Scorpio Bulkers Inc. STIFEL Conference Presentation February 2020
Disclaimer This presentation includes “forward - looking statements” within the meaning of the safe harbor provisions of the United States Pr ivate Securities Litigation Reform Act of 1995. These forward- looking statements reflect Scorpio Bulkers Inc.’s (“Scorpio’s”) current views with respect to future events and financial performance. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect” and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including w ithout limitation, management’s examination of historical operating trends, data contained in Scorpio’s records and other data available from third parties. Although Scorpio 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 pre dict and are beyond Scorpio’s control, Scorpio cannot assure you that it will achieve or accomplish these expectations, beliefs, projections or future financial performance. Risks and uncertainties include, but are not limited to, the failure of counterparties to fully perform their contracts with Scorpio, the strength of world economies and currencies, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the bulk carrier markets , changes in Scorpio’s operating expenses, including bunker prices, drydocking and insurance costs, the fuel efficiency of our vessels, the market for Scorpio'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 and environmental rules and regulations or actions taken by regulatory authorities including those that may limit the commercial useful lives of bulk carriers, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports Scorpio files with, or furnishes to, the Securities and Exchange Commission, or the Commission, and the New York Stock Exchange, or NYSE. Scorpio undertakes no obligation to update or revise any forward- looking statements. These forward-looking statements are not guarantees of Scorpio's future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements. Earnings before interest, taxes, depreciation and amortization (“EBITDA”), earnings before interest and taxes (“EBIT”), adjus ted net income and related per share amounts, as well as adjusted EBITDA, adjusted EBIT and TCE Revenue are non-GAAP performance measures that the Company believes provide investors with a means of evaluating and understanding how the Company’s management evaluates the Company’s operating performance. These non -GAAP financial measures should not be considered in isolation from, as substitutes for, nor superior to financial measures prepared in accordance with GAAP. Unless otherwise indicated, information contained in this presentation concerning Scorpio’s industry and the market in which it operates, including its general expectations about its industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third party sources widely available to the public such as independent industry publications, government publications, reports by market research firms or other published independent sources. Internal data and estimates are based upon this information as well as information obtained from trade and business organizations and other contacts in the mark ets in which Scorpio operates and management’s understanding of industry conditions. This information, data and estimates involve a number of assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed above. You are cautioned not to give undue weight to such information, data and estimates. While Scorpio believes the market and industry information included in this presentation to be generally reliable, it has not independently verified any third-party information or verified that more recent information is not available. 2
Company Overview # of Owned Handymax/Panamax Vessels Average Age Owns 52 mid-size dry bulk fuel-efficient 52 1 Scorpio Bulkers ‘Eco’ vessels with an average age of 3.9 3.9 years 79 Star Bulk 7.7 43 Navios MH 10.4 Marshall Islands incorporated, HQ in 50 Monaco, and NYSE-listed under the ticker 2 Eagle Bulk 8.7 “SALT” 37 Safe Bulkers 9.3 24 Trades vessels on the spot market through Diana 9.6 the Scorpio Ultramax and Scorpio 3 30 Golden Ocean 7.7 Kamsarmax pools 27 Genco 9.4 Meeting IMO 2020 regulations by installing 0 20 40 60 80 100 Mid Size Fleet Focus scrubbers throughout its fleet (80% 4 expected to be installed by June 2020) 17 35 Successfully invested $100 million in 2018 with the purchase of approximately 5.4 5 million shares of Scorpio Tankers Inc. (NYSE: Panamax/Kamsarmax Supramax/Ultramax STNG) 2 65,000 – 100,000 dwt 50,000 – 64,999 dwt 3 1) Source: Clarkson's Research Services January 2020 2) Given the special dividend declared on October 22, 2019, Scorpio Bulkers now owns approximately 4.4 million shares of Scorpio Tankers Inc. (NYSE: STNG)
Investor & Share Highlights Market Cap ($m) (2) $800 Current Major Shareholders (1) $700 $600 Scorpio Services Holding Limited 19.3 % $500 GRM Investments Limited 17.7 % $400 $300 Evermore Global Advisors LLC 8.3 % $200 $100 Dimensional Fund Advisors LP 4.9% $0 Star Bulk Golden Ocean Genco Diana Scorpio Bulkers Eagle Bulk BlackRock Inc 3.4% Liquidity Per Day ($m) (2) Renaissance Technologies LLC 2.5% $6 $5 The Bank of New York Mellon Corp. 1.8% $4 $3 Hosking Partners LLP 1.5% $2 State Street Corp. 1.3% $1 $0 Royce & Associates LP 1.0% Star Bulk Golden Ocean Genco Scorpio Eagle Bulk Diana 3 Bulkers 1) Bloomberg & IPreo January 2020, Scorpio Services Holding Limited (‘SSH’) with affiliates 4 2) Fearnleys, (US Exchanges Only) February 2020
Q4 – 2019 Corporate & Financial Highlights Q4-19 Financial Results • GAAP Net Income of $15.1 million / Income per diluted share of $0.21, Including: • Non-cash gain of approximately $46.1 million and cash dividend income of $0.5 million, or $0.66 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc. Write-down of assets held for sale of approximately $25.2 million, or $0.36 per diluted share, related • to the classification of four Ultramax vessels as held for sale. • Write-off of approximately $0.2 million of deferred financing costs on the credit facility related to the SBI Puma and the SBI Cougar. • Adjusted net income was $40.6 million, or $0.57 adjusted per diluted share • EBITDA of $41.5 million (Adjusted EBITDA of $66.7 million) • Ultramax TCE of $11,244 per day in Q4-2019 TCE • Ultramax TCE of $10,505 per day booked to date in Q1-2020 • Kamsarmax TCE of $11,934 per day in Q4-2019 • Kamsarmax TCE of $12,242 per day booked to date in Q1-2020 As of January 24, 2020, the Company had $65.9 million in cash Liquidity • Financing • During October 2019, the Company prepaid $21.9 million of its $38.7 Million Credit Facility and wrote-off approximately $0.2 million of deferred financing costs as part of the sale of the SBI Puma and SBI Cougar The Company’s Board of Directors declared a dividend of $0.02 per share on January 27, 2020 Dividend • 5
Financial Performance Summary ADJUSTED EBITDA REVENUE $80 $80 $70.0 $66.7 $60.6 $62.5 $65.2 $63.2 $60.3 $60 $60 $51.1 $54.3 $50.4 $50.6 $32.8 $40 $28.1 $28.8 $23.3 $26.1 $34.7 $37.7 $38.6 $22.9 $20.4 $40 $20 $0.9 $7.3 $10.8 $12.4 $23.9 $26.8 $17.4 $0 $20 $10.2 ($1.3) -$20 ($17.0) ($5.8) $0 -$40 ADJUSTED EBIT OPERATING CASH FLOW $60 $50.9 $49.8 $35 $21.1 $18.6 $19.6 $40 $18.9 $13.5 $11.1 $11.2 $15.5 $20 $5.3 $4.5 $10.6 $9.4 $2.5 $8.7 $6.0 $3.5 $2.9 $0 $0 -$0.7 -$4.5 -$2.1 -$1.7 -$19.2-$16.2-$14.1 -$9.9 -$6.2 -$4.1 -$20 -$18.1 -$28.8 -$27.5 -$40 -$35 Figures in USD millions
Scrubber Economics
IMO 2020 Regulations & Company Strategy What is IMO 2020? How Scorpio will Comply • The International Maritime Organization • The Company plans to install scrubbers on (IMO) will require shipowners to reduce all of its owned and finance leased sulfur emissions from 2020 Kamsarmax and Ultramax vessels before Q4-2020. To comply shipowners will have to decide • The majority of scrubber installations will between: be coordinated with scheduled dry docks • Installing a scrubber to enable the reducing the amount of off hire vessel to burn HSFO Paying the premium to consume • The Scrubbers and their installation will • compliant fuels with a sulfur cost approximately $2.5 million per content <0.5% (MGO and LSFO) vessel. • LNG as bunker fuel 8
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