2020 Bulkers Ltd. A different shipping company – full payout to investors Investor Presentation 9 July, 2019 |
Disclaimer This presentation (the " Presentation ") has been prepared by 2020 Bulkers Ltd. (the " Company ") and is made 9 July, 2019 solely for information purposes. The Presentation does not constitute any recommendation to buy, sell or otherwise transact with any securities issued by the Company. No representation, warranty or undertaking, express or implied, is made by the Company and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. The Company shall have no responsibility or liability whatsoever (for negligence or otherwise) for any loss arising from the use by any person or entity of the information set forth in the Presentation. All information set forth in the Presentation may change materially and without notice. In making the Presentation public the Company undertakes no obligation to provide additional information or to make updates thereto. The information set forth in the Presentation should be considered in the context of the circumstances prevailing at the date hereof and has not been and will not be updated to reflect material developments which may occur after such date unless specifically stated in such update(s). Matters discussed in the Presentation include "forward looking statements". "Forward looking statements" are statements that are not historical facts and are usually identified by words such as "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "continues", "should" etc. These "forward looking statements" reflect the Company's beliefs, intentions and current expectations concerning, among other things, the Company's results, financial condition, liquidity position, prospects, growth and strategies. "Forward looking statements" include statements regarding: objectives, goals, strategies, outlook and growth prospects, future plans, events or performance and potential for future growth, liquidity, capital resources and capital expenditures, economic outlook and industry trends, developments in the Company's market, the impact of regulatory initiatives and the strength of the Company's competitors. "Forward looking statements" involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The "forward looking statements" included herein are based upon various assumptions, many of which, in turn, are based upon further assumptions. This includes, without limitation, the Company's review of historical operating trends, data contained in the Company's records and data available from third parties. Although the Company believes that these assumptions were reasonable when the relevant statements were made, they are inherently subject to significant known and unknown risks, uncertainties, contingencies and other factors which are difficult or impossible to predict and which are beyond the Company's control. "Forward looking statements" are not guarantees of future performance and such risks, uncertainties, contingencies and other important factors which are inherent thereto could cause the actual results of operation, financial condition and liquidity position of the Company or the industry in which it operates to differ materially from those results which, expressed or implied, are contained herein. No representation to the effect that at any of the "forward looking statements" or forecasts will come to pass or that any forecasted result will be achieved are made. The Presentation and the information contained herein does not constitute or form a part of and should not be construed as an offer for sale or subscription or of solicitation or invitation of any offer to subscribe for or purchase any securities issued by the Company. | 2
Our business model Invest at attractive entry point Full alignment of interest as The right assets - 8 Scrubber founders & management are fitted Newcastlemax with largest shareholders proven premium vs Capesize Low cost Stop investing as asset values and risk increases corporate structure Attractive bank financing Free cash flow to be paid as Moderate leverage dividends once fleet is delivered | 3
A new business model for listed drybulk companies is needed Significant value destruction in shipping stocks historically… …however the underlying business was good 800 250 ~35% IRR buying a Capesize in 2002 holding until 2018 5.5x 700 Money multiple 200 13 600 500 150 USDm 400 100 197 300 184 200 50 100 36 0 0 2002 Purchase EBITDA 2002- Residual value Total cash flow 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 price 2018 2020 Bulkers with strong focus on capital discipline, low cash breakeven and dividends. Strong alignment with shareholders Source: Company, Bloomberg, Clarkson Research Services Limited (SIN) | 4
The right assets delivering at the right time The rights assets NAV per share on various resale prices 500 Larger cargo intake vs. standard Capesize 15% 450 400 + 350 300 20% Lower fuel consumption than standard Capesize 1) 250 200 + 150 100 Fuel saving vs. non-scrubber fitted Newcastlemax 2) 50 37% 0 USD 54 mill - USD 64 mill - 15 USD 70 mill - April USD 170 mill - July implied at last year average 2014 2008 peak equity offering USD Proven premium vs. Capesize based on concluded 9.00 Newcastlemax resale values (USDm) fixtures Short time to cash flow Bulk Sandefjord August 2019 ~1 year TC @ USD 19,525/day to Koch Bulk Santiago October 2019 ~1 year TC @ USD 22,250/day to Koch Bulk Seoul December 2019 • 1x vessel fixed for 3 years at Baltic 5TC index + 31% Bulk Shanghai and 50/50 sharing of scrubber benefit to Koch January 2020 Bulk Shenzen February 2020 • Remaining 5x newbuildings are currently open with several offers to contract vessels at index linked, Bulk Sydney March 2020 voyage based charters or fixed contracts to strong counterparties Bulk Sao Paulo April 2020 Bulk Santos May 2020 (1) Compared to Baltic 5TC reference type vessel at 13 knots ballast, 12 knots laden (2) Footnote: Calculated based on West Australian round voyage, basis 2020 Forward fuel prices, sailing 12 knots laden, 13 knots ballast | 5
Low cash break even Capesize historical rates (3) vs 2020 CBE Normalized cash break-even per vessel, per day (1) 165 Opex USD/d 4 750 160 G&A " 1 000 155 150 145 Capesize dayrate (USD'000/day) 140 Debt amortization " 4 566 80 Interest expense " 4 192 70 60 50 2020 Bulkers Cash Breakeven (CBE) @ 100% utilization " 14 508 40 - 50% share of scrubber profits @ USD 200 per ton spread " (2 354) 30 - Newcastlemax premium (31% vs Baltic type Capesize) " (2 876) 20 10 = Standard Capesize rate 2) required for 2020 Bulkers to earn CBE 9 278 0 1 year Capesize TC rate 2020 BE non-scrubber Capesize equivalent Since 1990, Capesize rates have been above 2020 Bulkers’ cash breakeven indexed to a Baltic Type Capesize ~95% of the time (3) (1) Does not include interest on revolving credit facility (2) Baltic reference Capesize 180,000 DWT without scrubbers (3) Baltic reference Capesize 180,000 DWT without scrubbers. Monthly data. Source: Company, Clarkson Research Services Limited (SIN) | 6
Significant dividend potential 10% FCFE when a standard Capesize earns USD 15,200/ day 1 Dividend potential vs Standard Capesize rates 2 1 year Capesize TC rate 70% 2020 BE non-scrubber Capesize equivalent 2020, 10% dividend yield dayrate (Newcastlemax equivalent) 180 60% 160 Capesize dayrate (USD'000/day) 50% 140 Free cash flow to equity 120 20 year average rates 40% 100 Current spot rates 3) 30% 80 60 20% 40 10% 20 0% 0 10 000 15 000 20 000 25 000 30 000 35 000 40 000 Standard Capesize rates 1) Baltic reference Capesize 180,000 DWT without scrubbers adjusted for 31% premium and 50% share of scrubber economics 2) Mark to market - assumeing 8 Newcastlemax trading spot at Index linked charter reflecting Baltic 5TC + 31% + 50% share of scrubber economics based on HFO vs LSFO spread of USD 200 per ton 3) Baltic 5TC index - 4 July 2019 | 7
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