other liabilities
 
19,489

 

Total non-current liabilities
 
750,968

 
690,408

Total liabilities
 
865,362

 
843,022

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 212,500,000 shares as of September 30, 2019 and December 31, 2018; outstanding 72,487,958 shares and 71,217,258 shares as of September 30, 2019 and December 31, 2018, respectively
 
809

 
796

Paid-in capital
 
1,750,011

 
1,747,648

Common shares held in treasury, at cost; 8,567,846 shares at September 30, 2019 and December 31, 2018
 
(56,720
)
 
(56,720
)
Accumulated deficit
 
(801,350
)
 
(830,920
)
Total shareholders’ equity
 
892,750

 
860,804

Total liabilities and shareholders’ equity
 
$
1,758,112

 
$
1,703,826



13

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

 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Operating activities
 
 
 
 
Net income (loss)
 
$
29,570

 
$
(5,325
)
Adjustment to reconcile net income (loss) to net cash provided by
 
 
 
 

operating activities:
 
 
 
 

Restricted share amortization
 
6,674

 
5,625

Vessel depreciation
 
40,803

 
42,193

Amortization of deferred financing costs
 
5,941

 
6,483

Write-off of deferred financing costs
 
446

 

Loss / write-down on assets held for sale
 
10,385

 

Net unrealized gains on investments
 
(68,606
)
 

Dividend income on equity investment
 
(1,623
)
 

Drydocking expenditure
 
(2,265
)
 

Changes in operating assets and liabilities:
 
 

 
 

(Increase) decrease in accounts receivable
 
(1,199
)
 
(745
)
Decrease (increase) in prepaid expenses and other assets
 
(4,241
)
 
(1,519
)
(Decrease) increase in accounts payable and accrued expenses
 
6,795

 
4,093

Net cash provided by operating activities
 
22,680

 
50,805

Investing activities
 
 

 
 

Equity investment
 
(1,500
)
 

Dividend income on equity investment
 
1,623

 

Proceeds from sale of assets held for sale
 
47,302

 

Scrubber payments
 
(16,678
)
 

Payments for vessels and vessels under construction
 

 
(21,423
)
Net cash provided by (used in) investing activities
 
30,747

 
(21,423
)
Financing activities
 
 

 
 

Proceeds from issuance of long-term debt
 
300,070

 
324,725

Repayments of long-term debt
 
(332,052
)
 
(251,515
)
Common shares repurchased
 

 
(18,710
)
Dividends paid
 
(4,298
)
 
(4,579
)
Debt issue costs paid
 
(4,508
)
 
(5,029
)
Net cash (used in) provided by financing activities
 
(40,788
)
 
44,892

Increase in cash and cash equivalents
 
12,639

 
74,274

Cash and cash equivalents, beginning of period
 
67,495

 
68,535

Cash and cash equivalents, end of period
 
$
80,134

 
$
142,809



14

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


 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Time charter equivalent revenue ($000’s) (1):
 
 
 
 
 
 
 
 
Vessel revenue
 
$
63,227

 
$
62,465

 
$
164,315

 
$
177,331

Voyage expenses
 
(501
)
 
(84
)
 
(846
)
 
(372
)
Time charter equivalent revenue
 
$
62,726

 
$
62,381

 
$
163,469

 
$
176,959

Time charter equivalent revenue attributable to:
 
 

 
 

 
 

 
 

Kamsarmax
 
$
21,709

 
$
22,739

 
$
60,673

 
$
64,445

Ultramax
 
41,017

 
39,642

 
102,796

 
112,514

 
 
$
62,726

 
$
62,381

 
$
163,469

 
$
176,959

Revenue days:
 
 

 
 

 
 

 
 

Kamsarmax
 
1,651

 
1,666

 
5,198

 
4,911

Ultramax
 
3,469

 
3,495

 
10,269

 
10,327

    Combined
 
5,120

 
5,161

 
15,467

 
15,238

TCE per revenue day (1):
 
 

 
 

 
 

 
 

Kamsarmax
 
$
13,149

 
$
13,649

 
$
11,672

 
$
13,123

Ultramax
 
$
11,824

 
$
11,342

 
$
10,010

 
$
10,895

Combined
 
$
12,251

 
$
12,087

 
$
10,569

 
$
11,613

(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.


15




Fleet List as of October 18, 2019
Vessel Name
 
Year Built
 
 DWT
 
 Vessel Type
SBI Samba
 
2015
 
84,000

 
Kamsarmax
SBI Rumba
 
2015
 
84,000

 
Kamsarmax
SBI Capoeira
 
2015
 
82,000

 
Kamsarmax
SBI Carioca
 
2015
 
82,000

 
Kamsarmax
SBI Conga
 
2015
 
82,000

 
Kamsarmax
SBI Bolero
 
2015
 
82,000

 
Kamsarmax
SBI Sousta
 
2016
 
82,000

 
Kamsarmax
SBI Rock
 
2016
 
82,000

 
Kamsarmax
SBI Lambada
 
2016
 
82,000

 
Kamsarmax
SBI Reggae
 
2016
 
82,000

 
Kamsarmax
SBI Zumba
 
2016
 
82,000

 
Kamsarmax
SBI Macarena
 
2016
 
82,000

 
Kamsarmax
SBI Parapara
 
2017
 
82,000

 
Kamsarmax
SBI Mazurka
 
2017
 
82,000

 
Kamsarmax
SBI Swing
 
2017
 
82,000

 
Kamsarmax
SBI Jive
 
2017
 
82,000

 
Kamsarmax
SBI Lynx
 
2018
 
82,000

 
Kamsarmax
Total Kamsarmax
 
 
 
1,398,000

 
 
 
 
 
 
 
 
 
SBI Antares
 
2015
 
61,000

 
Ultramax
SBI Athena
 
2015
 
64,000

 
Ultramax
SBI Bravo
 
2015
 
61,000

 
Ultramax
SBI Leo
 
2015
 
61,000

 
Ultramax
SBI Echo
 
2015
 
61,000

 
Ultramax
SBI Lyra
 
2015
 
61,000

 
Ultramax
SBI Tango
 
2015
 
61,000

 
Ultramax
SBI Maia
 
2015
 
61,000

 
Ultramax
SBI Hydra
 
2015
 
61,000

 
Ultramax
SBI Subaru
 
2015
 
61,000

 
Ultramax
SBI Pegasus
 
2015
 
64,000

 
Ultramax
SBI Ursa
 
2015
 
61,000

 
Ultramax
SBI Thalia
 
2015
 
64,000

 
Ultramax
SBI Cronos
 
2015
 
61,000

 
Ultramax
SBI Orion
 
2015
 
64,000

 
Ultramax
SBI Achilles
 
2016
 
61,000

 
Ultramax
SBI Hercules
 
2016
 
64,000

 
Ultramax
SBI Perseus
 
2016
 
64,000

 
Ultramax
SBI Hermes
 
2016
 
61,000

 
Ultramax
SBI Zeus
 
2016
 
60,200

 
Ultramax
SBI Hera
 
2016
 
60,200

 
Ultramax
SBI Hyperion
 
2016
 
61,000

 
Ultramax
SBI Tethys
 
2016
 
61,000

 
Ultramax
SBI Phoebe
 
2016
 
64,000

 
Ultramax
SBI Poseidon
 
2016
 
60,200

 
Ultramax
SBI Apollo
 
2016
 
60,200

 
Ultramax
SBI Samson
 
2017
 
64,000

 
Ultramax
SBI Phoenix
 
2017
 
64,000

 
Ultramax
SBI Gemini
 
2015
 
64,000

 
Ultramax
SBI Libra
 
2017
 
64,000

 
Ultramax
SBI Jaguar
 
2014
 
64,000

 
Ultramax

16



Vessel Name
 
Year Built
 
 DWT
 
 Vessel Type
SBI Aries
 
2015
 
64,000

 
Ultramax
SBI Taurus
 
2015
 
64,000

 
Ultramax
SBI Pisces
 
2016
 
64,000

 
Ultramax
SBI Virgo
 
2017
 
64,000

 
Ultramax
Total Ultramax
 
 
 
2,179,800

 
 
Total Owned or Finance Leased Vessels DWT
 
3,577,800

 
 
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 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 is time chartered-in for 24 months at $12,000 per day for the first twelve months and at $12,500 per day for the second twelve 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 120% 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.




17



Conference Call on Results:
A conference call to discuss the Company’s results will be held today, October 23, 2019, 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 2443857.

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/z9ur3yde

About Scorpio Bulkers Inc.
Scorpio Bulkers Inc. is a provider of marine transportation of dry bulk commodities.  Scorpio Bulkers Inc. has an operating fleet of 58 vessels consisting of 52 wholly-owned or finance leased drybulk vessels (including 17 Kamsarmax vessels and 35 Ultramax vessels), and six time chartered-in vessels (including five Kamsarmax vessels and one Ultramax vessel). The Company’s owned and finance leased fleet has a total carrying capacity of approximately 3.6 million dwt and all of the Company’s owned vessels 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.





18



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
2019
 
2018
 
2019
 
2018
Net (loss) income
$
(1,928
)
 
(354
)
 
$
29,570

 
$
(5,325
)
Add Back:
 
 
 
 
 
 
 
Net interest expense
10,779

 
9,791

 
33,399

 
28,273

Depreciation and amortization (1)
17,421

 
19,378

 
53,864

 
54,301

EBITDA
$
26,272

 
28,815

 
$
116,833

 
$
77,249

(1) Includes depreciation, amortization of deferred financing costs and restricted share amortization.
Adjusted net (loss) income (unaudited)
 
 
Three Months Ended
September 30,
 
Nine Months Ended September 30,
In thousands, except per share data
 
2019
 
2019
 
 
Amount
 
Per share
 
Amount
 
Per share
Net (loss) income
 
$
(1,928
)
 
$
(0.03
)
 
$
29,570

 
$
0.42

Adjustments:
 
 
 
 
 
 
 
 
(Reversal of) loss / write-down on assets sold or held for sale
 
(194
)
 

 
12,041

 
0.17

Write-down of deferred financing cost
 

 

 
446

 
0.01

Total adjustments
 
$
(194
)
 
$

 
$
12,487

 
$
0.18

Adjusted net (loss) income
 
$
(2,122
)
 
$
(0.03
)
 
$
42,057

 
$
0.60


19



Adjusted EBITDA (unaudited)
 
 
Three Months Ended
September 30,
 
Nine Months Ended September 30,
In thousands
 
2019
 
2019
Net (loss) income
 
$
(1,928
)
 
$
29,570

Impact of adjustments
 
(194
)
 
12,487

Adjusted net (loss) income
 
(2,122
)
 
42,057

Add Back:
 
 
 
 
Net interest expense
 
10,779

 
33,399

Depreciation and amortization (1)
 
17,421

 
53,417

Adjusted EBITDA
 
$
26,078

 
$
128,873

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


20



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, 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)


21
Exhibit
EXHIBIT 99.2

TAXATION

The following is a discussion of the material Marshall Islands and U.S. federal income tax considerations relevant to a U.S. Holder and a Non-U.S. Holder, each as defined below, with respect to the distribution of common shares of Scorpio Tankers Inc. This discussion does not purport to deal with the tax consequences of the distribution of Scorpio Tankers Inc. common stock to all categories of investors, some of which, such as dealers in securities, U.S. Holders whose functional currency is not the United States dollar and investors that own, actually or under applicable constructive ownership rules, 10% or more of Scorpio Bulkers Inc. common stock or Scorpio Tankers Inc. common stock, may be subject to special rules. This discussion deals only with holders who acquire Scorpio Tankers Inc. common stock in the distribution described herein and hold such common stock as a capital asset. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S. federal, state or local or non-U.S. law of the distribution and the ownership of Scorpio Tankers Inc. common stock.

Marshall Islands Tax Considerations

In the opinion of Seward & Kissel LLP, the following are the material Marshall Islands tax consequences of the distribution of Scorpio Tankers Inc. common stock. Under current Marshall Islands law, no Marshall Islands withholding tax or income tax will be imposed upon a non-Marshall Islands resident holder of Scorpio Bulkers Inc. common stock as a result of the receipt of Scorpio Tankers Inc. common stock in the partial spin-off.

United States Federal Income Tax Considerations

In the opinion of Seward & Kissel LLP, the U.S. counsel of Scorpio Bulkers Inc., the following are the material U.S. federal income tax consequences of the distribution of common shares of Scorpio Tankers Inc. The following discussion of U.S. federal income tax matters is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the U.S. Department of the Treasury, all of which are subject to change, possibly with retroactive effect.

As used herein, the term “U.S. Holder” means a beneficial owner of the common stock of Scorpio Bulkers Inc. that is an individual U.S. citizen or resident, a U.S. corporation or other U.S. entity taxable as a corporation, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.
 
If a partnership holds common stock of Scorpio Bulkers Inc., the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding the common stock, you are encouraged to consult your tax advisor.

Taxation of the Distribution to U.S. Holders

The distribution of Scorpio Tankers Inc. common shares or cash in lieu of partial common shares will be characterized as a taxable dividend for U.S. federal income tax purposes to the extent of Scorpio Bulkers Inc.’s current or accumulated earnings and profits. Scorpio Bulkers Inc. will not know its current earnings and profits until the end of 2019. To the extent that the aggregate value of the Scorpio Tankers Inc. common shares being distributed is more than Scorpio Bulker Inc.’s current and accumulated earnings and profits, the distribution of Scorpio Tankers Inc.’s common shares will be treated as a tax-free return of capital to the extent of a U.S. Holder’s basis in his or her Scorpio Bulkers Inc. shares, reducing such basis on a dollar-for-dollar basis, and thereafter as capital gain. The amount of the distribution for such tax purposes will be equal to the sum of (x) the fair market value of Scorpio Tankers Inc. common shares received by a U.S. Holder and (y) any cash payment in lieu of fractional shares paid to a U.S. Holder. You should treat the date of distribution as the date of the dividend.

A U.S. Holder’s basis for federal income tax purposes in the Scorpio Tankers Inc. common shares received in the partial spin-off will be equal to the fair market value of such shares on the date of the partial spin-off. A U.S. Holder’s holding period for federal income tax purposes in the Scorpio Tankers Inc. common shares will begin on the day of the partial spin-off.

The distribution of Scorpio Tankers Inc. common shares or cash in lieu thereof to a U.S. Holder who is an individual, trust or estate (a “U.S. Individual Holder”) may be treated as “qualified dividend income” taxable at a maximum rate of 20% to such holder if the U.S. Individual Holder has held his or her Scorpio Bulkers Inc. common shares on which the distribution is made for more than 60 days during the 121-day period beginning 60 days before the distribution becomes ex-dividend.

The distribution of Scorpio Tankers Inc. common shares or cash in lieu thereof will be treated as ordinary income to a U.S. Holder if such distribution is not treated as “qualified dividend income.”

U.S. Federal Income Taxation of the Distribution of Scorpio Tankers Inc. Common Shares to Non-U.S. Holders

A beneficial owner of the common stock of Scorpio Bulkers Inc. (other than a partnership or entity treated as a partnership for U.S. Federal income tax purposes) that is not a U.S. Holder is referred to herein as a “Non-U.S. Holder.”

Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on the receipt of Scorpio Tankers Inc. common shares or cash in lieu of partial common shares, unless the distribution is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States. In general, if the Non-U.S. Holder is entitled to the benefits of certain U.S. income tax treaties with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Taxation of Scorpio Tankers Inc. and Consequences to Holders of Owning Scorpio Tankers Inc. Common Shares

For a description of the taxation of Scorpio Tankers Inc. and a discussion of material U.S. federal income tax considerations of owning common shares of Scorpio Tankers Inc., see the section titled “Taxation” in the Form 20-F for the financial year ended December 31, 2018 filed by Scorpio Tankers Inc. on March 20, 2019.

Backup Withholding and Information Reporting
In general, dividend payments, or other taxable distributions, made within the United States to shareholders will be subject to information reporting requirements. Such payments will also be subject to backup withholding tax if the shareholder is a non-corporate U.S. Holder and if the shareholder:
fails to provide an accurate taxpayer identification number;
is notified by the IRS that it has failed to report all interest or dividends required to be shown on its U.S. federal income tax returns; or
in certain circumstances, fails to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as applicable.


Backup withholding is not an additional tax. Rather, shareholders generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed a shareholder’s U.S. federal income tax liability by timely filing a refund claim with the IRS.