Second Quarter 2018 Earnings Presentation - July 23, 2018
Safe Harbor Statement This document may contain forward- looking statements that reflects management’s expectations for the future. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, 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 our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. 2
Q2 2018 Corporate and Financial Highlights • GAAP Net Income of $0.8 million / Earnings per Share of $0.01 Q2-2018 Financial Results • EBITDA of $28.1 million and cash flow from operations of $32.2 million • Ultramax TCE of $11,569 in Q2 2018 • Ultramax TCE of $10,963 booked to date in Q3 18 TCE • Kamsarmax TCE of $12,823 in Q2 2018 • Kamsarmax TCE of $13,974 booked to date in Q3 18 • Liquidity position as of July 20, 2018 is $80.5 million in cash Liquidity • Closed the $19.0 million lease financing of the Ultramax bulk carrier, SBI Echo • Closed the $19.0 million lease financing of the Ultramax bulk carrier, SBI Tango Debt • Agreed to a $30.0 million loan with ING to refinance two of the Company’s Kamsarmax bulk carriers (SBI Zumba and SBI Parapara) • Drew down on the $12.8 Million BNPP Credit Facility in full • 1 Kamsarmax vessel, SBI Lynx, delivered in Q2 2018 – no further vessels on order Fleet Development • From April 1, 2018 to July 20, 2018, no shares were purchased by the Company Stock Buyback Program and under its share buyback program Dividend • The Company announced a dividend of $0.02 per share for Q2 2018 3
Strengthening Market for Our Vessels • The increase in reported TCE earnings over the last 2 plus years has defied traditional seasonality, and in the face of record newbuild deliveries, shows the underlying strength of the market and supports the continuation of the market recovery $13,974 February 10, $14,000 2016 BDI $12,881 $12,823 hits 40 year $12,605 low $12,000 $11,569 $10,963 $10,886 $9,757 $10,000 $9,273 $9,211 $9,164 $8,949 $8,360 $8,230 $8,000 $7,401 $7,238 $7,083 $6,349 $6,000 $5,335 $5,263 $4,000 $3,462 $3,331 $2,000 $0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18* Ultramax Kamsarmax 4 * Projections based on 46% and 47% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of July 18, 2018.
Financial Performance Revenue EBITDA $70 $40 $60.6 $28.1 $60 $54.3 $30 $51.1 $22.9 $20.4 $50 $17.0 $20 $12.4 $10.8 $38.6 $37.7 $40 $7.3 $34.7 $5.8 $10 $1.3 $0.9 $26.8 $30 $0 $23.9 $17.4 $20 -$10 $10.2 $10 -$20 $0 -$30 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Operating Cash Flow EBIT $25 $21.1 $15 $10.6 $13.5 $10 $6.0 $15 $11.1 $2.9 $5 $5.3 $2.5 $0 $5 -$5 -$4.1 -$5 -$2.1 -$1.7 -$6.2 -$10 -$4.5 -$9.9 -$15 -$15 -$16.2 -$14.1 -$20 -$19.2 -$18.1 -$25 -$25 -$30 -$27.5 -$28.8 -$35 -$35 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 5 Figures in $USD millions.
Overview of New Financings $38m Lease Financing – SBI Echo & SBI Tango $30m Credit Facility • ~$30 million credit facility from ING Bank N.V. • Two lease financings of $19m each for SBI to refinance two Kamsarmax bulk carriers (SBI Echo and SBI Tango with unaffiliated third Zumba and SBI Parapara) parties • 5 year term maturing Q3 2023, with a 13 year to • 5 year lease tenor, with purchase options zero repayment profile on SBI Zumba and a 14 starting at end of year 3 year to zero repayment profile on SBI Parapara • Bareboat Hire rate of $5,400 per day (equates • Pricing of L+2.20% to pricing of L+1.97% at prevailing swap rates) • SALT covenants (excl interest cover) + no • Minimum Tangible Net Worth covenant only + restricted cash no restricted cash • ‘On balance sheet’ and considered as debt for accounting purposes 6
Company Highlights ✓ Youngest ECO dry bulk High specification best-in-class fleet built at top tier yards with an average age of 2.4 fleet years - by far the youngest fleet among publicly listed peers ✓ Attractive Position in Mid size cargo segment provides access to all types of dry cargo commodities Mid Size Segment Reported $28.1 million in EBITDA in Q2 18, the 7 th consecutive quarter of positive ✓ Positive & Increasing EBITDA EBITDA ✓ Low leverage supports a very young fleet with liquidity and considerable future Strong Balance Sheet flexibility Early stage recovery An increase in rates from $10,000 to $15,000 (50%) translates to a 120% increase in ✓ with significant EBITDA, generating $2.5 in EBITDA per share. A $1,000 p.d. increase in rates is operating leverage $20.4m in additional cash per annum Significant trading ✓ One of the most liquid dry bulk stocks with over $3 million in trading liquidity per day liquidity and inside and insider ownership of 23% ownership Well prepared for ✓ Fleet is 100% fitted with BWT systems with no capex required. Our 100% Eco fleet to Ballast Water & IMO benefit from fuel savings compared to older less efficient tonnage 2020 regulation 7
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