Market Overview

Scorpio Bulkers Inc. Announces Financial Results for the Second Quarter of 2018 and Declares a Quarterly Dividend

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MONACO, July 23, 2018 (GLOBE NEWSWIRE) -- Scorpio Bulkers Inc. (NYSE:SALT) ("Scorpio Bulkers", or the "Company"), today reported its results for the three and six months ended June 30, 2018.

The Company also announced today that its Board of Directors has declared a quarterly cash dividend of $0.02 per share on the Company's common stock.

Results for the Three and Six Months Ended June 30, 2018 and 2017

For the second quarter of 2018, the Company's GAAP net income was $0.8 million, or $0.01 per diluted share.  For the same period in 2017, the Company's GAAP net loss was $13.4 million, or $0.19 loss per diluted share.  Total vessel revenues for the second quarter of 2018 were $60.6 million, compared to $37.7 million for the same period in 2017. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the second quarter of 2018 and 2017 were $28.1 million and $10.8 million, respectively (see Non-GAAP Financial Measures below).

For the six months ended June 30, 2018, the Company's GAAP net loss was $5.0 million or $0.07 loss per diluted share.  For the same period in 2017, the Company's GAAP net loss was $48.0 million, or $0.67 loss per diluted share.  Total vessel revenues for the first half of 2018 were $114.9 million, compared to $72.5 million for the same period in 2017. EBITDA for the six months ended June 30, 2018 and 2017 were $48.4 million and a loss of less than $0.1 million, respectively (see Non-GAAP Financial Measures below).

While the first half of 2018 included no non-GAAP adjustments to net income, the Company's first half of 2017 net income included a loss/write-off of vessels and assets held for sale of $17.7 million and the write-off of deferred financing costs on the credit facility related to those specific vessels of $0.5 million. Excluding these items, the Company's first half of 2017 adjusted net loss was $29.8 million, or $0.41 adjusted loss per diluted share. Adjusted EBITDA for the first half of 2017 was $17.7 million (see Non-GAAP Financial Measures below).

TCE Revenue

TCE Revenue Earned during the Second Quarter of 2018

  • Our Kamsarmax fleet earned $12,823 per day
  • Our Ultramax fleet earned $11,569 per day

Voyages Fixed thus far for the Third Quarter of 2018

  • Kamsarmax fleet: approximately $13,974 per day for 47% of the days
  • Ultramax fleet: approximately $10,963 per day for 46% of the days

Cash and Cash Equivalents

As of July 20, 2018, the Company had approximately $80.5 million in cash and cash equivalents.

Recent Significant Events

Dividend

In the second quarter of 2018, the Company's Board of Directors declared and the Company paid a quarterly cash dividend of $0.02 per share totaling approximately $1.5 million.

On July 23, 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.02 per share, payable on or about August 31, 2018, to all shareholders of record as of August 15, 2018. As of July 23, 2018, 75,960,341 shares were outstanding.

Newbuilding Vessel Delivery

On June 28, 2018, the Company took delivery of the SBI Lynx, a Kamsarmax vessel, from Jiangsu Yangzijiang Shipbuilding Co. Ltd.

Debt

$30.0 Million Credit Facility

In June 2018, the Company received a commitment for a loan facility of up to $30.0 million from ING Bank N.V. to refinance two of the Company's Kamsarmax bulk carriers (SBI Zumba and SBI Parapara). The loan facility has a final maturity date of five years from drawdown date and bears interest at LIBOR plus a margin of 2.20% per annum. This loan facility increases the Company's liquidity by approximately $8.0 million after repayment of the vessels' existing debt. The terms and conditions are similar to those set forth in the Company's existing credit facilities and the loan facility is subject to customary conditions precedent and the execution of definitive documentation.

$19.0 Million Lease Financing - SBI Echo

On July 18, 2018, the Company closed a previously announced financing transaction with an unaffiliated third party involving the sale and leaseback of the SBI Echo, a 2015 Japanese built Ultramax vessel, for consideration of $19.0 million. As part of the transaction, the Company will make payments of $5,400 per day under a five-year bareboat charter agreement with the buyer. If converted to floating interest rates, based on the expected weighted average life of the transaction, the equivalent cost of financing at the then prevailing swap rates would have been LIBOR + 1.97% per annum.

The transaction also provides the Company with options to repurchase the vessel beginning on the third anniversary of the sale until the end of the bareboat charter agreement. This transaction, which is being treated as a financial lease for accounting purposes beginning in the third quarter of 2018, increased the Company's liquidity by approximately $7.9 million after repayment of the vessel's existing loan.

$19.0 Million Lease Financing - SBI Tango

On July 18, 2018, the Company closed a previously announced financing transaction with an unaffiliated third party involving the sale and leaseback of the SBI Tango, a 2015 Japanese built Ultramax vessel, for consideration of $19.0 million. As part of the transaction, the Company will make payments of $5,400 per day under a five-year bareboat charter agreement with the buyer. If converted to floating interest rates, based on the expected weighted average life of the transaction, the equivalent cost of financing at the then prevailing swap rates would have been LIBOR + 1.73% per annum.

The transaction also provides the Company with options to repurchase the vessel beginning on the third anniversary of the sale until the end of the bareboat charter agreement. This transaction, which is being treated as a financial lease for accounting purposes beginning in the third quarter of 2018, increased the Company's liquidity by approximately $10.3 million after repayment of the vessel's existing loan.

Debt Overview

During the second quarter of 2018, the Company drew down the entire $12.8 million available to it under the $12.8 Million Credit Facility, for which the SBI Lynx serves as collateral.

The Company's outstanding debt balances, gross of unamortized deferred financing costs as of June 30, 2018 and July 20, 2018, are as follows (dollars in thousands):

    As of June 30,
2018
  As of July 20, 2018
Credit Facility   Amount Outstanding   Amount Outstanding   Amount Committed
Senior Notes   $ 73,625     $ 73,625     $  
$409 Million Credit Facility (1)(2)   169,248     158,556      
$330 Million Credit Facility   235,617     235,617      
$42 Million Credit Facility (3)   22,354     14,106      
$67.5 Million Credit Facility   38,456     38,244      
$12.5 Million Credit Facility   9,792     9,792      
$27.3 Million Credit Facility   17,825     17,825      
$85.5 Million Credit Facility   82,236     82,236      
$38.7 Million Credit Facility   36,900     36,900      
$19.6 Million Lease Financing   18,687     18,687      
$12.8 Million Credit Facility   12,750     12,750      
$30.0 Million Credit Facility *           29,975  
$19.0 Million Lease Financing - SBI Tango       18,910      
$19.0 Million Lease Financing - SBI Echo       18,915      
Total   $ 717,490     $ 736,163     $ 29,975  

                (1) $10.7 million repaid upon the drawdown of the $19.0 Million Lease Financing - SBI Echo
                (2) $22.0 million to be repaid upon the drawdown of the $30.0 Million Credit Facility
                (3) $8.2 million repaid upon the drawdown of the $19.0 Million Lease Financing - SBI Tango
                * Reflects the maximum loan amount available on undrawn facility.

The Company's projected quarterly debt repayments on our bank loans and senior notes and bareboat charter payments on our finance leases through 2019 are as follows (dollars in thousands):

    Principal on
Bank Loans and
Senior Notes
  Finance Lease   Total
Q3 2018 (1)     33,077       1,150       34,227  
Q4 2018     11,829       1,478       13,307  
Q1 2019     11,119       1,478       12,597  
Q2 2019     11,161       1,478       12,639  
Q3 2019 (2)     84,794       1,478       86,272  
Q4 2019     12,683       1,478       14,161  
Total   $ 164,663     $ 8,540     $ 173,203  


       
  (1)     Relates to payments expected to be made from July 21, 2018 to September 30, 2018 including $22.0 million to be repaid upon the drawdown of the $30.0 Million Credit Facility.
                              (2)   Includes $73.6 million repayment of Senior Notes due at maturity.


Financial Results for the Three Months Ended June 30, 2018 Compared to the Three Months Ended June 30, 2017

For the second quarter of 2018, the Company's GAAP net income was $0.8 million, or $0.01 per diluted share.  For the same period in 2017, the Company's GAAP net loss was $13.4 million, or $0.19 loss per diluted share.  EBITDA for the second quarters of 2018 and 2017 were $28.1 million and $10.8 million, respectively (see Non-GAAP Financial Measures).

Total vessel revenues for the second quarter of 2018 were $60.6 million, an increase of $22.9 million from $37.7 million in the second quarter of 2017. Our TCE revenue (see Non-GAAP Financial Measures) for the second quarter of 2018 was $60.5 million, an increase of $22.9 million from the second quarter of 2017.

Total operating expenses for the second quarter of 2018 were $48.6 million compared to $42.5 million in the second quarter of 2017.  The quarter over quarter increase relates to increases in vessel operating expenses and depreciation due to the increase in our fleet size.

Ultramax Operations

  Three Months Ended June 30,        
Dollars in thousands 2018   2017   Change   % Change
TCE Revenue:              
Vessel revenue $ 39,727     $ 21,285     $ 18,442     87  
Voyage expenses 56     17     39     229  
TCE Revenue $ 39,671     $ 21,268     $ 18,403     87  
Operating expenses:              
Vessel operating costs 18,016     12,311     5,705     46  
Charterhire expense 921         921     NA  
Vessel depreciation 9,297     7,437     1,860     25  
General and administrative expense 1,073     826     247     30  
Total operating expenses $ 29,307     $ 20,574     $ 8,733     42  
Operating income $ 10,364     $ 694     $ 9,670     1,393  

Vessel revenue for our Ultramax Operations increased to $39.7 million for the second quarter of 2018 from $21.3 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for our Ultramax Operations was $39.7 million for the second quarter of 2018 and was associated with a day-weighted average of 37 vessels owned and one time chartered-in vessel, compared to $21.3 million for the prior year period, which was associated with a day-weighted average of 28 vessels owned. TCE revenue per day was $11,569 and $8,360 for the second quarters of 2018 and 2017, respectively.

Dollars in thousands Three Months Ended June 30,        
Ultramax Operations: 2018   2017   Change   % Change
TCE Revenue $ 39,671     $ 21,268     $ 18,403     87  
TCE Revenue / Day $ 11,569     $ 8,360     $ 3,209     38  
Revenue Days 3,429     2,544     885     35  

Our Ultramax Operations vessel operating costs were $18.0 million for the second quarter of 2018, including approximately $1.2 million of takeover costs and contingency expenses, and related to 37 vessels owned on average during the period.  Vessel operating costs for the prior year period were $12.3 million and related to 28 vessels owned on average during the period. Daily operating costs excluding takeover costs and contingency expenses for the second quarters of 2018 and 2017 were $5,003 and $4,772, respectively.  Sequentially, daily operating costs increased from $4,909 in the first quarter of 2018.  The increase versus both periods is due primarily to the timing of store purchases as we make purchases in bulk to reduce overall cost.

Charterhire expense for our Ultramax Operations was approximately $0.9 million for the second quarter of 2018, and relates to the vessel we have time chartered-in at $10,125 per day.  During the second quarter of 2017 we did not charter-in any Ultramax vessels.

Ultramax Operations depreciation increased to $9.3 million in the second quarter of 2018 from $7.4 million in the prior year period, reflecting the increase in our weighted average vessels owned to 37 from 28.

General and administrative expense for our Ultramax Operations was $1.1 million for the second quarter of 2018 and $0.8 million in the prior year period. General and administrative expenses consist 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.  The increase versus the prior year period reflects the growth of our fleet.

Kamsarmax Operations

  Three Months Ended June 30,        
Dollars in thousands 2018   2017   Change   % Change
TCE Revenue:              
Vessel revenue $ 20,887     $ 16,457     $ 4,430     27  
Voyage expenses 36     145     (109 )   (75 )
TCE Revenue $ 20,851     $ 16,312     $ 4,539     28  
Operating expenses:              
Vessel operating costs 8,055     8,755     (700 )   (8 )
Charterhire expense 121     1,675     (1,554 )   (93 )
Vessel depreciation 4,730     4,580     150     3  
General and administrative expense 467     542     (75 )   (14 )
Total operating expenses $ 13,373     $ 15,552     $ (2,179 )   (14 )
Operating income $ 7,478     $ 760     $ 6,718     884  

Vessel revenue for our Kamsarmax Operations increased to $20.9 million in the second quarter of 2018 from $16.5 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for our Kamsarmax Operations was $20.9 million for the second quarter of 2018 and was associated with a day-weighted average of 18 vessels owned, compared to $16.3 million for the prior year period, which was associated with a day-weighted average of 19 vessels owned and one vessel time chartered-in. TCE revenue per day was $12,823 and $9,273 for the second quarters of 2018 and 2017, respectively.

Dollars in thousands

 
Three Months Ended June 30,        
Kamsarmax Operations: 2018   2017   Change   % Change
TCE Revenue $ 20,851     $ 16,312     $ 4,539     28  
TCE Revenue / Day $ 12,823     $ 9,273     $ 3,550     38  
Revenue Days 1,626     1,759     (133 )   (8 )

Kamsarmax Operations vessel operating costs were $8.1 million for the second quarter of 2018, including approximately $0.2 million of takeover costs and contingency expenses, related to 18 vessels owned, on average during the period. Vessel operating costs for the prior year period were $8.8 million and related to 19 vessels owned, on average during the period. Daily operating costs excluding takeover costs and contingency expenses for the second quarters of 2018 and 2017 were $4,801 and $4,989, respectively. Sequentially, daily operating costs decreased from $5,172 in the first quarter of 2018, due in large part to the timing of spare and store purchases.

While we do not time charter-in any Kamsarmax vessels, we have a profit and loss sharing agreement with a third party and during the second quarter of 2018, our share of the loss on that vessel was $0.1 million. During the prior year period, a Kamsarmax vessel was time chartered-in at a cost of $1.7 million.

Kamsarmax Operations depreciation remained relatively flat at $4.7 million in the second quarter 2018 compared to $4.6 million in the prior year period.  Our weighted average vessels owned were 18 and 19, in the second quarter of 2018 and 2017, respectively.

General and administrative expense for our Kamsarmax Operations was $0.5 million for both the second quarters of 2018 and 2017.  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.

Corporate

Certain general and administrative expenses we incur and all of our financial expenses are not attributable to a specific segment.  Accordingly, these costs are not allocated to any of 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 $5.8 million and $6.2 million in the second quarters of 2018 and 2017, respectively.  The quarter over quarter decline is due to reductions in restricted stock amortization and legal fees.

Financial expenses, net increased to $11.2 million in the second quarter of 2018 from $8.7 million in the prior year period due to an increase in the LIBOR rate and higher levels of debt related to the increase in overall fleet size.

Financial Results for the Six Months Ended June 30, 2018 Compared to the Six Months Ended June 30, 2017

For the first half of 2018, the Company's GAAP net loss was $5.0 million or $0.07 loss per diluted share.  For the same period in 2017, the Company's GAAP net loss was $48.0 million, or $0.67 loss per diluted share. EBITDA for the first half of 2018 and 2017 were $48.4 million and a loss of less than $0.1 million, respectively (see Non-GAAP Financial Measures). Excluding the loss/write-off of vessels and assets held for sale of $17.7 million and the write-off of deferred financing costs on the credit facility related to those specific vessels of $0.5 million, the Company's adjusted net loss for the first half of 2017 was $29.8 million, or $0.41 adjusted loss per diluted share (see Non-GAAP Financial Measures below). There were no such non-GAAP adjustments to the Company's first half of 2018 net income. Adjusted EBITDA for the first half of 2017 was $17.7 million (see Non-GAAP Financial Measures below).

Total vessel revenues for the first half of 2018 were $114.9 million, an increase of $42.4 million from $72.5 million in the first half of 2017. Our TCE revenue (see Non-GAAP Financial Measures) for the first half of 2018 was $114.6 million, an increase of $42.4 million from the first half of 2017.

Total operating expenses for the first half of 2018 were $98.3 million compared to $103.4 million in the first half of 2017.  The year over year decrease relates in part to the loss/write-off of vessels and assets held for sale of $17.7 million recorded in the first half of 2017, partially offset by increases in compensation as well as vessel operating costs and depreciation resulting from the increase in the size of our fleet.

Ultramax Operations

  Six Months Ended June 30,        
Dollars in thousands 2018   2017   Change   % Change
TCE Revenue:              
Vessel revenue $ 73,056     $ 41,045     $ 32,011     78  
Voyage expenses 184     66     118     179  
TCE Revenue $ 72,872     $ 40,979     $ 31,893     78  
Operating expenses:              
Vessel operating costs 35,252     24,590     10,662     43  
Charterhire expense 1,837     10     1,827     NA  
Vessel depreciation 18,487     14,460     4,027     28  
General and administrative expense 2,147     1,665     482     29  
Total operating expenses $ 57,723     $ 40,725     $ 16,998     42  
Operating income $ 15,149     $ 254     $ 14,895     NA

Vessel revenue for our Ultramax Operations increased to $73.1 million for the first half of 2018 from $41.0 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for our Ultramax Operations was $72.9 million for the first half of 2018 and was associated with a day-weighted average of 37 vessels owned and one time chartered-in vessel, compared to $41.0 million for the prior year period, which was associated with a day-weighted average of 28 vessels owned. TCE revenue per day was $10,666 and $8,297 for the six months ended June 30, 2018 and 2017, respectively.

Dollars in thousands Six Months Ended June 30,        
Ultramax Operations: 2018   2017   Change   % Change
TCE Revenue $ 72,872     $ 40,979     $ 31,893     78  
TCE Revenue / Day $ 10,666     $ 8,297     $ 2,369     29  
Revenue Days 6,832     4,939     1,893     38  

Our Ultramax Operations vessel operating costs were $35.3 million for the first half of 2018, including approximately $2.0 million of takeover costs and contingency expenses, and related to 37 vessels owned on average during the period.  Vessel operating costs for the prior year period were $24.6 million and related to 28 vessels owned on average during the period. Daily operating costs excluding takeover costs, contingency expenses and other non-operating expenses for the first half of 2018 and 2017 were $4,956 and $4,848, respectively. The increase is due to the timing of store purchases as we make bulk purchases in an effort to reduce the overall cost, as well as freight and forwarding expense.

Charterhire expense for our Ultramax Operations was approximately $1.8 million for the first half of 2018, and relates to the vessel we have time chartered-in at $10,125 per day.   We did not charter-in any Ultramax vessels during the first half of 2017.

Ultramax Operations depreciation increased to $18.5 million in the first half of 2018 from $14.5 million in the prior year period reflecting the increase in our weighted average vessels owned to 37 from 28.

General and administrative expense for our Ultramax Operations was $2.1 million for the first half of 2018 and $1.7 million in the prior year period. General and administrative expenses consist 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.  The increase versus the prior year period reflects the growth of our fleet.

Kamsarmax Operations

  Six Months Ended June 30,        
Dollars in thousands 2018   2017   Change   % Change
TCE Revenue:              
Vessel revenue $ 41,810     $ 31,425     $ 10,385     33  
Voyage expenses 104     213     (109 )   (51 )
TCE Revenue $ 41,706     $ 31,212     $ 10,494     34  
Operating expenses:              
Vessel operating costs 16,625     18,394     (1,769 )   (10 )
Charterhire expense 210     3,636     (3,426 )   (94 )
Vessel depreciation 9,408     9,139     269     3  
General and administrative expense 973     1,078     (105 )   (10 )
Loss / write down on assets held for sale     17,702     (17,702 )   (100 )
Total operating expenses $ 27,216     $ 49,949     $ (22,733 )   (46 )
Operating income (loss) $ 14,490     $ (18,737 )   $ 33,227     177  

Vessel revenue for our Kamsarmax Operations increased to $41.8 million in the first half of 2018 from $31.4 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for our Kamsarmax Operations was $41.7 million for the first half of 2018 and was associated with a day-weighted average of 18 vessels owned, compared to $31.2 million for prior year period, which was associated with a day-weighted average of 19 vessels owned and one vessel time chartered-in. TCE revenue per day was $12,173 and $9,221 for the first half of 2018 and 2017, respectively.

Dollars in thousands

 
Six Months Ended June 30,        
Kamsarmax Operations: 2018   2017   Change   % Change
TCE Revenue $ 41,706     $ 31,212     $ 10,494     34  
TCE Revenue / Day $ 12,173     $ 9,221     $ 2,952     32  
Revenue Days 3,426     3,385     41     1  

Kamsarmax Operations vessel operating costs were $16.6 million for the first half of 2018, including approximately $0.4 million of takeover costs and contingency expenses, and related to 18 vessels owned on average during the period. Vessel operating costs for the prior year period were $18.4 million, and related to 19 vessels owned on average during the period. Daily operating costs excluding takeover costs, contingency expenses and other non-operating expenses for the first half of 2018 and 2017 were $4,985 and $5,092, respectively.

While we do not time charter-in any Kamsarmax vessels, we have a profit and loss sharing agreement with a third party and during the first half of 2018, our share of the loss on that vessel was $0.2 million. During the prior year period, a Kamsarmax vessel was time chartered-in at a cost of $3.6 million.

Kamsarmax Operations depreciation remained relatively flat at $9.4 million in the first half of 2018 compared to $9.1 million in the prior year period.  Our weighted average vessels owned was 18 and 19, in the first half of 2018 and 2017, respectively.

General and administrative expense for our Kamsarmax Operations was $1.0 million and $1.1 million for the first halves of 2018 and 2017, respectively.  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 2017, we recorded a write-down on assets held for sale of $17.7 million related to the sale of two Kamsarmax vessels to an unaffiliated third party.

Corporate

Certain general and administrative expenses we incur and all of our financial expenses are not attributable to a specific segment.  Accordingly, these costs are not allocated to any of 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 $13.1 million and $12.5 million in the first half of 2018 and 2017, respectively.  The year over year increase is due to increases in compensation expense.

Financial expenses, net increased to $21.5 million in the first half of 2018 from $17.1 million in the prior year period due to an increase in the LIBOR rate and higher levels of debt related to the increase in overall fleet size.

 
Scorpio Bulkers Inc. and Subsidiaries
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
 
    Unaudited
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018   2017   2018   2017
Revenue:                
Vessel revenue   $ 60,614     $ 37,742     $ 114,866     $ 72,470  
Operating expenses:                
Voyage expenses   92     162     288     279  
Vessel operating costs   26,071     21,066     51,877     42,867  
Charterhire expense   1,042     1,675     2,047     3,646  
Vessel depreciation   14,027     12,017     27,895     23,599  
General and administrative expenses   7,333     7,556     16,240     15,284  
Loss / write down on assets held for sale               17,702  
Total operating expenses   48,565     42,476     98,347     103,377  
Operating income (loss)   12,049     (4,734 )   16,519     (30,907 )
Other income (expense):                
Interest income   215     353     429     615  
Foreign exchange income (loss)   45     (92 )   (42 )   (186 )
Financial expense, net   (11,509 )   (8,945 )   (21,877 )   (17,504 )
Total other expense   (11,249 )   (8,684 )   (21,490 )   (17,075 )
Net income (loss)   $ 800     $ (13,418 )   $ (4,971 )   $ (47,982 )
                 
Income (loss) per share:                
Basic   $ 0.01     $ (0.19 )   $ (0.07 )   $ (0.67 )
Diluted   $ 0.01     $ (0.19 )   $ (0.07 )   $ (0.67 )
                 
Basic weighted average number of common shares outstanding   72,494     71,804     72,598     71,770  
Diluted weighted average number of common shares outstanding   74,718     71,804     72,598     71,770  
                         


Scorpio Bulkers Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
 
    Unaudited    
    June 30, 2018   December 31, 2017
Assets        
Current assets        
Cash and cash equivalents   $ 54,776     $ 68,535  
Accounts receivable   6,980     7,933  
Prepaid expenses and other current assets   6,890     6,087  
Total current assets   68,646     82,555  
Non-current assets        
Vessels, net   1,507,485     1,534,782  
Vessels under construction   26,770     6,710  
Deferred financing costs, net   2,554     3,068  
Other assets   15,395     16,295  
Total non-current assets   1,552,204     1,560,855  
Total assets   $ 1,620,850     $ 1,643,410  
         
Liabilities and shareholders' equity        
Current liabilities        
Bank loans, net   $ 63,015     $ 46,993  
Capital lease obligation   1,169     1,144  
Accounts payable and accrued expenses   11,664     10,453  
Total current liabilities   75,848     58,590  
Non-current liabilities        
Bank loans, net   550,092     576,967  
Capital lease obligation   17,158     17,747  
Senior Notes, net   72,987     72,726  
Total non-current liabilities   640,237     667,440  
Total liabilities   716,085     726,030  
Shareholders' equity        
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued or outstanding        
Common stock, $0.01 par value per share; authorized 212,500,000 shares; issued and outstanding 75,960,341 and 74,902,364 shares as of June 30, 2018 and December 31, 2017, respectively   785     762  
Paid-in capital   1,746,822     1,745,844  
Common stock held in treasury, at cost; 2,635,413 and 1,465,448 shares at June 30, 2018 and December 31, 2017, respectively   (19,649 )   (11,004 )
Accumulated deficit   (823,193 )   (818,222 )
Total shareholders' equity   904,765     917,380  
Total liabilities and shareholders' equity   $ 1,620,850     $ 1,643,410  


 
Scorpio Bulkers Inc. and Subsidiaries
Statements of Cash Flows (unaudited)
(Amounts in thousands)
 
    For the Six Months Ended June 30,
    2018   2017
Operating activities        
Net loss   $ (4,971 )   $ (47,982 )
Adjustment to reconcile net loss to net cash used by        
operating activities:        
Restricted stock amortization   4,064     7,473  
Vessel depreciation   27,895     23,599  
Amortization of deferred financing costs   2,965     2,767  
Write-off of deferred financing costs       470  
Loss / write-down on assets held for sale       16,471  
Changes in operating assets and liabilities:        
Increase (decrease) in accounts receivable   951     (1,038 )
Increase (decrease) in prepaid expenses and other assets   97     (272 )
Increase (decrease) in accounts payable and accrued expenses   1,212     (702 )
Net cash provided by operating activities   32,213     786  
Investing activities        
Proceeds from sale of assets held for sale       44,340  
Payments for vessels and vessels under construction   (20,658 )   (23,428 )
Net cash (used in) provided by investing activities   (20,658 )   20,912  
Financing activities        
Proceeds from issuance of long-term debt   12,750     51,600  
Repayments of long-term debt   (25,883 )   (25,710 )
Common stock repurchased   (8,645 )    
Dividend paid   (3,062 )    
Debt issue costs paid   (474 )    
Net cash (used in) provided by financing activities   (25,314 )   25,890  
(Decrease) increase in cash and cash equivalents   (13,759 )   47,588  
Cash at cash equivalents, beginning of period   68,535     101,734  
Cash and cash equivalents, end of period   $ 54,776     $ 149,322  


 
Scorpio Bulkers Inc. and Subsidiaries
Other Operating Data (unaudited)
 
    Three Months Ended June 30,   Six Months Ended June 30,
    2018   2017   2018   2017
Time charter equivalent revenue ($000's) (1):                
Vessel revenue   $ 60,614     $ 37,742     $ 114,866     $ 72,470  
Voyage expenses   (92 )   (162 )   (288 )   (279 )
Time charter equivalent revenue   $ 60,522     $ 37,580     $ 114,578     $ 72,191  
Time charter equivalent revenue attributable to:                
Kamsarmax   $ 20,851     $ 16,312     $ 41,706     $ 31,212  
Ultramax   39,671     21,268     72,872     40,979  
    $ 60,522     $ 37,580     $ 114,578     $ 72,191  
Revenue days:                
Kamsarmax   1,626     1,759     3,426     3,385  
Ultramax   3,429     2,544     6,832     4,939  
Combined   5,055     4,303     10,258     8,324  
TCE per revenue day (1):                
Kamsarmax   $ 12,823     $ 9,273     $ 12,173     $ 9,221  
Ultramax   $ 11,569     $ 8,360     $ 10,666     $ 8,297  
Combined   $ 11,973     $ 8,733     $ 11,170     $ 8,673  
                                 


(1)  We define Time Charter Equivalent (TCE) revenue as vessel 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 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.
   
  We report TCE revenue, a non-GAAP financial measure, because (i) we believe it provides additional meaningful information in conjunction with vessel revenues and voyage expenses, the most directly comparable U.S.-GAAP measure, (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. See Non-GAAP Financial Measures.


Fleet List as of July 20, 2018

Vessel Name   Year Built    DWT    Vessel Type
SBI Samba   2015   84,000     Kamsarmax
SBI Rumba   2015   84,000     Kamsarmax
SBI Capoeira   2015   82,000     Kamsarmax
SBI Electra   2015   82,000     Kamsarmax
SBI Carioca   2015   82,000     Kamsarmax
SBI Conga   2015   82,000     Kamsarmax
SBI Flamenco   2015   82,000     Kamsarmax
SBI Bolero   2015   82,000     Kamsarmax
SBI Sousta   2016   82,000     Kamsarmax
SBI Rock   2016   82,000     Kamsarmax
SBI Lambada   2016   82,000     Kamsarmax
SBI Reggae   2016   82,000     Kamsarmax
SBI Zumba   2016   82,000     Kamsarmax
SBI Macarena   2016   82,000     Kamsarmax
SBI Parapara   2017   82,000     Kamsarmax
SBI Mazurka   2017   82,000     Kamsarmax
SBI Swing   2017   82,000     Kamsarmax
SBI Jive   2017   82,000     Kamsarmax
SBI Lynx (1)   2018   82,000     Kamsarmax
Total Kamsarmax       1,562,000      
             
SBI Antares   2015   61,000     Ultramax
SBI Athena   2015   64,000     Ultramax
SBI Bravo   2015   61,000     Ultramax
SBI Leo   2015   61,000     Ultramax
SBI Echo   2015   61,000     Ultramax
SBI Lyra   2015   61,000     Ultramax
SBI Tango   2015   61,000     Ultramax
SBI Maia   2015   61,000     Ultramax
SBI Hydra   2015   61,000     Ultramax
SBI Subaru   2015   61,000     Ultramax
SBI Pegasus   2015   64,000     Ultramax
SBI Ursa   2015   61,000     Ultramax
SBI Thalia   2015   64,000     Ultramax
SBI Cronos   2015   61,000     Ultramax
SBI Orion   2015   64,000     Ultramax
SBI Achilles   2016   61,000     Ultramax
SBI Hercules   2016   64,000     Ultramax
SBI Perseus   2016   64,000     Ultramax
SBI Hermes   2016   61,000     Ultramax
SBI Zeus   2016   60,200     Ultramax
SBI Hera   2016   60,200     Ultramax
SBI Hyperion   2016   61,000     Ultramax
SBI Tethys   2016   61,000     Ultramax
SBI Phoebe   2016   64,000     Ultramax
SBI Poseidon   2016   60,200     Ultramax
SBI Apollo   2016   60,200     Ultramax
SBI Samson   2017   64,000     Ultramax
SBI Phoenix   2017   64,000     Ultramax
SBI Gemini   2015   64,000     Ultramax
SBI Libra   2017   64,000     Ultramax
SBI Puma   2014   64,000     Ultramax
SBI Jaguar   2014   64,000     Ultramax
SBI Cougar   2015   64,000     Ultramax
SBI Aries   2015   64,000     Ultramax
SBI Taurus   2015   64,000     Ultramax
SBI Pisces   2016   64,000     Ultramax
SBI Virgo   2017   64,000     Ultramax
Total Ultramax       2,307,800      
Total Owned or Finance Leased Vessels DWT   3,869,800      


(1)  For accounting purposes, a vessel is considered a vessel under construction until it reaches the first port of load

Time chartered-in vessels

The Company currently time charters-in one Ultramax vessel. The terms of the contract are summarized as follows:

Vessel Type   Year Built   DWT   Country of Build   Daily Base Rate   Earliest Expiry
Ultramax   2017   62,100     Japan   $ 10,125     30-Sep-19   (1 )
Total TC DWT       62,100                  


(1)          This vessel is time chartered-in for 22 to 24 months at the Company's option at $10,125 per day. The Company has the option to extend this time charter for one year at $10,885 per day. The vessel was delivered to the Company in September 2017.


Conference Call on Results:

A conference call to discuss the Company's results will be held today, July 23, 2018, at 10:00 AM Eastern Daylight Time / 4:00 PM Central European Summer Time.  Those wishing to listen to the call should dial 1 (866) 219-5268 (U.S.) or 1 (703) 736-7424 (International) at least 10 minutes prior to the start of the call to ensure connection. The conference participant passcode is 6755439.

There will also be a simultaneous live webcast over the internet, through the Scorpio Bulkers Inc. website www.scorpiobulkers.com.  Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Webcast URL: https://edge.media-server.com/m6/p/who7avvy

About Scorpio Bulkers Inc.

Scorpio Bulkers Inc. is a provider of marine transportation of dry bulk commodities.  Scorpio Bulkers Inc. has an operating fleet of 57 vessels consisting of 56 wholly-owned or finance leased dry bulk vessels (including 19 Kamsarmax vessels and 37 Ultramax vessels), and one time chartered-in Ultramax vessel. The Company's owned and finance leased fleet has a total carrying capacity of approximately 3.9 million dwt and all of the Company's owned vessels have carrying capacities of greater than 60,000 dwt. Additional information about the Company is available on the Company's website www.scorpiobulkers.com, which is not a part of this press release.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with accounting principles generally accepted in the 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 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 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 ("EBITDA"), adjusted net loss and related per share amounts, as well as adjusted EBITDA and TCE Revenue are non-GAAP performance measures that we believe 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.  Please see below for reconciliations of EBITDA, adjusted net loss and related per share amounts, and adjusted EBITDA.  Please see "Other Operating Data" for a reconciliation of TCE revenue.

EBITDA (unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,
In thousands 2018   2017   2018   2017
Net income (loss) $ 800     (13,418 )   $ (4,971 )   $ (47,982 )
Add Back:              
Net interest expense 9,811     7,185     18,483     13,652  
Depreciation and amortization (1) 17,449     17,034     34,924     34,309  
EBITDA $ 28,060     10,801     $ 48,436     $ (21 )

(1) Includes depreciation, amortization of deferred financing costs and restricted stock amortization.

Adjusted net loss (unaudited)

      Six Months Ended June 30,
  In thousands, except per share data   2017
      Amount   Per share
  Net loss   $ (47,982 )   $ (0.67 )
  Adjustments:        
                    Loss / write down on assets held for sale   17,702     0.25  
  Write down of deferred financing cost   470     0.01  
  Total adjustments   $ 18,172     $ 0.26  
  Adjusted net loss   $ (29,810 )   $ (0.41 )

Adjusted EBITDA (unaudited)

      Six Months Ended June 30,
  In thousands   2017
  Net loss   $ (47,982 )
  Impact of adjustments   18,172  
  Adjusted net loss   (29,810 )
                        Add Back:    
  Net interest expense   13,652  
  Depreciation and amortization (1)   33,839  
  Adjusted EBITDA   $ 17,681  

(1) Includes depreciation, amortization of deferred financing costs and restricted stock amortization.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements.  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 press release 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.

Contact:

Scorpio Bulkers Inc.
+377-9798-5715 (Monaco)
+1-646-432-1675 (New York)

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