Diamond S Shipping Inc. Third Quarter 2019 Earnings Presentation - PowerPoint PPT Presentation

Diamond S Shipping Inc. Third Quarter 2019 Earnings Presentation November 13, 2019

Disclaimer and Forward-Looking Statements Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. Some factors that, in the Company’s view, could cause actual results or conditions to differ materially from those discussed in the forward-looking statements include unforeseen liabilities; future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the Company’s operations; risks relating to the integration of assets or operations of entities that it has or may in the future acquire and the possibility that the anticipated synergies and other benefits of such acquisitions may not be realized within expected timeframes or at all; the failure of counterparties to fully perform their contracts with the Company; the strength of world economies and currencies; general market conditions, including fluctuations in charter rates and vessel values; changes in demand for tanker vessel capacity; changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs; the market for the Company’s vessels; availability of financing and refinancing; charter counterparty performance; ability to obtain financing and comply with covenants in such financing arrangements; changes in governmental rules and regulations or actions taken by regulatory authorities; potential liability from pending or future litigation; general domestic and international political conditions; potential disruption of shipping routes due to accidents or political events; vessels breakdowns and instances of off-hires; and other factors. Please see the Company's filings with the SEC for a more complete discussion of certain of these and other risks and uncertainties. The Company undertakes no obligation, and specifically declines any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

Highlights & Business Overview Craig H Stevenson, Jr., CEO

Highlights & Recent Activity DAILY STATISTICS FOR THIRD QUARTER 2019 THIRD QUARTER 2019 RESULTS  Excluding loss on sale, net loss of $7.6 million or loss of $0.19 CRUDE PRODUCTS per share Spot TCE (1) $18,174 per day $12,714 per day A non-cash loss on sale of two 2008-built vessels $18.3 million was recognized in Q3 2019 TCE (1) 18,938 per day 13,139 per day Including loss on sale, net loss is $25.9 million or loss of $0.65 per Vessel expenses (2) 7,139 per day 6,503 per day share General & administrative (cash) (3) 1,012 per day 1,012 per day  Adjusted EBITDA of $34.0 million TCE less Vessel expenses less G&A 10,787 per day 5,624 per day  Cash and restricted cash: $81.1 million; $5.5 million available on revolvers RECENT MARKET IMPROVEMENTS IN Q4 2019 DSSI WELL-POSITIONED FOR MARKET STRENGTH  Scale: 66 vessels across Crude & Product asset classes DSSI: 62% fixed = $43,000/day DSSI: 63% fixed = $13,500/day  Unit Leverage: low cash break evens 120,000 48,000 MR Spot Rates Suezmax Spot Rates 105,000 42,000  Spot: 80% vessels employed in Spot market 90,000 36,000 Sensitivity: if rates increase by below , net income increase by USD mm 100.0 6 Crude Fleet 75,000 30,000 Products Fleet 80.0 71.2 60,000 24,000 Earnings per share impact 4 60.0 47.5 45,000 18,000 2.96 10 YR RANGE 43.8 10 YR RANGE 2019 40.0 1.97 29.2 30,000 12,000 2019 23.7 2 0.99 14.6 20.0 15,000 6,000 0 0 0.0 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 1,000 5,000 EPS 2,000 10,000 EPS 3,000 15,000 EPS Source: Clarksons Research NOTES 1. TCE rates are a non-GAAP measure. Please refer to non-GAAP measure disclosures at the end of this presentation. 2. The vessel operating expenses we incur primarily consist of crew wages and associated costs, insurance premiums, lubricants and spare parts, and repair and maintenance costs and technical management fees. Excluded in above are nonrecurring costs or benefits. Daily vessel expenses are based on total operating days, which are the number of calendar days in the period of owned vessels. 4 3. General and administrative expenses (cash) for the quarter 2019 period excludes non-cash compensation expenses.

Current Market Tailwinds for tankers despite mixed signals in oil markets BEARISH FACTORS IN THE OIL MARKETS BULLISH FACTORS IN THE TANKER MARKETS Oil demand growth expected below 1mmbpd in 2019 Delays in scrubber retrofits absorbing tonnage Agencies have cut oil demand forecasts during 2019 Average days in shipyards increasing (LH) vs. daily Suezmax spot earnings (RH) mmbpd 1.60 50 125,000 IEA EIA OPEC Scrubber retrofit days in yard (LH) Opportunity cost: Avg daily Suezmax earnings in month (RH) 1.40 45 100,000 1.20 1.00 40 75,000 0.80 35 50,000 0.60 0.40 30 25,000 0.20 Retrofits for Afra/LR2 and larger 0.00 25 - Jan Feb Mar Apr May Jun Jul Aug Sept Oct Jan Feb Mar Apr May Jun Jul Aug Sep Oct Source: Bloomberg, Oct 2019 Source: Braemar ACM, Oct 2019 Other Factors include: Other Factors include:  Continued backwardation of oil prices limit arbitrage opportunities  Sanctions can significantly reduce tanker supply  Inventories at 60.9 days forward demand near 10 year averages  Swing tonnage increasingly trading dirty  OPEC+ has continued limits on production quantities  Reemergence of arbitrage opportunities  Higher than average refinery maintenance affects product  Imminent IMO 2020 compliance expected to create inefficiency of seaborne transportation tanker supply 5

Tanker Fundamentals Daily earnings expected to increase based on limited tanker supply growth and rising demand growth SUEZMAX FLEET PROFILE MR FLEET PROFILE Basis: 565 vessels Basis: 1,570 vessels 33% 31% 26% 25% 24% 20% 18% 12% 9% 8% 6% 5% 0-4 5-9 10-14 15-19 20+ On Order On order 0-4 5-9 10-14 15-19 20+ On Order On order CRUDE TANKER DEMAND GROWTH PRODUCT TANKER DEMAND GROWTH 10% YOY Growth by DWT YOY Growth by DWT 10% 9% 8% 8% 6.5% 7.5% 6% 7% 5.0% 4.9% 6.4% 4.3% 6% 4% 6.0% 5% 2% 2.0% 4% 0% 3% 2.5% 2% -2% 1.2% 1% -3.3% -4% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 6 Source: Clarkson Research Oct-19

Suezmax Asset Values Values in the Crude Fleet have ticked up, but compared to the 10-year range, more value could potentially be unlocked. ASSET VALUES ACROSS THE FLEET $mm NEWBUILD PARITY $ mm Asset values have improved across all ages. Older vessels have room to move despite newbuilding prices. 140 90 75 NEWBUILD RESALE 120 80 65.9 10yr range 63.6 65 69 2019 100 70 63.6 63.6 80 60 10yr range 55 2019 64 51.6 60 50 50.6 St. Line Depreciation 45 40 40 Jan Apr Jul Oct Jan Apr Jul Oct 39.7 Current Values 80 60 35 5 YR OLD 10 YR OLD Discount to Depreciation 21% 70 50 31.3 27.7 10yr range 25 10yr range 60 40 35 51 2019 2019 50 30 15.8 17.9 15 40 20 9.8 30 10 5 Jan Apr Jul Oct Jan Apr Jul Oct NB Resale 5 yrs 10 yrs 15 yrs 20 yrs Source: Clarkson Research Oct-19 Source: Vessels Value 10/21/19 7

MR Asset Values DSSI Product Fleet is in the sweet spot for potential asset appreciation ASSET VALUES ACROSS THE FLEET $mm NEWBUILD PARITY $ mm Product tanker values generally flat. Older vessel values with room to run upwards. 85 50 41 NEWBUILD RESALE 39.8 73 45 36.3 36.3 36.3 35 61 40 10yr range 39 10yr range 2019 49 35 29.8 2019 36 29 37 30 29.8 St. Line Depreciation 25 25 Jan Apr Jul Oct Jan Apr Jul Oct 23.3 23 Current Values 21% Discount to Depreciation 40 30 5 YR OLD 10 YR OLD 35 26 18.8 17 16.8 30 29 22 2019 10yr range 18 2019 25 10yr range 18 11 10.3 11.0 20 14 6.4 15 10 5 Jan Apr Jul Oct Jan Apr Jul Oct NB Resale 5 yrs 10 yrs 15 yrs 20 yrs Source: Clarkson Research Oct-19 Source: Vessels Value 10/21/19 8

Financial Overview Kevin Kilcullen, CFO