salt-20200630
SCORPIO BULKERS INC.00015872646-K6/30/2020false12/31Q2202000015872642020-01-012020-06-30iso4217:USD00015872642020-06-3000015872642019-12-31iso4217:USDxbrli:sharesxbrli:shares00015872642019-01-012019-06-300001587264us-gaap:CommonStockMember2019-12-310001587264us-gaap:AdditionalPaidInCapitalMember2019-12-310001587264us-gaap:RetainedEarningsMember2019-12-310001587264us-gaap:CommonStockMember2020-01-012020-06-300001587264us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300001587264us-gaap:CommonStockMember2020-06-300001587264us-gaap:AdditionalPaidInCapitalMember2020-06-300001587264us-gaap:RetainedEarningsMember2020-06-300001587264us-gaap:CommonStockMember2018-12-310001587264us-gaap:AdditionalPaidInCapitalMember2018-12-3100015872642018-12-310001587264us-gaap:RetainedEarningsMember2018-12-310001587264us-gaap:CommonStockMember2019-01-012019-06-300001587264us-gaap:AdditionalPaidInCapitalMember2019-01-012019-06-300001587264us-gaap:TreasuryStockMember2019-01-012019-06-300001587264us-gaap:CommonStockMember2019-06-300001587264us-gaap:AdditionalPaidInCapitalMember2019-06-3000015872642019-06-300001587264us-gaap:RetainedEarningsMember2019-06-30salt:deadWeightTon0001587264srt:MinimumMember2020-01-012020-06-30xbrli:pure0001587264salt:KamsarmaxVesselMember2020-01-012020-06-300001587264salt:UltramaxpoolMember2020-01-012020-06-300001587264salt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxpoolMembersrt:MinimumMember2020-01-012020-06-300001587264salt:UltramaxpoolMembersrt:MaximumMember2020-01-012020-06-300001587264salt:KamsarmaxpoolMembersrt:MinimumMember2020-01-012020-06-300001587264srt:MaximumMembersalt:KamsarmaxpoolMember2020-01-012020-06-30salt:numberOfVesselsCoveredByCreditFacility0001587264salt:KamsarmaxVesselMember2020-06-300001587264salt:UltramaxMember2020-06-300001587264salt:UltramaxMembersalt:SBIAntaresMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBIAthenaMember2020-01-012020-06-300001587264salt:SBIBravoMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBILeoMember2020-01-012020-06-300001587264salt:SBIEchoMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBILyraMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBITangoMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIMaiaMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIHydraMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBISubaruMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIPegasusMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBIUrsaMember2020-01-012020-06-300001587264salt:SBIThaliaMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBICronosMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBIOrionMember2020-01-012020-06-300001587264salt:SBIAchillesMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIHerculesMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIHermesMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIPerseusMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIZeusMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIHeraMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIHyperionMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBITethysMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBIPhoebeMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBIPoseidonMember2020-01-012020-06-300001587264salt:SBIApolloMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBISamsonMember2020-01-012020-06-300001587264salt:SBIPhoenixMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIAriesMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIGeminiMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBIPiscesMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:SBILibraMembersalt:UltramaxMember2020-01-012020-06-300001587264salt:UltramaxMembersalt:SBIVirgoMember2020-01-012020-06-300001587264salt:SBISambaMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBIRumbaMember2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBICapoeiraMember2020-01-012020-06-300001587264salt:SBICariocaMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBICongaMember2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBISoustaMember2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBIRockMember2020-01-012020-06-300001587264salt:SBILambadaMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBIReggaeMember2020-01-012020-06-300001587264salt:SBIZumbaMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBIMacarenaMember2020-01-012020-06-300001587264salt:Kamsarmax1Membersalt:SBIParaparaMember2020-01-012020-06-300001587264salt:SBISwingMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:SBIMazurkaMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:SBIJiveMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:SBILynxMembersalt:Kamsarmax1Member2020-01-012020-06-300001587264salt:Kamsarmax1Member2020-01-012020-06-300001587264salt:UltramaxpoolMember2019-01-012019-06-300001587264salt:UltramaxpoolMember2019-01-012019-12-310001587264salt:UltramaxpoolMember2020-01-012020-06-300001587264salt:ScorpioCommercialScorpioShipManagementMemberus-gaap:ContractTerminationMember2020-06-300001587264salt:ScorpioCommercialScorpioShipManagementMemberus-gaap:ContractTerminationMember2020-01-012020-06-300001587264srt:MinimumMember2020-06-300001587264srt:MaximumMember2020-06-3000015872642020-04-0700015872642020-04-060001587264salt:ScorpioServicesHoldingLimitedMember2020-06-300001587264salt:ScorpioHoldingsLimitedMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A12.5MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A12.5MillionCreditFacilityMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A27.3MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A27.3MillionCreditFacilityMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A85.5MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A85.5MillionCreditFacilityMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A38.7MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A38.7MillionCreditFacilityMember2019-12-310001587264salt:A12.8MillionCreditFacilityMemberus-gaap:SecuredDebtMember2020-06-300001587264salt:A12.8MillionCreditFacilityMemberus-gaap:SecuredDebtMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A30.0MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A30.0MillionCreditFacilityMember2019-12-310001587264salt:A60.0MillionCreditFacilityMemberus-gaap:SecuredDebtMember2020-06-300001587264salt:A60.0MillionCreditFacilityMemberMemberus-gaap:SecuredDebtMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A184.0MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A184.0MillionCreditFacilityMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A34.0MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A34.0MillionCreditFacilityMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:A90.0CreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A90.0CreditFacilityMember2019-12-310001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBIRumbaMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBIRumbaMember2019-12-310001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBITangoMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBITangoMember2019-12-310001587264us-gaap:SecuredDebtMembersalt:SBIEchoMemberus-gaap:FinanceLeasesPortfolioSegmentMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:SBIEchoMemberus-gaap:FinanceLeasesPortfolioSegmentMember2019-12-310001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBHermesMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBHermesMember2019-12-310001587264salt:SBISambaMemberus-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMember2020-06-300001587264salt:SBISambaMemberus-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMember2019-12-310001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:CMBFLMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:VirgoandLibraLeaseMember2019-12-310001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:VirgoandLibraLeaseMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:CMBFLMember2019-12-310001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:AVICMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:AVICMemberDomain2019-12-310001587264us-gaap:SecuredDebtMembersalt:A673MillionLeaseFinancingMemberus-gaap:FinanceLeasesPortfolioSegmentMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A673MillionLeaseFinancingMemberus-gaap:FinanceLeasesPortfolioSegmentMember2019-12-310001587264us-gaap:SecuredDebtMember2020-06-300001587264us-gaap:SecuredDebtMember2019-12-310001587264salt:CurrentDomainDomain2020-06-300001587264salt:NoncurrentDomain2020-06-300001587264salt:CurrentDomainDomain2019-12-310001587264salt:NoncurrentDomain2019-12-310001587264us-gaap:SecuredDebtMembersalt:Kamsarmax1Membersalt:A85.5MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:Kamsarmax1Membersalt:A30.0MillionCreditFacilityMember2020-06-300001587264salt:A60.0MillionCreditFacilityMemberMemberus-gaap:SecuredDebtMembersalt:Kamsarmax1Member2020-06-300001587264us-gaap:SecuredDebtMembersalt:A184.0MillionCreditFacilityMembersalt:Kamsarmax1Member2020-06-300001587264us-gaap:SecuredDebtMembersalt:Kamsarmax1Membersalt:A34.0MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:Kamsarmax1Membersalt:A90.0CreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:UltramaxMembersalt:A85.5MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:UltramaxMembersalt:A30.0MillionCreditFacilityMember2020-06-300001587264salt:A60.0MillionCreditFacilityMemberMemberus-gaap:SecuredDebtMembersalt:UltramaxMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A184.0MillionCreditFacilityMembersalt:UltramaxMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:UltramaxMembersalt:A34.0MillionCreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:UltramaxMembersalt:A90.0CreditFacilityMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:A85.5MillionCreditFacilityMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMembersalt:A30.0MillionCreditFacilityMember2020-01-012020-06-300001587264salt:A60.0MillionCreditFacilityMemberMemberus-gaap:SecuredDebtMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMembersalt:A184.0MillionCreditFacilityMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMembersalt:A34.0MillionCreditFacilityMember2018-10-032018-10-030001587264us-gaap:SecuredDebtMembersalt:A90.0CreditFacilityMember2018-11-082018-11-080001587264salt:A60.0MillionCreditFacilityMemberMemberus-gaap:SecuredDebtMember2020-06-300001587264salt:SBIRumbaMemberus-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMember2017-10-252017-10-250001587264salt:SBIRumbaMember2017-10-252017-10-250001587264salt:A196LeaseSBIRumbaMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMembersalt:SBITangoMemberus-gaap:FinanceLeasesPortfolioSegmentMember2017-10-252017-10-250001587264us-gaap:SecuredDebtMembersalt:SBITangoMemberus-gaap:FinanceLeasesPortfolioSegmentMember2018-07-182018-07-180001587264us-gaap:SecuredDebtMembersalt:SBITangoMemberus-gaap:FinanceLeasesPortfolioSegmentMember2020-01-012020-06-300001587264salt:SBIEchoMemberus-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMember2018-07-182018-07-180001587264salt:SBIEchoMember2018-07-182018-07-180001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBHermesMember2018-11-162018-11-160001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:SBISambaMember2019-04-152019-04-150001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:UltramaxpoolMembersalt:CMBFLMember2019-05-240001587264salt:KamsarmaxpoolMemberus-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:CMBFLMember2019-05-240001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:CMBFLMember2019-05-242019-05-240001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:CMBFLMember2019-05-240001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:VirgoandLibraLeaseMember2019-05-212019-05-210001587264salt:VirgoandLibraLeaseMember2020-01-012020-06-300001587264salt:VirgoandLibraLeaseMemberus-gaap:SecuredDebtMember2019-05-212019-05-210001587264us-gaap:SecuredDebtMembersalt:AVICMembersalt:UltramaxpoolMember2019-07-160001587264salt:AVICMember2019-06-272019-06-270001587264salt:AVICMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMember2019-07-160001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:UltramaxpoolMember2020-06-300001587264us-gaap:SecuredDebtMemberus-gaap:FinanceLeasesPortfolioSegmentMembersalt:UltramaxpoolMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMembersalt:UltramaxpoolMembersalt:A673MillionLeaseFinancingMember2020-03-190001587264salt:SBICronosMemberus-gaap:SecuredDebtMembersalt:A673MillionLeaseFinancingMember2020-03-192020-03-190001587264us-gaap:SecuredDebtMembersalt:A673MillionLeaseFinancingMembersalt:SBIAchillesMember2020-03-192020-03-190001587264us-gaap:SecuredDebtMembersalt:SBILynxMembersalt:A673MillionLeaseFinancingMember2020-03-192020-03-190001587264us-gaap:SecuredDebtMembersalt:A673MillionLeaseFinancingMember2020-06-300001587264us-gaap:SecuredDebtMembersalt:UltramaxpoolMembersalt:A673MillionLeaseFinancingMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMembersrt:MinimumMember2020-06-300001587264srt:MaximumMemberus-gaap:SecuredDebtMember2020-06-300001587264srt:MaximumMemberus-gaap:SecuredDebtMember2020-01-012020-06-300001587264us-gaap:SecuredDebtMember2020-01-012020-06-300001587264srt:MaximumMember2020-01-012020-06-300001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-06-300001587264us-gaap:FairValueMeasurementsRecurringMember2019-12-310001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-06-300001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:SecuredDebtMember2020-06-300001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:SecuredDebtMember2019-12-310001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:SaleLeasebackTransactionNameDomain2020-06-300001587264us-gaap:FairValueMeasurementsRecurringMemberus-gaap:SaleLeasebackTransactionNameDomain2019-12-310001587264us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-06-300001587264us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-06-300001587264us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-06-300001587264salt:ScorpioServicesHoldingLimitedMember2020-01-012020-06-300001587264salt:ScorpioCommercialScorpioShipManagementMember2020-01-012020-06-300001587264salt:ScorpioCommercialManagementMember2020-01-012020-06-300001587264salt:KamsarmaxpoolMember2020-01-012020-06-300001587264salt:UltramaxpoolMember2020-01-012020-06-300001587264salt:KamsarmaxpoolMember2019-01-012019-06-300001587264salt:UltramaxpoolMember2019-01-012019-06-300001587264salt:SumecVesselsMember2020-01-012020-06-300001587264srt:MinimumMembersalt:SumecVesselsMember2020-01-012020-06-300001587264srt:MaximumMembersalt:SumecVesselsMember2020-01-012020-06-300001587264salt:ScorpioShipManagementSAMMember2020-06-300001587264srt:MinimumMembersalt:ScorpioShipManagementSAMMember2020-01-012020-06-300001587264srt:MaximumMembersalt:ScorpioShipManagementSAMMember2020-01-012020-06-300001587264salt:ScorpioTankersMember2018-10-1200015872642020-05-110001587264salt:ScorpioCommercialManagementMember2019-01-012019-06-300001587264salt:BunkerSupplierMember2020-01-012020-06-300001587264salt:BunkerSupplierMember2019-01-012019-06-300001587264salt:ScorpioShipManagementSAMMember2020-01-012020-06-300001587264salt:ScorpioShipManagementSAMMember2019-01-012019-06-300001587264salt:PortAgentMember2020-01-012020-06-300001587264salt:PortAgentMember2019-01-012019-06-300001587264salt:ScorpioServicesHoldingLimitedMember2019-01-012019-06-300001587264salt:ScorpioUKLimitedMember2020-01-012020-06-300001587264salt:ScorpioUKLimitedMember2019-01-012019-06-300001587264salt:TravelProviderMember2020-01-012020-06-300001587264salt:TravelProviderMember2019-01-012019-06-300001587264salt:ScorpioTankersMember2020-01-012020-06-300001587264salt:ScorpioTankersMember2019-01-012019-06-300001587264salt:KamsarmaxpoolMember2020-06-300001587264salt:KamsarmaxpoolMember2019-12-310001587264salt:UltramaxpoolMember2020-06-300001587264salt:UltramaxpoolMember2019-12-310001587264salt:PortAgentMember2020-06-300001587264salt:PortAgentMember2019-12-310001587264salt:ScorpioShipManagementSAMMember2019-12-310001587264salt:ScorpioTankersMember2020-06-300001587264salt:ScorpioTankersMember2019-12-310001587264salt:ScorpioCommercialManagementMember2020-06-300001587264salt:ScorpioCommercialManagementMember2019-12-310001587264salt:ScorpioServicesHoldingLimitedMember2019-12-310001587264salt:BunkerSupplierMember2020-06-300001587264salt:BunkerSupplierMember2019-12-310001587264salt:SCMSSMAsetsHeldForSaleAdjustmentMember2020-06-300001587264salt:SCMSSMAsetsHeldForSaleAdjustmentMember2019-12-3100015872642018-10-120001587264salt:OceanTreePhoenixMember2020-01-012020-06-300001587264salt:OceanTreePhoenixMember2020-06-300001587264salt:NewTimeCharterIn2019Member2020-01-012020-06-300001587264salt:TCITaizhouMember2020-01-012020-06-300001587264salt:TCITaizhouMember2020-06-300001587264salt:TCIZhenjiangMember2020-01-012020-06-300001587264salt:TCIZhenjiangMember2020-06-300001587264salt:CLSuzhouMember2020-06-300001587264salt:Yangze11Member2020-01-012020-06-300001587264srt:MinimumMembersalt:Yangze11Member2020-01-012020-06-300001587264salt:Yangze11Member2020-06-300001587264salt:KamsarmaxpoolMember2020-01-012020-06-300001587264salt:ScorpioUltramaxPoolMember2020-01-012020-06-300001587264us-gaap:CorporateMember2020-01-012020-06-300001587264salt:KamsarmaxpoolMember2019-01-012019-06-300001587264salt:ScorpioUltramaxPoolMember2019-01-012019-06-300001587264us-gaap:CorporateMember2019-01-012019-06-300001587264salt:KamsarmaxpoolMember2020-06-300001587264salt:KamsarmaxpoolMember2019-12-310001587264salt:ScorpioUltramaxPoolMember2020-06-300001587264salt:ScorpioUltramaxPoolMember2019-12-310001587264us-gaap:CorporateMember2020-06-300001587264us-gaap:CorporateMember2019-12-310001587264us-gaap:SubsequentEventMember2020-08-030001587264us-gaap:SubsequentEventMember2020-07-012020-09-300001587264us-gaap:SubsequentEventMember2020-07-012021-06-300001587264us-gaap:SubsequentEventMembersalt:A85.5MillionCreditFacilityMember2020-07-012020-09-300001587264us-gaap:SubsequentEventMembersalt:A30.0MillionCreditFacilityMember2020-07-012020-09-300001587264salt:A60.0MillionCreditFacilityMemberus-gaap:SubsequentEventMember2020-07-012020-09-300001587264salt:A184.0MillionCreditFacilityMemberus-gaap:SubsequentEventMember2020-07-012020-09-300001587264us-gaap:SubsequentEventMembersalt:A34.0MillionCreditFacilityMember2020-07-012020-09-300001587264us-gaap:SubsequentEventMembersalt:A90.0CreditFacilityMember2020-07-012020-09-300001587264us-gaap:SubsequentEventMember2020-10-012020-12-31

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 September 2020

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.















­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
 




INFORMATION CONTAINED IN THIS FORM 6-K REPORT
 

Attached as Exhibit 99.1 to this Report on Form 6-K is Management’s Discussion and Analysis of Financial Condition and Results of Operations and the unaudited interim consolidated financial statements, and the accompanying notes thereto, for the six month period ended June 30, 2020 of Scorpio Bulkers Inc. (the “Company”).

The information contained in this Report on Form 6-K is hereby incorporated by reference into the Company's registration statement on Form F-3 (File No. 333-217445), the Company's registration statement on Form F-3 (File No. 333-221441), the Company's registration statement on Form F-3 (File No. 333-222013) and the Company's registration statement on Form F-3 (File No. 333-222448).






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:September 28, 2020By: /s/ Hugh Baker
 Hugh Baker
 Chief Financial Officer
 


salt-20200630_d2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    The following is management’s discussion and analysis of financial condition and results of operations of Scorpio Bulkers Inc. for the six-month period ended June 30, 2020. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, including the notes thereto, included in this report, which have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and the discussion included in our Annual Report on Form 20-F for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission, or the SEC, on April 2, 2020, or our Annual Report. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, such as those set forth in the section entitled “Risk Factors” included in our Annual Report. We use the term deadweight tons, or dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of our vessels.
    Unless otherwise indicated, references to “Scorpio Bulkers,” the “Company,” “we,” “our,” “us,” or similar terms refer to Scorpio Bulkers Inc. and its subsidiaries, except where the context otherwise requires.

All share and per share information 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.
Overview
    We are an international shipping company that owns and operates the latest generation of newbuilding drybulk carriers with fuel-efficient specifications and carrying capacities of greater than 30,000 dwt in the international shipping markets. Scorpio Bulkers Inc. was incorporated in the Republic of the Marshall Islands on March 20, 2013.
    Our vessels transport a broad range of major and minor bulk commodities, including ores, coal, grains, and fertilizers, along worldwide shipping routes, and are employed primarily in the spot market or in spot market-oriented pools of similarly sized vessels. At June 30, 2020, we had an operating fleet of 55 vessels consisting of 49 owned or finance leased vessels (including 16 Kamsarmax vessels and 33 Ultramax vessels), one time chartered-in Ultramax vessel and five time chartered-in Kamsarmax vessels.
    The Company is organized by vessel type into two operating segments:
Ultramax - includes vessels ranging from approximately 60,200 dwt to 64,000 dwt
Kamsarmax - includes vessels ranging from approximately 82,000 dwt to 84,000 dwt

    Our vessels are commercially managed by Scorpio Commercial Management S.A.M., or SCM, and technically managed by Scorpio Ship Management S.A.M., or SSM, pursuant to a master agreement (as amended and restated from time to time) effective as from January 1, 2018, or the Master Agreement. SCM and SSM are controlled by the Lolli-Ghetti family, of which Emanuele Lauro, our Chairman and Chief Executive Officer, and Filippo Lauro, our Vice President, are members. We expect that additional vessels that we may acquire in the future will also be managed under the Master Agreement or on substantially similar terms as those contained in the Master Agreement.
    SCM’s commercial management services include securing employment for our vessels in the spot market or on time charters. SCM also manages the Scorpio Pools identified below, which are spot-market oriented pools of similarly sized vessels operated by companies affiliated with us, in which our vessels and vessels owned by third parties are employed.
    SSM’s technical management services include providing technical support, such as arranging the hiring of qualified officers and crew, supervising the maintenance and performance of our vessels, purchasing supplies, spare parts and new equipment, arranging and supervising drydocking and repairs, and monitoring regulatory and classification society compliance and customer standards.
    We have also entered into an administrative services agreement, as amended from time to time, or the Administrative Services Agreement, with Scorpio Services Holding Limited, or SSH, an entity controlled by the Lolli-Ghetti family. The administrative services provided under this agreement primarily include provision of administrative staff, office space and accounting, legal compliance, financial and information technology services. We reimburse SSH for the direct or indirect expenses it incurs in providing us with the administrative services described above.
1


    We generate revenue by charging customers for the transportation of their drybulk cargoes using our vessels. Historically, these services generally have been provided under the following basic types of contractual relationships:
Commercial Pools, whereby we participate with other shipowners to operate a large number of vessels as an integrated transportation system, which offers customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools negotiate charters primarily in the spot market but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs (described below), thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market.
Voyage charters, which are charters for short intervals that are priced on current, or “spot,” market rates.
Time charters, which are chartered to customers for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates.
    For all of our vessels’ contractual relationships, we are responsible for crewing and other vessel operating costs for our owned or finance leased vessels and the charterhire expense for vessels that we time charter-in.
    The table below illustrates the primary distinctions among these different employment arrangements:
Commercial PoolVoyage CharterTime Charter
Typical contract lengthVariesSingle voyageUp to one year or more
Hire rate basis
VariesVariesDaily
Voyage expenses
Pool paysWe payCustomer pays
Vessel operating costs for owned or finance leased vessels
We payWe payWe pay
Charterhire expense for vessels chartered-in
We payWe payWe pay
Off-hire
Pool does not payCustomer does not payCustomer does not pay
See “Important Financial and Operational Terms and Concepts” below.
As of the date of this report, all of our owned, finance leased and time chartered-in vessels were operating in the Scorpio Kamsarmax Pool or the Scorpio Ultramax Pool, which we refer to together as the “Scorpio Pools,” which are spot market-oriented commercial pools managed by our commercial manager, SCM, a related party of ours.
Important Financial and Operational Terms and Concepts
We use a variety of financial and operational terms and concepts. These include the following:
Hire rate. The basic payment from the charterer for the use of the vessel.
Vessel revenues. Vessel revenues primarily include revenues from time charters, pool revenues, and voyage charters. Vessel revenues are affected by hire rates and the number of days a vessel operates. Vessel revenues are also affected by the mix of business between vessels on time charter, vessels in pools, and vessels operating on voyage charter. Revenues from vessels in pools and on voyage charter are more volatile, as they are typically tied to prevailing market rates.
Voyage charters. Voyage charters or spot voyages are charters under which the customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. We pay all of the voyage expenses.
Voyage expenses. Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid by us under voyage charters, as well as brokerage commissions and miscellaneous voyage expenses that we are unable to collect under time charter and pool arrangements. These expenses are subtracted from voyage charter revenues to calculate TCE revenues.
2


Vessel operating costs. For our owned and finance leased vessels, we are responsible for vessel operating costs, which include crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses, and technical management fees.
Technical management fees are paid to SSM. Pursuant to our Master Agreement, SSM provides us with technical management services, and we provide them with the ability to subcontract technical management of our vessels.
Charterhire. Charterhire is the amount we pay the owner for time chartered-in vessels. The amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates. The vessel’s owner is responsible for crewing and other vessel operating costs.
Drydocking. We periodically drydock each of our owned and finance leased vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 months to 60 months. We capitalize a substantial portion of the costs incurred during drydocking and amortize those costs on a straight-line basis from the completion of a drydocking to the estimated completion of the next drydocking. We immediately expense costs for routine repairs and maintenance performed during drydocking that do not improve or extend the useful lives of the vessels. The number of drydockings undertaken in a given period and the nature of the work performed determine the level of drydocking expenditures.
Depreciation. Depreciation expense typically consists of:
charges related to the depreciation of the historical cost of our owned or finance leased vessels (less an estimated residual value) over the estimated useful lives of the vessels; and
charges related to the amortization of drydocking expenditures over the estimated number of years to the next scheduled drydocking.
Time charter equivalent (TCE) revenue or rates. We report TCE revenue, a non-GAAP financial measure, because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable U.S. GAAP measures, (ii) it assists our management in making decisions regarding the deployment and use of our 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) we believe that it presents useful information to investors. TCE revenue is vessel revenue less voyage expenses, including bunkers, port charges and commissions to SCM. The TCE rate achieved on a given voyage is expressed in U.S. dollars/day and is generally calculated by dividing TCE revenue by the number of revenue days in the period. For a reconciliation of TCE revenue, deduct voyage expenses from revenue on our Statement of Operations. Please also see “Non-GAAP Financial Measures.”
Revenue days. Revenue days are the total number of calendar days our vessels were in service during a period, less the total number of off-hire days during the period associated with repairs or drydockings. Consequently, revenue days represent the total number of days available for the vessel to earn revenue. Idle days, which are days when a vessel is available to earn revenue, yet is not employed, are included in revenue days. We use revenue days to show changes in net vessel revenues between periods.
Contract of affreightment. A contract of affreightment, or COA, relates to the carriage of specific quantities of cargo with multiple voyages over the same route and over a specific period of time which usually spans a number of years. A COA does not designate the specific vessels or voyage schedules that will transport the cargo, thereby providing both the charterer and shipowner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to determine the individual voyage scheduling at a future date while the shipowner may use different vessels to perform these individual voyages. As a result, COAs are mostly entered into by large fleet operators, such as pools or shipowners with large fleets of the same vessel type. We pay the voyage expenses while the freight rate normally is agreed on a per cargo ton basis.
Commercial pools. To increase vessel utilization and revenues, we participate in commercial pools with other shipowners and operators of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters with customers primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool
3


vessels by securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers.
Off-hire. Time a vessel is not available for service due primarily to scheduled and unscheduled repairs or drydockings. For time chartered-in vessels, we do not pay the charterhire expense when the vessel is off-hire.
Operating days. Operating days are the total number of available days in a period with respect to owned and finance leased vessels, before deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to our owned and finance leased vessels, not our time chartered-in vessels.
Non-GAAP Financial Measures
    To supplement our financial information presented in accordance with U.S. GAAP, management uses certain “non-GAAP financial measures” as such term is defined in Regulation G promulgated by 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 U.S. GAAP. Management believes the presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations, and therefore a more complete understanding of factors affecting our business than U.S. 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, or EBITDA, adjusted net (loss) income and related per share amounts, as well as adjusted EBITDA and TCE revenue are non-GAAP financial measures that we believe provide investors with a means of evaluating and understanding how our management evaluates our operating performance. These non-GAAP financial measures should be viewed in addition to the results reported under U.S. GAAP, and should not be considered in isolation from, as substitutes for, nor superior to financial measures prepared in accordance with U.S. GAAP.
Reconciliations of adjusted net (loss) income, EBITDA, adjusted EBITDA and TCE revenue as determined in accordance with U.S. GAAP for the six months ended June 30, 2020 and 2019 are provided below (dollars in thousands, except per share data).
EBITDA (unaudited)
Six Months Ended June 30,
In thousands20202019
Net (loss) income$(169,754)$31,499 
Add Back:
Net interest expense17,637 22,620 
Depreciation and amortization (1)
31,430 36,443 
EBITDA$(120,687)$90,562 
(1) Includes depreciation, amortization of deferred financing costs and restricted stock amortization.
Adjusted Net (Loss) Income (unaudited)
4


For the Six Months Ended June 30,
20202019
In thousands, except per share dataAmountPer diluted shareAmount Per diluted share
Net (loss) income$(169,754)$(23.01)$31,499 $4.55 
Adjustments:
Loss / write-down on assets held for sale17,009 2.31 12,235 1.77 
Write-off of deferred financing cost366 0.05 446 0.07 
Total adjustments17,375 2.36 12,681 1.84 
Adjusted net (loss) income$(152,379)$(20.65)$44,180 $6.39 
Adjusted EBITDA (unaudited)
Six Months Ended June 30,
In thousands20202019
Net (loss) income$(169,754)$31,499 
Impact of Adjustments17,375 12,681 
Adjusted net income(152,379)44,180 
Add Back:
Net interest expense17,637 22,620 
Depreciation and amortization (1)
31,064 35,997 
Adjusted EBITDA$(103,678)$102,797 
(1) Includes depreciation, amortization of deferred financing costs and restricted stock amortization.
TCE Revenue (unaudited)
    Time Charter Equivalent (TCE) revenue is defined as voyage revenues less voyage expenses. Such TCE revenue, divided by the number of our available days during the period, or revenue days, is TCE per revenue day, which we believe 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.
        
5


Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Time charter equivalent revenue ($000’s):  
Vessel revenue$66,990 $101,088 
Voyage expenses(2,820)(345)
Time charter equivalent revenue$64,170 $100,743 
Time charter equivalent revenue attributable to:  
Kamsarmax$26,493 $38,965 
Ultramax37,677 61,778 
 $64,170 $100,743 
Revenue days:  
Kamsarmax3,387 3,393 
Ultramax5,468 6,799 
Combined8,855 10,192 
TCE per revenue day:  
Kamsarmax$7,822 $11,484 
Ultramax$6,890 $9,086 
Combined$7,247 $9,885 
Executive Summary
For the first half of 2020, our GAAP net loss was $169.8 million, or $23.01 per diluted share, compared to GAAP net income of $31.5 million, or $4.55 per diluted share, for the same period in 2019. Results for the first half of 2020 include: a loss of approximately $103.0 million and cash dividend income of $0.7 million, or $13.87 per diluted share, from our equity investment in Scorpio Tankers Inc., a write-down of assets held for sale of approximately $17.0 million, or $2.31 per diluted share, related to the classification of the SBI Jaguar, SBI Taurus and SBI Bolero as held for sale (the sales of all three vessels were completed in the second quarter of 2020), and a write-off of approximately $0.4 million, or $0.05 per diluted share, of deferred financing costs on the credit facilities related to those three vessels. Results for the first half of 2019 include a non-cash gain of approximately $67.6 million and cash dividend income of $1.0 million, or $9.92 per diluted share, from our equity investment in Scorpio Tankers Inc., a write-down of assets held for sale and write-off of related deferred financing costs totaling approximately $12.7 million, or $1.84 per diluted share, and a write-off of deferred financing costs of approximately $2.7 million, or $0.39 per diluted share.
EBITDA for the first halves of 2020 and 2019 were a loss of $120.7 million and a gain of $90.6 million, respectively (see Non-GAAP Financial Measures above).
For the first half of 2020, our adjusted net loss was $152.4 million, or $20.65 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $17.0 million and the write-off of deferred financing costs on the related credit facilities of $0.4 million. Adjusted EBITDA for the first half of 2020 was a loss of $103.7 million (see Non-GAAP Financial Measures above).
For the first half of 2019, our adjusted net income was $44.2 million, or $6.39 adjusted per diluted share, which excludes the impact of the write-down of assets either sold or held for sale of $12.2 million and the write-off of deferred financing costs on the related credit facilities of $0.4 million. Adjusted EBITDA for the first half of 2019 was $102.8 million (see Non-GAAP Financial Measures above).
Our revenues for the first half of 2020 were $67.0 million compared to $101.1 million in the first half of 2019. Our TCE revenue (see Non-GAAP Financial Measures above) for the first half of 2020 was $64.2 million, a decrease of $36.6 million from the prior year period.
Total operating expenses for the first half of 2020 were $114.3 million, including the charge related to the classification of vessels as held for sale of approximately $17.0 million, compared to $110.7 million in the first half of 2019, which also included a charge related to the classification of vessels as sold or held for sale of $12.2 million.    
6


Recent and Other Developments

COVID-19

The 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 the implementation of numerous restrictive actions taken by governments and governmental agencies in an attempt to control or mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. A significant reduction in manufacturing and other economic activities has and is expected to continue to have a materially adverse impact on the global demand for raw materials, coal and other bulk cargoes that our customers transport on our vessels. This significant decline in the demand for dry bulk tonnage has negatively impacted, and may continue to 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 materially impact our results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

Purchase of Wind Turbine Installation Vessel

In August 2020, we signed a non-binding letter of intent (“LOI”) to purchase an NG-16000X Wind Turbine Installation Vessel (“WTIV”) and a 1500 LEC crane to be used on the WTIV from GustoMSC and Huisman Equipment B.V., respectively. The total cost of the project is expected to be between $265 and $290 million, subject to change pending design modifications and further modifications due to customer requirements. The scheduled delivery date for both the WTIV and the crane is September 2023. The contract is expected to be signed in the fourth quarter of 2020 and will include options to construct up to an additional three units having similar specifications.

Equity Raise

In June 2020, we raised net proceeds of approximately $82.3 million in an underwritten public offering of approximately 4.7 million shares of our common stock at $18.46 per share (which includes the exercise in full of the underwriters’ option to purchase additional shares). Scorpio Services Holding Limited, a related party, purchased 950,000 common shares in the offering at the public offering price, after which it beneficially owned 16.1% of our outstanding common stock at that time, thereby increasing Scorpio Holdings Limited’s beneficial ownership of our outstanding common stock to 20.0% at that time.

Quarterly Cash Dividend

In the second quarter of 2020, our Board of Directors declared and the Company paid a quarterly cash dividend of $0.05 per share totaling approximately $0.6 million.

On August 3, 2020, our Board of Directors declared a quarterly cash dividend of $0.05 per share, or $0.6 million in total, which was paid on September 15, 2020, to all shareholders of record as of August 14, 2020.

Investment in Scorpio Tankers Inc.

In May 2020, we sold 2.25 million common shares of Scorpio Tankers Inc. (NYSE: STNG) for aggregate net proceeds of approximately $42.7 million. Following the sales, we continue to own in aggregate approximately 2.16 million common shares of Scorpio Tankers Inc.

Vessel Sales

During the second quarter of 2020, we completed the sales of the SBI Jaguar and SBI Taurus, 2014 and 2015 built Ultramax vessels, respectively, and the SBI Bolero, a 2015 built Kamsarmax vessel, for approximately $53.5 million in aggregate.

During the second quarter of 2020, our Board of Directors resolved to retain in the Company’s fleet the four Ultramax vessels that had been classified as held for sale since December 31, 2019. As such, the vessels were transferred from held for sale to held for use at current fair market value with no gain or loss recognized in the period.

7


In September 2020, the Company entered into an agreement with an unaffiliated third party to sell the SBI Rock, a 2016 built Kamsarmax vessel, for approximately $18.0 million. The vessel has not been fitted with a scrubber. Delivery of the vessel is expected to take place in the fourth quarter of 2020. It is estimated that the Company’s liquidity will increase by approximately $4.8 million and a loss of approximately $9.0 million will be recorded in the third quarter of 2020.

Debt

Amendment of Minimum Liquidity Covenant

We agreed with our 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 49 vessels, the minimum liquidity requirement is $25.0 million (a reduction from $34.3 million).

In consideration for the above amendment, we 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

We agreed with our 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, we will not have to make certain installment payments totaling $29.8 million on these facilities through the end of the second quarter of 2021.

Please see “Liquidity and Capital Resources” below for further information.
Financial Results for the Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019
    For the first half of 2020, our GAAP net loss was $169.8 million, or $23.01 per diluted share, compared to GAAP net income of $31.5 million, or $4.55 per diluted share, for the same period in 2019. Results for the first half of 2020 include: a loss of approximately $103.0 million and cash dividend income of $0.7 million, or $13.87 per diluted share, from our equity investment in Scorpio Tankers Inc., a write-down of assets held for sale of approximately $17.0 million, or $2.31 per diluted share, related to the classification of the SBI Jaguar, SBI Taurus and SBI Bolero as held for sale (the sales of all three vessels were completed in the second quarter of 2020), and a write-off of approximately $0.4 million, or $0.05 per diluted share, of deferred financing costs on the credit facilities related to those three vessels. Results for the first half of 2019 include a non-cash gain of approximately $67.6 million and cash dividend income of $1.0 million, or $9.92 per diluted share, from our equity investment in Scorpio Tankers Inc., a write-down of assets held for sale and write-off of related deferred financing costs totaling approximately $12.7 million, or $1.84 per diluted share, and a write-off of deferred financing costs of approximately $2.7 million, or $0.39 per diluted share.
EBITDA for the first halves of 2020 and 2019 were a loss of $120.7 million and a gain of $90.6 million, respectively (see Non-GAAP Financial Measures above).
For the first half of 2020, our adjusted net loss was $152.4 million, or $20.65 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $17.0 million and the write-off of deferred financing costs on the related credit facilities of $0.4 million. Adjusted EBITDA for the first half of 2020 was a loss of $103.7 million (see Non-GAAP Financial Measures above).
For the first half of 2019, our adjusted net income was $44.2 million, or $6.39 adjusted per diluted share, which excludes the impact of the write-down of assets either sold or held for sale of $12.2 million and the write-off of deferred financing costs on the related credit facilities of $0.4 million. Adjusted EBITDA for the first half of 2019 was $102.8 million (see Non-GAAP Financial Measures above).
Our revenues for the first half of 2020 were $67.0 million compared to $101.1 million in the first half of 2019. Our TCE revenue (see Non-GAAP Financial Measures above) for the first half of 2020 was $64.2 million, a decrease of $36.6 million from the prior year period.
8


Total operating expenses for the first half of 2020 were $114.3 million, including the charge related to the classification of vessels as held for sale of approximately $17.0 million, compared to $110.7 million in the first half of 2019, which also included a charge related to the classification of vessels as sold or held for sale of $12.2 million.    
Ultramax Operations
Six Months Ended June 30,
Dollars in thousands20202019Change% Change
TCE Revenue:
Vessel revenue
$39,044 $61,977 $(22,933)(37)
Voyage expenses
1,367 199 1,168 587 
TCE Revenue$37,677 $61,778 $(24,101)(39)
Operating expenses:
Vessel operating costs
31,306 34,165 (2,859)(8)
Charterhire expense
1,967 1,795 172 10 
Vessel depreciation
16,130 18,107 (1,977)(11)
General and administrative expense
2,056 2,062 (6) 
Loss / write-down on assets held for sale
7,615 4,883 2,732 56 
Total operating expenses
$59,074 $61,012 $(1,938)(3)
Operating income$(21,397)$766 $(22,163)NA
    
Vessel revenue for our Ultramax Operations decreased to $39.0 million for the first half of 2020 from $62.0 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures above) for our Ultramax Operations was $37.7 million for the first half of 2020 compared to $61.8 million for the prior year period. Our Ultramax fleet consisted of a day-weighted average of 34 vessels owned or finance leased and one vessel time chartered-in during the first half of 2020 and 37 vessels owned or finance leased and one vessel time chartered-in during the first half of 2019. TCE revenue per day was $6,890 and $9,086 for the first halves of 2020 and 2019, respectively.
Six Months Ended June 30,
Ultramax Operations:20202019Change% Change
TCE Revenue (in thousands)
$37,677 $61,778 $(24,101)(39)
TCE Revenue / Day$6,890 $9,086 $(2,196)(24)
Revenue Days5,468 6,799 (1,331)(20)
    
Our Ultramax Operations vessel operating costs were $31.3 million for the first half of 2020, including approximately $1.7 million of takeover costs and contingency expenses, compared with vessel operating costs of $34.2 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 the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses for the first half of 2020 decreased to $4,832 from $4,913 in the prior year period due primarily to the timing of purchases of spares and stores as well as the timing of repairs.

Charterhire expense for our Ultramax Operations was approximately $2.0 million and $1.8 million for the first halves of 2020 and 2019, respectively and relates to the vessel we time chartered-in at $10,125 per day until September 2019, when we exercised our option to extend the time charter for one year at $10,885 per day.

Ultramax Operations depreciation decreased from $18.1 million for the first half of 2019 to $16.1 million for the first half of 2020 due to the decrease in fleet size and the classification of four vessels as held for sale during the first six months of 2020 (vessels classified as held for sale are not depreciated).

9


General and administrative expense for our 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 $2.1 million for the first halves of both 2020 and 2019.

During the first half of 2020, we 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 half of 2019, we also recorded a write-down on the SBI Puma and SBI Cougar which were sold in the fourth quarter of 2019.
Kamsarmax Operations
Six Months Ended June 30,
Dollars in thousands20202019Change% Change
TCE Revenue:
Vessel revenue
$27,946 $39,111 $(11,165)(29)
Voyage expenses
1,453 146 1,307 895 
TCE Revenue$26,493 $38,965 $(12,472)(32)
Operating expenses:
Vessel operating costs
15,629 17,331 (1,702)(10)
Charterhire expense
7,207 1,487 5,720 385 
Vessel depreciation
8,893 9,163 (270)(3)
General and administrative expense
1,011 1,112 (101)(9)
Loss / write-down on assets held for sale
9,394 7,352 2,042 28 
Total operating expenses
$42,134 $36,445 $5,689 16 
Operating income$(15,641)$2,520 $(18,161)721 
    
Vessel revenue for our Kamsarmax Operations decreased to $27.9 million in the first half of 2020 from $39.1 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures above) for our Kamsarmax Operations was $26.5 million for the first half of 2020 associated with a day-weighted average of 17 vessels owned or finance leased and five vessels time chartered-in, compared to $39.0 million for the prior year period associated with a day-weighted average of 19 vessels owned or finance leased and one vessel time chartered-in. TCE revenue per day was $7,822 and $11,484 for the first halves of 2020 and 2019, respectively.
Six Months Ended June 30,
Kamsarmax Operations:20202019Change% Change
TCE Revenue (in thousands)
$26,493 $38,965 $(12,472)(32)
TCE Revenue / Day$7,822 $11,484 $(3,662)(32)
Revenue Days3,387 3,393 (6) 
    
Kamsarmax Operations vessel operating costs were $15.6 million for the first half of 2020, including approximately $0.8 million of takeover costs and contingency expenses, compared with vessel operating costs of $17.3 million in the prior year period, relating to 17 and 19 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses for the first half of 2020 decreased to $4,874 from $5,001 in the prior year period due primarily to the timing of purchases of spares and stores as well as the timing of repairs.

Kamsarmax Operations charterhire expense was $7.2 million in the first half of 2020, relating to five vessels the Company has time chartered-in, the first of which was time chartered-in during 2019.

10


Kamsarmax Operations depreciation was $8.9 million and $9.2 million in the first halves of 2020 and 2019, respectively, as the number of vessels owned or finance leased on average decreased to 17 in the first half of 2020 from 19 in the first half of 2019.

General and administrative expense for our Kamsarmax Operations was $1.0 million for the first half of 2020 and $1.1 million in the first half 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 half of 2020, we recorded a write down on assets held for sale of $9.4 million related to the classification of the SBI Bolero as held for sale. In the first half of 2019, $7.4 million was written down related to the sale of the SBI Electra and SBI Flamenco.
Corporate
Certain general and administrative expenses we incur, as well as all of our financial expenses and investment income or losses, are not attributable to a specific segment. Accordingly, these costs are not allocated to our 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 $10.2 million and $12.9 million in the first halves of 2020 and 2019, respectively. The decrease from the prior year is due primarily to a reduction in compensation costs.

We recorded a loss of approximately $103.0 million for the first half of 2020 and received cash dividend income of $0.7 million from our equity investment in Scorpio Tankers Inc. During the first half of 2019, we recorded a non-cash gain of approximately $67.6 million as well as cash dividend income of $1.0 million also related to our equity investment in Scorpio Tankers Inc.

Financial expenses, net of interest income decreased to $20.0 million in the first half of 2020 from $27.5 million in the prior year period due to lower LIBOR rates and a reduction in our outstanding debt through the redemption of our 7.50% Senior Unsecured Notes during the third quarter of 2019 and managing our revolving credit facility.

Liquidity and Capital Resources
Our primary sources of funds are cash flow from our vessels, which operate in the Scorpio Pools, credit facility borrowings and equity offerings. Our liquidity and capital needs arise primarily from working capital requirements to operate our fleet, payments to meet or refinance our debt obligations and expenditures for vessel acquisition/construction, as well as to maintain the high quality of our fleet including drydocking and scrubber installations. We also make occasional repurchases of shares of our common stock at the sole discretion of management based on market conditions and other factors.

At June 30, 2020, cash and cash equivalents totaled $68.3 million and we had approximately $90.8 million in available and undrawn capacity under our revolving credit facilities. We believe that our current cash and cash equivalents balance, available credit under existing credit facilities, as well as our operating cash flows will be sufficient to fund the operation of our fleet as well as other liquidity requirements such as debt repayment and capital expenditures (such as contractual payments for scrubbers and the WTIV).

Recent Financing Activities
    Our recent financing activities include the following, which are more fully described in the “Secured Credit Facilities and Financing Obligations” section below:
$67.3 Million Lease Financing

On March 19, 2020, we closed the transactions to sell and leaseback the SBI Cronos and SBI Achilles, two Ultramax vessels and on April 2, 2020, we closed a transaction to sell and lease back the SBI Lynx, a Kamsarmax vessel to Ocean Yield ASA. As part of the transaction we agreed to bareboat charter-in the SBI Cronos for a period of nine years, the SBI Achilles for a period of ten years and the SBI Lynx for a period of twelve years. We have several purchase options during the charter period of each agreement, as well as a purchase option for each vessel upon the expiration of the relevant agreement.

The transaction provides financing for the installation of scrubbers for each of the vessels included at approximately $1.5 million, which will amortize over four years.

11


$12.8 Million Credit Facility

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

$38.7 Million Credit Facility

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

$85.5 Million Credit Facility

We repaid approximately $11.1 million of this credit facility in April 2020 in connection with the sale of the SBI Taurus.

$184.0 Million Credit Facility

We repaid approximately $12.5 million of this credit facility in May 2020 in connection with the sale of the SBI Bolero.

Amendment of Minimum Liquidity Covenant

We agreed with our 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 49 vessels, the minimum liquidity requirement is $25.0 million (a reduction from $34.3 million).

In consideration for the above amendment, we made an advance principal repayment 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

We agreed with our 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, we will not have to make certain installment payments on these facilities totaling $29.8 million through the end of the second quarter of 2021.

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

Amendment of Minimum Liquidity CovenantPayment Holiday on Certain Future Principal Repayments
$85.5 Million Credit Facility$820 $1,093 
$30.0 Million Credit Facility555 1,111 
$60.0 Million Credit Facility565 565 
$184.0 Million Credit Facility3,479 6,958 
$34.0 Million Credit Facility607 1,214 
$90.0 Million Credit Facility1,650 3,950 
Total$7,676 $14,891 


Financial Guarantees

In April 2020, we agreed to guarantee certain obligations of certain related parties arising from bunker purchases made through April 2021 on behalf of the vessels we own. The maximum potential liability as of the date of this filing is $6.0 million.

12


Equity Issuance

In June 2020, we issued approximately 4.7 million shares of our common stock, par value $0.01 per share, at $18.46 per share in an underwritten public offering. Scorpio Services Holding Limited, a related party, purchased 950,000 common shares in the offering at the public offering price, after which it beneficially owned 16.1% of our outstanding common stock at that time, thereby increasing Scorpio Holdings Limited’s beneficial ownership of our outstanding common stock to 20.0% at that time. We received approximately $82.3 million of net proceeds from the issuance.

Cash Flow
Operating Activities
    The table below summarizes the effect of the major components of our operating cash flow.
Six Months Ended June 30,
20202019
Net (loss) income(169,754)31,499 
Non-cash items included in net (loss) income149,174 (21,820)
Related party balances(1,293)1,315 
Effect of changes in other working capital and operating assets and liabilities(13,228)(7,176)
Net cash provided by operating activities(35,101)3,818 
    The cash flow provided by operating activities for the six months ended June 30, 2020 reflects the lower time charter rates earned during the period. Our non-cash items include unrealized gains on investments, the loss/write-down on vessels held for sale, vessel depreciation, amortization of restricted stock and deferred financing costs.
Investing Activities
Net cash provided by investing activities of $58.1 million primarily reflects the proceeds received from the sale of 2.25 million common shares of Scorpio Tankers Inc. (NYSE: STNG) and the sale of two Ultramax vessels and one Kamsarmax vessel, partially offset by payments made on our scrubber program.
Financing Activities
Net cash provided by financing activities of $2.8 million primarily reflects the net proceeds from our issuance of stock and the refinancing of existing bank debt under financing obligations via our new sale and leaseback transactions. These were offset by the repayment of the outstanding balances on our revolving credit facilities, all of which remain available to us.
Share Repurchase Program
On January 25, 2019, our Board of Directors authorized a new share repurchase program of up to $50.0 million of our common stock in open market or privately negotiated transactions, or the New Share Repurchase Program. This New Share Repurchase Program replaced the previous $50.0 million share repurchase program authorized in October 2018. The specific timing and amounts of the repurchases are in the sole discretion of management and may vary based on market conditions and other factors, but we are not obligated under the terms of the New Share Repurchase Program to repurchase any of our common stock. The authorization, which remains available to us in its entirety, has no expiration date.
Dividend
    Year to date 2020, our Board of Directors declared cash dividends totaling $0.30 per share or $2.6 million in the aggregate, all of which have been paid as of the date of this filing.
Secured Credit Facilities and Financing Obligations
13


As of June 30, 2020, we had $661.3 million of outstanding borrowings under the credit agreements and financing obligations as shown in the following table (dollars in thousands):
June 30, 2020September 25, 2020
$85.5 Million Credit Facility$35,971 $34,057 
$30.0 Million Credit Facility28,007 26,166 
$60.0 Million Credit Facility25,442 24,029 
$184.0 Million Credit Facility71,591 66,682 
$34.0 Million Credit Facility15,857 31,036 
$90.0 Million Credit Facility78,150 72,550 
$19.6 Million Lease Financing - SBI Rumba16,253 15,935 
$19.0 Million Lease Financing - SBI Tango16,709 16,409 
$19.0 Million Lease Financing - SBI Echo16,833 16,548 
$20.5 Million Lease Financing - SBI Hermes18,416 18,091 
$21.4 Million Lease Financing - SBI Samba19,679 19,322 
CMBFL Lease Financing107,644 104,963 
$45.0 Million Lease Financing - SBI Virgo & SBI Libra41,383 40,375 
AVIC Lease Financing106,703 104,330 
$67.3 Million Lease Financing62,61561,197 
Total bank loans and financing obligations outstanding$661,253 $651,690 
Our secured credit facilities are secured by, among other things: a first priority mortgage over the relevant collateralized vessels; a first priority assignment of earnings, and insurances from the mortgaged vessels for the specific facility; a pledge of the earnings account of the mortgaged vessels for the specific facility; and a pledge of the equity interests of each vessel owning subsidiary under the specific facility.

Loan Covenants
    Certain of our credit facilities and financing obligations discussed above, have, among other things, the following financial covenants, as amended or waived, the most stringent of which require us to maintain:
The ratio of net debt to total capitalization of no greater than 0.60 to 1.00.
Consolidated tangible net worth (adjusted for a minimum amount of $100.0 million in historical non-operating costs and to exclude certain future non-operating items, including impairments) of no less than $500.0 million plus: (i) 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after December 31, 2013, and (ii) 50% of the value of any new equity issues occurring on or after December 31, 2013.
Minimum liquidity of not less than the greater of $25.0 million and $0.5 million per owned or finance leased vessel.
Minimum fair value of the collateral for each credit facility, such that the aggregate fair value of the vessels collateralizing the credit facility be between 140% and 160% of the aggregate principal amount outstanding under such credit facility, or, if we do not meet these thresholds, to prepay a portion of the loan or provide additional security to eliminate the shortfall.
Minimum fair value of the vessel for certain financing obligations be 115% of the principal amount outstanding under such financing obligation, or, if we do not meet this threshold, to prepay a portion of the financing obligation or provide additional security to eliminate the shortfall.
    Our credit facilities and financing obligations discussed above have, among other things, the following restrictive covenants which may restrict our ability to, among other things:
14


incur additional indebtedness;
sell the collateral vessel, if applicable;
make additional investments or acquisitions;
pay dividends; or
effect a change of control of the Company.

    A violation of any of the financial covenants contained in our credit facilities described above may constitute an event of default under all of our credit facilities, which, unless cured within the grace period set forth under the credit facility, if applicable, or waived or modified by our lenders, provides our lenders with the right to, among other things, require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, reclassify our indebtedness as current liabilities, accelerate our indebtedness, and foreclose their liens on our vessels and the other assets securing the credit facilities, which would impair our ability to continue to conduct our business.

In addition, our credit facilities and finance leases contain subjective acceleration clauses under which the debt could become due and payable in the event of a material adverse change in our business.

    Furthermore, our credit facilities contain a cross-default provision that may be triggered by a default under one of our other credit facilities. A cross-default provision means that a default on one loan would result in a default on certain of our other loans. Because of the presence of cross-default provisions in certain of our credit facilities, the refusal of any one lender under our credit facilities to grant or extend a waiver could result in certain of our indebtedness being accelerated, even if our other lenders under our credit facilities have waived covenant defaults under the respective credit facilities. If our secured indebtedness is accelerated in full or in part, it would be very difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels and other assets securing our credit facilities if our lenders foreclose their liens, which would adversely affect our ability to conduct our business.

    Moreover, in connection with any waivers of or amendments to our credit facilities that we have obtained, or may obtain in the future, our lenders may impose additional operating and financial restrictions on us or modify the terms of our existing credit facilities. These restrictions may further restrict our ability to, among other things, pay dividends, make capital expenditures or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness.

    As of the date of this filing, we were in compliance with all of the financial covenants contained in our credit facilities and financing obligations that we had entered into as of the date of this filing.

    Please see Note 9, Debt, to our consolidated financial statements for additional information about these credit facilities and financing obligations.

$67.3 Million Lease Financing

On March 19, 2020, we closed the transactions to sell and leaseback the SBI Cronos and SBI Achilles, two Ultramax vessels and on April 2, 2020, we closed a transaction to sell and lease back the SBI Lynx, a Kamsarmax vessel to Ocean Yield ASA. As part of the transaction we agreed to bareboat charter-in the SBI Cronos for a period of nine years, the SBI Achilles for a period of ten years and the SBI Lynx for a period of twelve years. We have several purchase options during the charter period of each agreement, as well as a purchase option for each vessel upon the expiration of the relevant agreement.

The transaction provides financing for the installation of scrubbers for each of the vessels included at approximately $1.5 million, which will amortize over four years.

$12.8 Million Credit Facility

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

$38.7 Million Credit Facility

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

15


$85.5 Million Credit Facility

We repaid approximately $11.1 million of this credit facility in April 2020 in connection with the sale of the SBI Taurus.

$184.0 Million Credit Facility

We repaid approximately $12.5 million of this credit facility in May 2020 in connection with the sale of the SBI Bolero.

Vessel Sales

In September 2020, the Company entered into an agreement with an unaffiliated third party to sell the SBI Rock, a 2016 built Kamsarmax vessel, for approximately $18.0 million. The vessel has not been fitted with a scrubber. Delivery of the vessel is expected to take place in the fourth quarter of 2020. It is estimated that the Company’s liquidity will increase by approximately $4.8 million and a loss of approximately $9.0 million will be recorded in the third quarter of 2020.

COVID-19

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

Fair Value of Our Vessels

At June 30, 2020 the carrying value of our vessels was $1.3 billion in total on our condensed consolidated balance sheet, which exceeded the fair value of our vessels as of that date by approximately $54.0 million in total (approximately $29.0 million and $25.0 million on the Kamsarmax and Ultramax fleets, respectively). The fair market values of drybulk vessels, including our vessels, have generally experienced high volatility. The fair market value of our vessels may continue to fluctuate depending on a number of factors, including: (i) prevailing level of charter rates; (ii) general economic and market conditions affecting the shipping industry; (iii) types, sizes and ages of vessels; (iv) supply of and demand for vessels; (v) other modes of transportation; (vi) cost of newbuildings; (vii) governmental or other regulations; (viii) the need to upgrade vessels as a result of charterer requirements, technological advances in vessel design or equipment or otherwise; (ix) technological advances; and (x) competition from other shipping companies and other modes of transportation.

Critical Accounting Estimates
    There have been no material changes to our significant accounting estimates since December 31, 2019 other than those reflected in our unaudited interim condensed consolidated financial statements for the six-month period ended June 30, 2020 included elsewhere herein.  For a description of our critical accounting estimates and all of our significant accounting policies, see Note 1 to our audited financial statements and "Item 5 - Operating and Financial Review and Prospects," included in our Annual Report.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
    As of June 30, 2020, our contractual obligations and commitments consisted principally of debt repayments, future minimum payments under non-cancelable time chartered-in agreements and future minimum purchases under non-cancelable purchase agreements. As of June 30, 2020, there have been no significant changes to such arrangements and obligations since December 31, 2019 other than that noted below.

Financial Guarantees

In April 2020, we agreed to guarantee certain obligations of certain related parties arising from bunker purchases made through April 2021 on behalf of the vessels we own. The maximum potential liability as of the date of this filing is $6.0 million.
16






17


INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Page
F- 1

Scorpio Bulkers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)

June 30,December 31,
20202019
(unaudited)
Assets
Current assets 
Cash and cash equivalents$68,307 $42,530 
Inventories3,504 6,371 
Due from related parties8,307 5,954 
Prepaid expenses and other current assets9,514 10,431 
Total current assets89,632 65,286 
Non-current assets 
Vessels, net1,319,518 1,271,993 
Equity investments-related party27,607 173,298 
Assets held for sale 77,536 
Deferred financing costs, net2,541 2,982 
Other assets35,344 60,234 
Due from related parties13,071 14,230 
Total non-current assets1,398,081 1,600,273 
Total assets$1,487,713 $1,665,559 
  
Liabilities and shareholders’ equity 
Current liabilities 
Bank loans, net$34,090 $44,956 
Financing obligations35,900 29,159 
Accounts payable and accrued expenses43,839 48,746 
Due to related parties873 972 
Total current liabilities114,702 123,833 
Non-current liabilities 
Bank loans, net216,706 332,613 
Financing obligations365,508 321,646 
Other liabilities1,323 12,500 
Total non-current liabilities583,537 666,759 
Total liabilities698,239 790,592 
Commitment and contingencies (Note 7)
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 June 30, 2020 and December 31, 2019; outstanding 11,992,580 shares as of June 30, 2020 and 7,248,180 as of December 31, 2019
854 809 
Paid-in capital1,801,360 1,717,144 
Common shares held in treasury, at cost; 856,785 shares at June 30, 2020 and December 31, 2019
(56,720)(56,720)
Accumulated deficit (956,020)(786,266)
Total shareholders’ equity789,474 874,967 
Total liabilities and shareholders’ equity$1,487,713 $1,665,559 
F- 2

Scorpio Bulkers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)


See notes to the unaudited condensed consolidated financial statements.

F- 3

Scorpio Bulkers Inc. and Subsidiaries
Condensed Consolidated Statement of Operations (unaudited)
(Amounts in thousands, except per share amounts)

 Six Months Ended June 30,
 20202019
Revenue: 
Vessel revenue$9,389 $ 
Vessel revenue-related party57,601 101,088 
Total vessel revenue66,990 101,088 
Operating expenses: 
Voyage expenses1,385 295 
Voyage expenses-related party1,435 50 
Vessel operating costs40,806 44,754 
Vessel operating costs-related party6,129 6,742 
Charterhire expense9,174 3,282 
Vessel depreciation25,023 27,270 
General and administrative expenses9,193 11,454 
General and administrative expenses-related party4,112 4,606 
Loss / write-down on assets held for sale16,611 11,636 
Loss / write-down on assets held for sale-related party398 599 
Total operating expenses114,266 110,688 
Operating (loss) income(47,276)(9,600)
Other income (expense): 
Interest income172 674 
Income from equity investment 278 
Income from equity investment - related party(102,324)68,368 
Foreign exchange loss(130)(51)
Financial expense, net(20,196)(28,170)
Total other (expense) income(122,478)41,099 
Net (loss) income$(169,754)$31,499 
Weighted-average shares outstanding: 
Basic7,379 6,760 
Diluted7,379 6,917 
(Loss) income per common share: 
Basic$(23.01)$4.66 
Diluted$(23.01)$4.55 
 
See notes to the unaudited condensed consolidated financial statements.

F- 4

Scorpio Bulkers Inc. and Subsidiaries
Condensed Consolidated Statement of Changes in Shareholders’ Equity (unaudited)
(Dollars in thousands)

Number of
shares
outstanding
Common
stock
Paid-in
capital
Treasury SharesAccumulated deficitTotal
Balance as of January 1, 20207,248,180 $809 $1,717,144 $(56,720)$(786,266)$874,967 
Net income(169,754)(169,754)
Common stock issued4,715,000 47 82,208   82,255 
Reverse stock split (2)   (2)
Issuance of restricted stock, net of forfeitures29,400      
Cash dividends declared on stock ($0.25 per common share)  (2,011)  (2,011)
Restricted stock amortization  4,019   4,019 
Balance as of June 30, 202011,992,580 $854 $1,801,360 $(56,720)$(956,020)$789,474 




Number of
shares
outstanding
Common
stock
Paid-in
capital
Treasury SharesAccumulated deficitTotal
Balance as of January 1, 20197,121,726 $796 $1,747,648 $(56,720)$(830,920)$860,804 
Net loss31,499 31,499 
Issuance of restricted stock, net of forfeitures18,000 2 (2)   
Cash dividends declared on stock ($0.40 per common share)  (2,849)  (2,849)
Treasury Stock      
Restricted stock amortization  4,297   4,297 
Balance as of June 30, 20197,139,726 $798 $1,749,094 $(56,720)$(799,421)$893,751 


See notes to the unaudited condensed consolidated financial statements.

F- 5

Scorpio Bulkers Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)

 Six Months Ended June 30,
 20202019
Operating activities 
Net (loss) income$(169,754)$31,499 
Adjustment to reconcile net (loss) income to net cash provided by operating activities:
Restricted stock amortization4,019 4,297 
Vessel depreciation25,023 27,270 
Amortization of deferred financing costs2,022 4,429 
Write-off of deferred financing costs366 446 
Loss / write-down on assets held for sale15,420 10,385 
Net losses (gains) on investments102,980 (67,565)
Dividend income on equity investments(656)(1,082)
Changes in operating assets and liabilities:
Drydocking expenditures(10,775)(1,362)
Decrease inventories2,867 189 
Decrease (increase) in prepaid expenses and other current assets9,832 (7,495)
(Decrease) increase in accounts payable, accrued expenses and other liabilities(15,152)1,492 
(Decrease) increase in related party balances(1,293)1,315 
Net cash (used in) provided by operating activities(35,101)3,818 
Investing activities 
Equity investment (1,500)
Sale of equity investment42,711  
Proceeds from sale of vessels52,518 47,302 
Dividend income on equity investments656 1,082 
Scrubber payments(37,805)(5,746)
Net cash provided by investing activities58,080 41,138 
Financing activities
Proceeds from issuance of common stock82,255  
Proceeds from issuance of debt110,178 242,260 
Repayments of long term debt(187,624)(212,560)
Dividend paid(2,011)(2,849)
Net cash provided by financing activities2,798 26,851 
Increase in cash and cash equivalents25,777 71,807 
Cash and cash equivalents, beginning of period42,530 67,495 
Cash and cash equivalents, end of period$68,307 $139,302 
Supplemental cash flow information:
Interest paid$17,612 $26,134 
Non-cash investing and financing activities
Right of use assets obtained in exchange for operating lease liabilities$ $15,280 
See notes to the unaudited condensed consolidated financial statements.
F- 6

SCORPIO BULKERS INC. AND SUBSIDIARIES
Unaudited Notes to Condensed Consolidated Financial Statements

F- 7

SCORPIO BULKERS INC. AND SUBSIDIARIES
Unaudited Notes to Condensed Consolidated Financial Statements
1.Organization and Basis of Presentation
Company
Scorpio Bulkers Inc. and its subsidiaries (together the “Company”) is an international shipping company that owns and operates the latest generation newbuilding drybulk carriers with fuel-efficient specifications and carrying capacities of greater than 30,000 dwt in the international shipping markets. Scorpio Bulkers Inc. was incorporated in the Republic of the Marshall Islands on March 20, 2013.

The Company’s vessels transport a broad range of major and minor bulk commodities, including ores, coal, grains, and fertilizers, along worldwide shipping routes, and are, or are expected to be, employed primarily in the spot market or in spot market-oriented pools of similarly sized vessels. As of June 30, 2020, the Company owned or finance leased 49 vessels consisting of 16 Kamsarmax vessels and 33 Ultramax vessels and time chartered in six vessels consisting of five Kamsarmax vessels and one Ultramax vessel.
The Company is organized by vessel type into two operating segments (see Note 16, Segments, to the condensed consolidated financial statements):
Ultramax - includes vessels ranging from approximately 60,200 dwt to 64,000 dwt
Kamsarmax - includes vessels ranging from approximately 82,000 dwt to 84,000 dwt

The Company’s vessels are commercially managed by Scorpio Commercial Management S.A.M., or SCM, an entity controlled by the Lolli-Ghetti family of which Emanuele Lauro, the Company’s co-founder, Chairman and Chief Executive Officer, and Filippo Lauro, the Company’s Vice President, are members. SCM’s services include securing employment for the Company’s vessels in pools, in the spot market and on time charters.

The Company’s vessels are technically managed by Scorpio Ship Management S.A.M., or SSM, an entity controlled by the Lolli-Ghetti family. SSM facilitates vessel technical support such as crew, provisions, deck and engine stores, insurance, maintenance and repairs, and other services as necessary to operate the vessels such as drydocks and vetting/inspection under a technical management agreement.

The Company has also entered into an administrative services agreement, as amended from time to time, or the Administrative Services Agreement, with Scorpio Services Holding Limited, or SSH, an entity controlled by the Lolli-Ghetti family. The administrative services provided under this agreement primarily include provision of administrative staff, office space and accounting, legal compliance, financial and information technology services, in addition to arranging vessel sales and purchases for the Company.

Basis of accounting
The condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of June 30, 2020 and the Company’s result of operations for the six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019. The condensed consolidated balance sheet as of December 31, 2019 was derived from audited financial statements but does not contain all the footnote disclosures from the annual financial statements.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reporting amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with Securities and Exchange Commission, or the SEC, rules and regulations; however, management believes that the disclosures herein are adequate to make the information presented not misleading. This report should be read in conjunction with the audited financial statements and the notes included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2019.
F- 8

SCORPIO BULKERS INC. AND SUBSIDIARIES
Unaudited Notes to Condensed Consolidated Financial Statements
Reverse stock split
On April 7, 2020, the Company effected a one-for-ten reverse stock split. All share and per share information has been retroactively adjusted to reflect the reverse stock split. The par value was not adjusted as a result of the reverse stock split.

Going concern

The Company’s revenue is primarily derived from pool revenue. The bulker shipping industry is volatile and a sustained cyclical downturn could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.
The fair market values of the Company’s vessels also experience high volatility. The fair market value of the vessels may increase or decrease depending on a number of factors including, but not limited to, the prevailing level of charter rates and day rates, general economic and market conditions affecting the international shipping industry, types, sizes and ages of vessels, supply and demand for vessels, availability of or developments in other modes of transportation, competition from other shipping companies, cost of newbuildings, governmental or other regulations and technological advances. In addition, as vessels grow older they generally decline in value. If the fair market value of its vessels declines, the Company may not be in compliance with certain provisions of its credit facilities and it may not be able to refinance its debt. The prepayment of certain credit facilities may be necessary for the Company to maintain compliance with certain covenants in the event that the value of its vessels falls below a certain level. Additionally, if the Company sells one or more of its vessels at a time when vessel prices have fallen, the sale price may be less than the vessel’s carrying value on its consolidated financial statements, resulting in a loss on sale or an impairment loss being recognized, ultimately leading to a reduction in earnings. Furthermore, if vessel values fall significantly, this could indicate a decrease in the recoverable amount for the vessel which may result in an impairment adjustment in the carrying value of the vessel.
These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, nor to the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

2.Cash and cash equivalents
Cash and cash equivalents includes $15.0 million and $10.1 million of short-term deposits with original maturities of less than three months, at June 30, 2020 and December 31, 2019, respectively.





F- 9

SCORPIO BULKERS INC. AND SUBSIDIARIES
Unaudited Notes to Condensed Consolidated Financial Statements