Scorpio Bulkers Inc. (NYSE: SALT) (“Scorpio Bulkers”, or the
“Company”), today reported its results for the three months ended
June 30, 2019.
The Company also announced that today, its Board
of Directors declared a quarterly cash dividend of $0.02 per share
on the Company’s common shares.
Results for the Three and Six Months
Ended June 30, 2019 and 2018
For the second quarter of 2019, the Company’s
GAAP net income was $35.0 million, or $0.50 per diluted share,
including:
- a non-cash gain of approximately $52.6 million and cash
dividend income of $0.5 million, or $0.77 earnings per diluted
share, primarily from the Company’s equity investment in Scorpio
Tankers Inc.;
- a write-down of assets held for sale of approximately $5.2
million, or $0.08 per diluted share, related to the classification
of two Ultramax vessels as held for sale, and the write-off of
deferred financing costs on the credit facilities related to the
SBI Electra and SBI Flamenco; and
- the write-off of deferred financing costs of approximately $2.7
million, or $0.04 per diluted share, related to the refinancing of
existing debt.
For the same period in 2018, the Company’s GAAP
net income was $0.8 million, or $0.01 per diluted share.
Total vessel revenues for the second quarter of
2019 were $49.1 million, compared to $60.6 million for the same
period in 2018. Earnings before interest, taxes, depreciation and
amortization (“EBITDA”) for the second quarters of 2019 and 2018
were $65.2 million and $28.1 million, respectively (see Non-GAAP
Financial Measures below).
For the second quarter of 2019, the Company’s
adjusted net income was $40.1 million, or $0.58 adjusted earnings
per diluted share, which excludes the impact of the write-down of
assets held for sale of $4.7 million and the write-off of deferred
financing costs on the credit facilities relating to the SBI
Electra and SBI Flamenco of $0.4 million. Adjusted EBITDA for the
second quarter of 2019 was $70.0 million. There were no such
non-GAAP adjustments to net income in the second quarter of 2018
(see Non-GAAP Financial Measures below).
For the first half of 2019, the Company’s GAAP
net income was $31.5 million, or $0.45 per diluted share,
including:
- a non-cash gain of approximately $67.6 million and cash
dividend income of $1.0 million, or $0.99 earnings per diluted
share, primarily from the Company’s equity investment in Scorpio
Tankers Inc.;
- a write-down of assets held for sale of approximately $12.7
million, or $0.19 per diluted share, related to the sale of the SBI
Electra and SBI Flamenco and the write-off of deferred financing
costs on the credit facilities related to such vessels, as well as
the classification of two Ultramax vessels as held for sale;
and
- the write-off of deferred financing costs of approximately $2.7
million, or $0.04 per diluted share, related to the refinancing of
existing debt.
For the same period in 2018, the Company’s GAAP
net loss was $5.0 million, or $0.07 loss per diluted share.
Total vessel revenues for the first half of 2019
were $99.4 million, compared to $114.9 million for the same period
in 2018. EBITDA for the first halves of 2019 and 2018 were $90.6
million and $48.4 million, respectively (see Non-GAAP Financial
Measures below).
For the first half of 2019, the Company’s
adjusted net income was $44.2 million, or $0.64 adjusted earnings
per diluted share, which excludes the impact of the write-down of
assets either sold or held for sale of $12.2 million and the
write-off of deferred financing costs on the credit facilities
relating to the SBI Electra and SBI Flamenco of $0.4 million.
Adjusted EBITDA for the first half of 2019 was $102.8 million.
There were no such non-GAAP adjustments to net income in the first
half of 2018 (see Non-GAAP Financial Measures below).
TCE Revenue
TCE Revenue Earned during the Second Quarter of
2019 (see Non-GAAP Financial Measures)
- Our Kamsarmax fleet earned an average of $10,830 per day
- Our Ultramax fleet earned an average of $8,993 per day
Voyages Fixed thus far for the Third Quarter of 2019, as of the
date hereof
- Kamsarmax fleet: approximately $12,656 per day on average for
42% of the days
- Ultramax fleet: approximately $9,603 per day on average for 42%
of the days
Cash and Cash Equivalents
As of July 19, 2019, the Company had
approximately $160.0 million in cash and cash equivalents.
Recent Significant Events
Vessel Sales
In June 2019, the Company completed the sale of
the SBI Electra and SBI Flamenco, two 2015 Chinese built Kamsarmax
vessels that the Company agreed to sell in March 2019, for
approximately $48.0 million in aggregate. The Company recorded a
loss of approximately $7.8 million, including the write-off of
deferred financing costs, during the first half of 2019.
During the second quarter of 2019, the Company’s
Board of Directors made the decision to sell two Ultramax vessels
and as such these vessels were classified as held for sale at June
30, 2019. The Company recorded a loss of approximately $4.9 million
in the second quarter of 2019 and expects to write-off deferred
financing costs of $0.2 million upon closing of the sale and
repaying the outstanding debt.
Dividend
In the second quarter of 2019, the Company’s
Board of Directors declared and the Company paid a quarterly cash
dividend of $0.02 per share totaling approximately $1.4
million.
On July 22, 2019, the Company’s Board of
Directors declared a quarterly cash dividend of $0.02 per share,
payable on or about September 13, 2019, to all shareholders of
record as of August 15, 2019. As of July 22, 2019, 72,487,958
shares were outstanding.
Debt
Senior Unsecured Notes Due September
2019
In July 2019, the Company issued a notice of
redemption for the entire outstanding balance of its 7.5% Senior
Unsecured Notes due September 2019 of $73,625,000 (the "Senior
Notes Due September 2019") to be redeemed on August 2, 2019 (the
"Redemption Date"). The redemption price of the Senior Notes
Due September 2019 is equal to 100% of the principal amount to be
redeemed, plus accrued and unpaid interest to, but excluding, the
Redemption Date. A notice of redemption was distributed to all
registered holders of the Senior Notes Due September 2019 by
Deutsche Bank Trust Company Americas.
CMBFL Lease Financing
In May 2019, the Company closed a financing
transaction with CMB Financial Leasing Co., Ltd. involving the sale
and leaseback of three Ultramax vessels (SBI Pegasus, SBI Subaru
and SBI Ursa) and four Kamsarmax vessels (SBI Lambada, SBI
Macarena, SBI Carioca and SBI Capoeira). As part of this
transaction, the Company has agreed to bareboat charter-in the
vessels for a period of seven years. In addition, the Company has
purchase options beginning after the end of the third year of each
bareboat charter agreement. The Company also has a purchase
option for each vessel upon the expiration of each bareboat charter
agreement.
$45.0 Million Lease Financing - SBI Virgo and SBI
Libra
In May 2019, the Company closed a financing
transaction with an unaffiliated third party involving the sale and
leaseback of the SBI Virgo and SBI Libra for a consideration of
$21.0 million each. As part of this transaction, the Company has
agreed to bareboat charter-in the vessels for a period of eleven
years and will have purchase options beginning after the end of the
fourth year of each bareboat charter agreement.
$85.5 Million Credit
Facility
During May 2019, the Company prepaid
approximately $27.6 million of its $85.5
Million Credit Facility and wrote off approximately $0.3
million of deferred financing costs as part of the refinancing
of the two vessels now financed by the $45.0 Million Lease
Financing - SBI Virgo and SBI Libra.
AVIC Lease Financing
In April 2019, the Company agreed to sell and
leaseback six Ultramax vessels (SBI Antares, SBI Bravo, SBI Hydra,
SBI Leo, SBI Lyra and SBI Maia) to AVIC International Leasing Co.,
Ltd. As part of this transaction, the Company has agreed to
bareboat charter-in the vessels for a period of eight years and
will have purchase options beginning after the end of the second
year of each bareboat charter agreement. The Company also has a
purchase option for each vessel upon the expiration of each
bareboat charter agreement.
The Company closed the transaction with regards
to the SBI Antares, SBI Bravo and SBI Leo in June 2019 and with
regards to the SBI Hydra, SBI Lyra and SBI Maia in July 2019.
$330.0 Million Credit
Facility
During May 2019, the Company prepaid
approximately $74.8 million of its $330.0
Million Credit Facility and wrote off approximately $1.2
million of deferred financing costs as part of the refinancing
of the seven vessels now financed by the CMBFL Lease
Financing.
During June and July 2019, the Company prepaid
approximately $29.1 million and $30.9 million,
respectively, of its $330.0 Million Credit Facility and
wrote off deferred financing costs of approximately $0.3
million and $0.4 million, respectively, as part of the refinancing
of the six vessels now financed by the AVIC Lease
Financing.
$60.0 Million Credit
Facility
During June 2019, the Company prepaid
approximately $28.7 million of its $60.0
Million Credit Facility and wrote off approximately $0.4
million of deferred financing costs as part of the sale of the
SBI Electra and SBI Flamenco.
Vessels Time Chartered-In
The Company time chartered-in four Kamsarmax
vessels, for approximately 24 to 27 months.
Three vessels were initially time chartered-in
at rates tied to the Baltic Exchange’s 74,000 DWT Panamax Index
(“BPI”), (two at 118% of the BPI and one at 120% of the BPI). The
daily base rate in respect of one vessel was subsequently converted
from 118% of the BPI to a fixed rate of $14,170 per day effective
July 2019. As of June 30, 2019, two of the vessels were delivered
to the Company and the third is expected to be delivered to the
Company between July and August of 2019. The Company simultaneously
time chartered these vessels out to the Scorpio Kamsarmax Pool
under matching terms.
The fourth Kamsarmax vessel was chartered-in at
$12,000 per day for the first twelve months and $12,500 per day for
the second twelve months. The Company has options to extend
the time charter-in agreement to 36 and 48 months at $13,000 per
day and $14,500 per day, respectively, as well as purchase options
beginning after twelve months.
IMO 2020
In June 2019, the Company exercised its option
to purchase and install exhaust gas cleaning systems (“scrubbers”)
on nine of its Kamsarmax vessels in 2020. After exercising
this option, the Company has contracts to purchase and install
scrubbers on 37 of its vessels and has the option to purchase
scrubbers for nine additional vessels in 2020.
Debt Overview
The Company’s outstanding debt balances, gross of unamortized
deferred financing costs as of June 30, 2019 and July 19,
2019, are as follows (dollars in thousands):
| |
|
As ofJune 30, 2019 |
|
As of July 19, 2019 |
|
As of July 19, 2019 |
|
Credit Facility |
|
Amount Outstanding (1) |
|
Amount Committed (2)(3) |
|
Senior Notes |
|
$ |
73,625 |
|
|
$ |
73,625 |
|
|
$ |
— |
|
| $330 Million Credit
Facility |
|
30,938 |
|
|
— |
|
|
— |
|
| $12.5 Million Credit
Facility |
|
9,008 |
|
|
9,008 |
|
|
— |
|
| $27.3 Million Credit
Facility |
|
9,008 |
|
|
9,008 |
|
|
— |
|
| $85.5 Million Credit
Facility |
|
48,689 |
|
|
48,689 |
|
|
5,712 |
|
| $38.7 Million Credit
Facility |
|
33,300 |
|
|
33,300 |
|
|
4,260 |
|
| $12.8 Million Credit
Facility |
|
11,900 |
|
|
11,900 |
|
|
1,398 |
|
| $30.0 Million Credit
Facility |
|
28,309 |
|
|
28,309 |
|
|
2,585 |
|
| $60.0 Million Credit
Facility |
|
27,704 |
|
|
27,704 |
|
|
2,862 |
|
| $184.0 Million Credit
Facility |
|
172,687 |
|
|
172,687 |
|
|
17,448 |
|
| $34.0 Million Credit
Facility |
|
32,786 |
|
|
32,786 |
|
|
3,000 |
|
| $90.0 Million Credit
Facility |
|
82,100 |
|
|
82,100 |
|
|
8,706 |
|
| $19.6 Million Lease Financing
- SBI Rumba |
|
17,495 |
|
|
17,495 |
|
|
— |
|
| $19.0 Million Lease Financing
- SBI Tango |
|
17,881 |
|
|
17,787 |
|
|
— |
|
| $19.0 Million Lease Financing
- SBI Echo |
|
17,942 |
|
|
17,853 |
|
|
— |
|
| $20.5 Million Lease Financing
- SBI Hermes |
|
19,682 |
|
|
19,580 |
|
|
— |
|
| $21.4 Million Lease Financing
- SBI Samba |
|
21,064 |
|
|
20,953 |
|
|
— |
|
| CMBFL Lease Financing |
|
118,369 |
|
|
118,369 |
|
|
11,842 |
|
| $45.0 Million Lease Financing
- SBI Virgo & SBI Libra |
|
41,540 |
|
|
41,285 |
|
|
3,000 |
|
| AVIC Lease Financing |
|
56,664 |
|
|
113,329 |
|
|
9,840 |
|
| Total |
|
$ |
870,691 |
|
|
$ |
895,767 |
|
|
$ |
70,653 |
|
- $23.1 million expected to be repaid upon the sale of the two
Ultramax vessels currently classified as held for sale.
- Includes the maximum loan amount available for the installation
of scrubbers following upsizes of certain credit facilities. These
financing arrangements will be subject to conditions precedent and
the execution of definitive documentation.
- The amount committed for the installation of scrubbers will be
reduced by approximately $2.9 million upon the sale of the two
Ultramax vessels currently classified as held for sale.
The Company’s projected quarterly debt
repayments on its bank loans, senior notes and lease financing
arrangements through 2020 are as follows (dollars in
thousands):
| |
|
Principal on Bank Loans and Senior Notes |
|
Principal on Lease Financing Arrangements |
|
Total (1) |
|
Q3 2019 (2)(3) |
|
|
103,815 |
|
|
|
5,478 |
|
|
|
109,293 |
|
| Q4 2019 |
|
|
8,306 |
|
|
|
7,539 |
|
|
|
15,845 |
|
| Q1 2020 |
|
|
10,258 |
|
|
|
7,562 |
|
|
|
17,820 |
|
| Q2 2020 |
|
|
10,996 |
|
|
|
7,862 |
|
|
|
18,858 |
|
| Q3 2020 |
|
|
10,669 |
|
|
|
8,330 |
|
|
|
18,999 |
|
| Q4 2020 (4) |
|
|
19,268 |
|
|
|
8,350 |
|
|
|
27,618 |
|
| Total |
|
$163,312 |
|
|
$45,121 |
|
|
$208,433 |
|
- Includes estimated repayments on the upsizings of certain
credit facilities for the installation of scrubbers, for which the
timing of the drawdowns and repayment schedules set forth are
estimates only and may vary as the timing of the related
installations finalize.
- Relates to payments expected to be made from July 20, 2019 to
September 30, 2019.
- Includes (i) $73.6 million repayment of Senior Notes due at
maturity and (ii) the repayment of $23.1 million of outstanding
debt upon the sale of the two Ultramax vessels currently classified
as held for sale.
- Includes $8.0 million repayment of the $12.5 Million Credit
Facility due at maturity.
IMO 2020
The Company’s projected schedule and estimated
payments for the installation of scrubbers on all the wholly-owned
and finance leased vessels in the Company’s fleet is as follows
(dollars in thousands):
| |
|
Number of Vessels by Type |
|
Estimated Payments (1) |
|
| |
|
Ultramax |
|
Kamsarmax |
|
|
| Q3 2019 (2) |
|
6 |
|
|
4 |
|
|
17,834 |
|
|
| Q4 2019 |
|
3 |
|
|
4 |
|
|
21,481 |
|
|
| Q1 2020 |
|
11 |
|
|
1 |
|
|
18,607 |
|
|
| Q2 2020 |
|
8 |
|
|
4 |
|
|
23,198 |
|
|
| Q3 2020 |
|
3 |
|
|
4 |
|
|
17,204 |
|
|
| Q4 2020 |
|
4 |
|
|
— |
|
|
11,291 |
|
|
| Q1 2021 |
|
— |
|
|
— |
|
|
4,281 |
|
|
|
Total |
|
35 |
|
|
17 |
|
|
$ |
113,896 |
|
|
- Includes estimated cash payments for scrubbers that are due in
advance of the scheduled service and may be scheduled to occur in
quarters prior to the actual installation. In addition to these
installment payments, these amounts also include estimates of the
installation costs of such systems. The timing of the payments set
forth are estimates only and may vary as the timing of the related
installations finalize.
- Relates to payments expected to be made from July 20, 2019 to
September 30, 2019.
Financial Results for the Three Months
Ended June 30, 2019 Compared to the Three Months Ended June
30, 2018
For the second quarter of 2019, the Company’s
GAAP net income was $35.0 million, or $0.50 per diluted share,
compared to $0.8 million, or $0.01 per diluted share, in the same
period in 2018. Results for the second quarter of 2019 include: a
non-cash gain of approximately $52.6 million and cash dividend
income of $0.5 million, or $0.77 per diluted share, primarily from
the Company’s equity investment in Scorpio Tankers Inc., charges of
approximately $5.2 million, or $0.08 per diluted share, related to
the write-down of two Ultramax vessels classified as held for sale,
the sale of the SBI Electra and SBI Flamenco, as well as the
write-off of deferred financing costs on the credit facilities
related to such vessels, and the write-off of deferred financing
costs of approximately $2.7 million, or $0.04 per diluted share,
related to the refinancing of existing debt. EBITDA for the second
quarters of 2019 and 2018 were $65.2 million and $28.1 million,
respectively (see Non-GAAP Financial Measures below).
For the second quarter of 2019, the Company’s
adjusted net income was $40.1 million, or $0.58 adjusted earnings
per diluted share, which excludes the impact of the write-down of
assets held for sale and the write-off of related deferred
financing costs totaling $5.2 million. Adjusted EBITDA for the
second quarter of 2019 was $70.0 million. There were no such
non-GAAP adjustments to net income in the second quarter of 2018
(see Non-GAAP Financial Measures below).
Total vessel revenues for the second quarter of
2019 were $49.1 million compared to $60.6 million in the second
quarter of 2018. The Company’s TCE revenue (see Non-GAAP Financial
Measures below) for the second quarter of 2019 was $48.9 million, a
decrease of $11.7 million from the prior year period. Rates earned
by the Company’s vessels were adversely impacted by a reduction in
coal imports in Europe and China, loss of iron ore exports from
Vale’s tailing dam failure, and continued disruptions from the
US-China trade war. Despite these challenges, a strong South
American grain season and increasing coal exports to India provided
support for improving Ultramax and Kamsarmax rates during the
second quarter. During the second quarter the Company began
repositioning its fleet in preparation for the drydock and scrubber
fitting program starting in the third quarter of 2019.
Total operating expenses for the second quarter
of 2019 were $52.4 million, including the write-down of assets held
for sale of $4.7 million, compared to $48.6 million in the second
quarter of 2018.
Ultramax Operations
| |
Three Months Ended June 30, |
|
|
|
|
| Dollars in thousands |
2019 |
|
2018 |
|
Change |
|
% Change |
| TCE
Revenue: |
|
|
|
|
|
|
|
|
Vessel revenue |
$ |
30,696 |
|
|
$ |
39,727 |
|
|
$ |
(9,031 |
) |
|
(23 |
) |
|
Voyage expenses |
138 |
|
|
56 |
|
|
82 |
|
|
146 |
|
| TCE
Revenue |
$ |
30,558 |
|
|
$ |
39,671 |
|
|
$ |
(9,113 |
) |
|
(23 |
) |
| Operating
expenses: |
|
|
|
|
|
|
|
|
Vessel operating costs |
16,529 |
|
|
18,016 |
|
|
(1,487 |
) |
|
(8 |
) |
|
Charterhire expense |
925 |
|
|
921 |
|
|
4 |
|
|
— |
|
|
Vessel depreciation |
8,911 |
|
|
9,297 |
|
|
(386 |
) |
|
(4 |
) |
|
General and administrative expense |
1,035 |
|
|
1,073 |
|
|
(38 |
) |
|
(4 |
) |
|
Loss / write-down on assets held for sale |
4,883 |
|
|
— |
|
|
4,883 |
|
|
NA |
|
|
Total operating expenses |
$ |
32,283 |
|
|
$ |
29,307 |
|
|
$ |
2,976 |
|
|
10 |
|
| Operating (loss)
income |
$ |
(1,725 |
) |
|
$ |
10,364 |
|
|
$ |
(12,089 |
) |
|
(117 |
) |
Vessel revenue for the Company’s Ultramax
Operations decreased to $30.7 million for the second quarter of
2019 from $39.7 million in the prior year period. The weakness in
rates experienced towards the end of the first quarter of 2019
continued into the second quarter of 2019. However, rates began to
improve on the back of a strong South American grain season and
were further assisted by increased coal imports from China at the
end of the quarter. The Company moved to a more balanced split
of its Ultramax fleet between the Atlantic and Pacific basins due
to the start of the fleet’s drydock and scrubber fitting
program.
TCE revenue (see Non-GAAP Financial Measures
below) for the Company’s Ultramax Operations was $30.6 million for
the second quarter of 2019 compared to $39.7 million for the prior
year period. During both periods, the Company’s Ultramax
fleet consisted of a day-weighted average of 37 vessels owned or
finance leased and one vessel time chartered-in. TCE revenue per
day was $8,993 and $11,569 for the second quarters of 2019 and
2018, respectively.
| |
Three Months Ended June 30, |
|
|
|
|
| Ultramax
Operations: |
2019 |
|
2018 |
|
Change |
|
% Change |
|
TCE Revenue (in thousands) |
$ |
30,558 |
|
|
$ |
39,671 |
|
|
$ |
(9,113 |
) |
|
(23 |
) |
| TCE Revenue / Day |
$ |
8,993 |
|
|
$ |
11,569 |
|
|
$ |
(2,576 |
) |
|
(22 |
) |
| Revenue Days |
3,398 |
|
|
3,429 |
|
|
(31 |
) |
|
(1 |
) |
The Company’s Ultramax Operations vessel
operating costs were $16.5 million for the second quarter of 2019,
including approximately $0.3 million of takeover costs and
contingency expenses, compared with vessel operating costs of $18.0
million in the prior year, relating to the 37 vessels owned or
finance leased on average during both periods. Daily operating
costs excluding takeover costs and contingency expenses for the
second quarters of 2019 and 2018 were $4,822 and $5,003,
respectively. Daily operating costs for the second quarter of 2019
decreased from the second quarter of 2018 due primarily to the
timing of spare purchases and a disbursement from an insurance
carrier representing a return of premiums.
Charterhire expense for the Company’s Ultramax
Operations was approximately $0.9 million for both the second
quarters of 2019 and 2018 and relates to the vessel the Company
time chartered-in at $10,125 per day.
Ultramax Operations depreciation decreased
slightly from $9.3 million to $8.9 million as two Ultramax vessels
were classified as held for sale during the second quarter of
2019.
General and administrative expense for the
Company’s Ultramax Operations, consists 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, was $1.0 million for the second quarter of 2019 and
$1.1 million in the prior year period.
During the second quarter of 2019, the Company recorded a
write-down on assets held for sale related to the classification of
two Ultramax vessels as held for sale.
Kamsarmax Operations
| |
Three Months Ended June 30, |
|
|
|
|
| Dollars in thousands |
2019 |
|
2018 |
|
Change |
|
% Change |
| TCE
Revenue: |
|
|
|
|
|
|
|
|
Vessel revenue |
$ |
18,400 |
|
|
$ |
20,887 |
|
|
$ |
(2,487 |
) |
|
(12 |
) |
|
Voyage expenses |
98 |
|
|
36 |
|
|
62 |
|
|
172 |
|
| TCE
Revenue |
$ |
18,302 |
|
|
$ |
20,851 |
|
|
$ |
(2,549 |
) |
|
(12 |
) |
| Operating
expenses: |
|
|
|
|
|
|
|
|
Vessel operating costs |
8,697 |
|
|
8,055 |
|
|
642 |
|
|
8 |
|
|
Charterhire expense |
(263 |
) |
|
121 |
|
|
(384 |
) |
|
(317 |
) |
|
Vessel depreciation |
4,440 |
|
|
4,730 |
|
|
(290 |
) |
|
(6 |
) |
|
General and administrative expense |
823 |
|
|
467 |
|
|
356 |
|
|
76 |
|
|
Loss / write-down on assets held for sale |
(157 |
) |
|
— |
|
|
(157 |
) |
|
NA |
|
|
Total operating expenses |
$ |
13,540 |
|
|
$ |
13,373 |
|
|
$ |
167 |
|
|
1 |
|
| Operating
income |
$ |
4,762 |
|
|
$ |
7,478 |
|
|
$ |
(2,716 |
) |
|
(36 |
) |
Vessel revenue for the Company’s Kamsarmax
Operations decreased to $18.4 million in the second quarter of 2019
from $20.9 million in the prior year period.
TCE revenue (see Non-GAAP Financial Measures)
for the Company’s Kamsarmax Operations was $18.3 million for the
second quarter of 2019 associated with a day-weighted average of 19
vessels owned or finance leased, compared to $20.9 million for the
prior year period associated with a day-weighted average of 18
vessels owned or finance leased. TCE revenue per day was $10,830
and $12,823 for the second quarters of 2019 and 2018, respectively.
Despite the loss of Brazilian iron exports and a reduction in
European and Chinese coal imports, the Kamsarmax market continued
to recover throughout the second quarter. Slower industrial
activity in Europe and increasing domestic production in China had
a negative impact on coal imports, but this was offset by
increasing coal imports in India. The Company moved to a more
balanced split of its Kamsarmax fleet between the Atlantic and
Pacific basins due to the start of the fleet’s drydock and scrubber
fitting program.
| |
Three Months Ended June 30, |
|
|
|
|
| Kamsarmax
Operations: |
2019 |
|
2018 |
|
Change |
|
% Change |
| TCE Revenue (in
thousands) |
$ |
18,302 |
|
|
$ |
20,851 |
|
|
$ |
(2,549 |
) |
|
(12 |
) |
| TCE Revenue / Day |
$ |
10,830 |
|
|
$ |
12,823 |
|
|
$ |
(1,993 |
) |
|
(16 |
) |
| Revenue Days |
1,690 |
|
|
1,626 |
|
|
64 |
|
|
4 |
|
Kamsarmax Operations vessel operating costs were
$8.7 million for the second quarter of 2019, including
approximately $0.3 million of takeover costs and contingency
expenses, compared with vessel operating costs of $8.1 million in
the prior year, relating to 19 and 18 vessels owned or finance
leased on average, respectively, during the periods. Daily
operating costs excluding takeover costs and contingency expenses
for the second quarters of 2019 and 2018 were $4,891 and $4,801,
respectively. Incremental costs associated with the SBI Lynx, which
was delivered in the third quarter of 2018, drove the increase in
both the cost in the aggregate and the daily costs.
While the Company did not time charter-in any
Kamsarmax vessels in the first quarter of either 2019 or 2018, it
had a profit and loss sharing agreement with a third party related
to one Kamsarmax vessel which expired in the first quarter of 2019,
for which it recorded its residual share of the profits in the
second quarter. In July 2019, the Company time chartered-in a
Kamsarmax vessel for a period of 24 months at $12,000 per day for
the first twelve months and $12,500 per day for the second twelve
months. The Company has options to extend the time charter-in
agreement to 36 and 48 months at $13,000 per day and $14,500 per
day, respectively, as well as purchase options beginning after
twelve months.
Kamsarmax Operations depreciation was $4.4
million and $4.7 million in the second quarters of 2019 and 2018,
respectively, as the Company classified the SBI Electra and SBI
Flamenco as held for sale in the first quarter of 2019 and
completed the sale of these vessels in the second quarter of
2019.
General and administrative expense for the
Company’s Kamsarmax Operations was $0.8 million and $0.5 million
for the second quarters of 2019 and 2018, 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 quarter of 2019, the Company recorded a
write-down on assets held for sale related to the sale of the SBI
Electra and SBI Flamenco and adjusted the loss recorded in the
first quarter of 2019 by approximately $0.2 million in the
second quarter of 2019.
Corporate
Certain general and administrative expenses the
Company incurs, as well as all of its financial expenses and
investment income or losses, are not attributable to a specific
segment. Accordingly, these costs are not allocated to the
Company’s 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 $6.4 million and $5.8 million in the second quarters of
2019 and 2018, respectively. The quarter over quarter increase is
due primarily to legal and travel costs.
The Company recorded a non-cash gain of
approximately $52.6 million for the second quarter of 2019 and a
cash dividend of $0.5 million primarily from its equity investment
in Scorpio Tankers Inc.
Financial expenses, net increased to $15.1
million in the second quarter of 2019 from $11.5 million in the
prior year period due to higher levels of debt partially offset by
lower LIBOR rates. In the second quarter of 2019, approximately
$3.1 million of deferred financing costs were written off related
to vessel sales and debt refinancings under the Company’s new sale
and leaseback transactions. We expect to write-off approximately
$0.7 million upon the closing of the sale of the two Ultramax
vessels currently classified as held for sale and the closing of
the sale leaseback transaction of three vessels under the AVIC
Lease Financing in the third quarter of 2019.
Financial Results for the Six Months
Ended June 30, 2019 Compared to the Six Months Ended June 30,
2018
For the first half of 2019, the Company’s GAAP
net income was $31.5 million, or $0.45 per diluted share, compared
to a GAAP net loss of $5.0 million, or $0.07 loss per diluted
share, in the same period in 2018. Results for the first half of
2019 include: a non-cash gain of approximately $67.6 million and
cash dividend income of $1.0 million, or $0.99 per diluted share,
primarily from the Company’s equity investment in Scorpio Tankers
Inc., charges of approximately $12.7 million, or $0.19 per diluted
share, related to the write-down of two Ultramax vessels which were
classified as held for sale, the sale of the SBI Electra and SBI
Flamenco, as well as the write-off of deferred financing costs on
the credit facilities related to such vessels, and the write-off of
deferred financing costs of approximately $2.7 million, or $0.04
per diluted share, related to the refinancing of existing debt.
EBITDA for the first halves of 2019 and 2018 were $90.6 million and
$48.4 million, respectively (see Non-GAAP Financial Measures
below).
For the first half of 2019, the Company’s
adjusted net income was $44.2 million, or $0.64 adjusted earnings
per diluted share, which excludes the impact of the write-down of
assets either sold or held for sale and the write-off of related
deferred financing costs totaling $12.7 million. Adjusted EBITDA
for the first half of 2019 was $102.8 million. There were no such
non-GAAP adjustments to net income in the first half of 2018 (see
Non-GAAP Financial Measures below).
Total vessel revenues for the first half of 2019
were $99.4 million compared to $114.9 million in the prior year
period. The Company’s TCE revenue (see Non-GAAP Financial Measures
below) for the first half of 2019 was $99.1 million, a decrease of
$15.5 million from the prior year period. The first half of 2019
proved challenging with a reduction in coal imports in Europe and
China, loss of iron exports from Vale’s tailing dam failure,
outbreak of African swine flu in China and continued disruptions
from the US-China trade war. However, a strong South American grain
season, increasing coal exports to India and China’s resumption of
coal buying provided support for improving Ultramax and Kamsarmax
rates during the second quarter.
Total operating expenses for the first half of
2019 were $109.0 million, including the write-down of assets held
for sale of $12.2 million, compared to $98.3 million in the first
half of 2018.
Ultramax Operations
| |
Six Months Ended June 30, |
|
|
|
|
| Dollars in thousands |
2019 |
|
2018 |
|
Change |
|
% Change |
| TCE
Revenue: |
|
|
|
|
|
|
|
|
Vessel revenue |
$ |
61,977 |
|
|
$ |
73,056 |
|
|
$ |
(11,079 |
) |
|
(15 |
) |
|
Voyage expenses |
199 |
|
|
184 |
|
|
15 |
|
|
8 |
|
| TCE
Revenue |
$ |
61,778 |
|
|
$ |
72,872 |
|
|
$ |
(11,094 |
) |
|
(15 |
) |
| Operating
expenses: |
|
|
|
|
|
|
|
|
Vessel operating costs |
34,165 |
|
|
35,252 |
|
|
(1,087 |
) |
|
(3 |
) |
|
Charterhire expense |
1,795 |
|
|
1,837 |
|
|
(42 |
) |
|
(2 |
) |
|
Vessel depreciation |
18,107 |
|
|
18,487 |
|
|
(380 |
) |
|
(2 |
) |
|
General and administrative expense |
2,062 |
|
|
2,147 |
|
|
(85 |
) |
|
(4 |
) |
|
Loss / write-down on assets held for sale |
4,883 |
|
|
— |
|
|
4,883 |
|
|
NA |
|
|
Total operating expenses |
$ |
61,012 |
|
|
$ |
57,723 |
|
|
$ |
3,289 |
|
|
6 |
|
| Operating
income |
$ |
766 |
|
|
$ |
15,149 |
|
|
$ |
(14,383 |
) |
|
(95 |
) |
Vessel revenue for the Company’s Ultramax
Operations decreased to $62.0 million for the first half of 2019
from $73.1 million in the prior year period. After a slow start to
the year due to coal import restrictions by China and higher coal
stockpiles, the grain trade sparked a recovery in rates towards the
end of the first quarter that carried into the second quarter of
2019. Going into the third quarter of 2019, the Company positioned
its vessels to align with its drydock and scrubber fitting program
on a balanced basis between the Atlantic and Pacific basins.
TCE revenue (see Non-GAAP Financial Measures
below) for the Company’s Ultramax Operations was $61.8 million for
the first half of 2019 compared to $72.9 million for the prior year
period. During both periods, the Company’s Ultramax fleet consisted
of a day-weighted average of 37 vessels owned or finance leased and
one vessel time chartered-in. TCE revenue per day was $9,086 and
$10,666 for the first halves of 2019 and 2018, respectively.
| |
Six Months Ended June 30, |
|
|
|
|
| Ultramax
Operations: |
2019 |
|
2018 |
|
Change |
|
% Change |
|
TCE Revenue (in thousands) |
$ |
61,778 |
|
|
$ |
72,872 |
|
|
$ |
(11,094 |
) |
|
(15 |
) |
| TCE Revenue / Day |
$ |
9,086 |
|
|
$ |
10,666 |
|
|
$ |
(1,580 |
) |
|
(15 |
) |
| Revenue Days |
6,799 |
|
|
6,832 |
|
|
(33 |
) |
|
— |
|
The Company’s Ultramax Operations vessel
operating costs were $34.2 million for the first half of 2019,
including approximately $1.2 million of takeover costs and
contingency expenses, compared with vessel operating costs of $35.3
million in the prior year, relating to the 37 vessels owned or
finance leased on average during both periods. Daily operating
costs excluding takeover costs and contingency expenses for the
first half of 2019 of $4,913 was relatively flat compared to the
prior year period of $4,956.
Charterhire expense for the Company’s Ultramax
Operations was approximately $1.8 million for both the first halves
of 2019 and 2018 and relates to the vessel the Company time
chartered-in at $10,125 per day.
Ultramax Operations depreciation decreased
slightly from $18.5 million in the first half of 2018 to $18.1
million in the first half of 2019 as two Ultramax vessels were
classified as held for sale in the second quarter of 2019.
General and administrative expense for the
Company’s Ultramax Operations, consists 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, was $2.1 million for both the first half of 2019 and
2018.
During the first half of 2019, the Company recorded a write-down
on assets held for sale related to the classification of two
Ultramax vessels as held for sale.
Kamsarmax Operations
| |
Six Months Ended June 30, |
|
|
|
|
| Dollars in thousands |
2019 |
|
2018 |
|
Change |
|
% Change |
| TCE
Revenue: |
|
|
|
|
|
|
|
|
Vessel revenue |
$ |
37,470 |
|
|
$ |
41,810 |
|
|
$ |
(4,340 |
) |
|
(10 |
) |
|
Voyage expenses |
146 |
|
|
104 |
|
|
42 |
|
|
40 |
|
| TCE
Revenue |
$ |
37,324 |
|
|
$ |
41,706 |
|
|
$ |
(4,382 |
) |
|
(11 |
) |
| Operating
expenses: |
|
|
|
|
|
|
|
|
Vessel operating costs |
17,331 |
|
|
16,625 |
|
|
706 |
|
|
4 |
|
|
Charterhire expense |
(154 |
) |
|
210 |
|
|
(364 |
) |
|
(173 |
) |
|
Vessel depreciation |
9,163 |
|
|
9,408 |
|
|
(245 |
) |
|
(3 |
) |
|
General and administrative expense |
1,112 |
|
|
973 |
|
|
139 |
|
|
14 |
|
|
Loss / write-down on assets held for sale |
7,352 |
|
|
— |
|
|
7,352 |
|
|
NA |
|
|
Total operating expenses |
$ |
34,804 |
|
|
$ |
27,216 |
|
|
$ |
7,588 |
|
|
28 |
|
| Operating
income |
$ |
2,520 |
|
|
$ |
14,490 |
|
|
$ |
(11,970 |
) |
|
(83 |
) |
Vessel revenue for the Company’s Kamsarmax
Operations decreased to $37.5 million in the first half of 2019
from $41.8 million in the prior year period. Lower rates earned by
the Company’s Kamsarmax fleet in the first quarter of 2019 due to
negative sentiment and disruptions of iron ore exports
from Brazil and Australia continued through most of
the second quarter of 2019 as the trade war continued to negatively
affect sentiment. The quarter finished on a very strong note with a
spot North Atlantic squeeze and a strong Black Sea corn and wheat
campaign employing ships as far as the east coast of India. The
Kamsarmax fleet has been positioned evenly between the Atlantic and
Pacific as the Company prepares for its drydock and scrubber
fitting program.
TCE revenue (see Non-GAAP Financial Measures)
for the Company’s Kamsarmax Operations was $37.3 million for the
first half of 2019 associated with a day-weighted average of 19
vessels owned or finance leased, compared to $41.7 million for the
prior year period associated with a day-weighted average of 18
vessels owned or finance leased. TCE revenue per day was $11,000
and $12,173 for the first halves of 2019 and 2018,
respectively.
| |
Six Months Ended June 30, |
|
|
|
|
| Kamsarmax
Operations: |
2019 |
|
2018 |
|
Change |
|
% Change |
|
TCE Revenue (in thousands) |
$ |
37,324 |
|
|
$ |
41,706 |
|
|
$ |
(4,382 |
) |
|
(11 |
) |
| TCE Revenue / Day |
$ |
11,000 |
|
|
$ |
12,173 |
|
|
$ |
(1,173 |
) |
|
(10 |
) |
| Revenue Days |
3,393 |
|
|
3,426 |
|
|
(33 |
) |
|
(1 |
) |
Kamsarmax Operations vessel operating costs were
$17.3 million for the first half of 2019, including approximately
$0.2 million of takeover costs and contingency expenses, compared
with vessel operating costs of $16.6 million in the prior year
period, relating to 19 and 18 vessels owned or finance leased on
average, respectively, during the periods. Daily operating costs
excluding takeover costs and contingency expenses for the first
halves of 2019 and 2018 were $5,001 and $4,985, respectively. The
increase in vessel operating expenses in the aggregate can be
attributed to the addition of the SBI Lynx which was delivered in
the third quarter of 2018.
While the Company did not time charter-in any
Kamsarmax vessels in the first quarter of either 2019 or 2018, it
had a profit and loss sharing agreement with a third party related
to one Kamsarmax vessel which expired in the first quarter of 2019,
for which it recorded its share of the profits. In July 2019, the
Company time chartered-in a Kamsarmax vessel for a period of 24
months at $12,000 per day for the first twelve months and $12,500
per day for the second twelve months. The Company has options
to extend the time charter-in agreement to 36 and 48 months at
$13,000 per day and $14,500 per day, respectively, as well as
purchase options beginning after twelve months.
Kamsarmax Operations depreciation was $9.2
million and $9.4 million in the first halves of 2019 and 2018,
respectively as the SBI Electra and SBI Flamenco were classified as
held for sale in the first quarter of 2019 and sold in the second
quarter of 2019.
General and administrative expense for the
Company’s Kamsarmax Operations was $1.1 million and $1.0 million
for the first halves of 2019 and 2018, 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 2019, the Company recorded write-downs
of assets held for sale related to the sale of the SBI Electra and
SBI Flamenco totaling approximately $7.4 million.
Corporate
Certain general and administrative expenses the
Company incurs, as well as all of its financial expenses and
investment income or losses, are not attributable to a specific
segment. Accordingly, these costs are not allocated to the
Company’s 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 $12.9 million and $13.1 million in the first halves of
2019 and 2018, respectively.
The Company recorded a non-cash gain of
approximately $67.6 million and a cash dividend of $1.0 million for
the first half of 2019 primarily from its equity investment in
Scorpio Tankers Inc.
Financial expenses, net increased to $28.2
million in the first half of 2019 from $21.9 million in the prior
year period due to higher levels of debt and a decrease in the
value of the interest rate caps. In the first half of 2019
approximately $3.1 million of deferred financing costs were written
off related to vessel sales and debt refinancings under the
Company’s new sale and leaseback transactions. We expect to
write-off approximately $0.7 million upon the sale of the two
Ultramax vessels currently classified as held for sale and the
closing of the sale leaseback transaction of three vessels under
the AVIC Lease Financing in the third quarter of 2019.
Scorpio Bulkers Inc. and
SubsidiariesConsolidated Statements of
Operations(Amounts in thousands, except per share
data)
| |
|
Unaudited |
| |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
| Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel revenue |
|
$ |
49,096 |
|
|
$ |
60,614 |
|
|
$ |
99,447 |
|
|
$ |
114,866 |
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
Voyage expenses |
|
236 |
|
|
92 |
|
|
345 |
|
|
288 |
|
|
Vessel operating costs |
|
25,226 |
|
|
26,071 |
|
|
51,496 |
|
|
51,877 |
|
|
Charterhire expense |
|
662 |
|
|
1,042 |
|
|
1,641 |
|
|
2,047 |
|
|
Vessel depreciation |
|
13,351 |
|
|
14,027 |
|
|
27,270 |
|
|
27,895 |
|
|
General and administrative expenses |
|
8,232 |
|
|
7,333 |
|
|
16,060 |
|
|
16,240 |
|
|
Loss / write-down on assets sold or held for sale |
|
4,726 |
|
|
— |
|
|
12,235 |
|
|
— |
|
| Total operating
expenses |
|
52,433 |
|
|
48,565 |
|
|
109,047 |
|
|
98,347 |
|
| Operating (loss)
income |
|
(3,337 |
) |
|
12,049 |
|
|
(9,600 |
) |
|
16,519 |
|
| Other income
(expense): |
|
|
|
|
|
|
|
|
|
Interest income |
|
330 |
|
|
215 |
|
|
674 |
|
|
429 |
|
|
Income from equity investments |
|
53,143 |
|
|
— |
|
|
68,646 |
|
|
— |
|
|
Foreign exchange loss |
|
(47 |
) |
|
45 |
|
|
(51 |
) |
|
(42 |
) |
|
Financial expense, net |
|
(15,120 |
) |
|
(11,509 |
) |
|
(28,170 |
) |
|
(21,877 |
) |
| Total other income
(expense) |
|
38,306 |
|
|
(11,249 |
) |
|
41,099 |
|
|
(21,490 |
) |
| Net income
(loss) |
|
$ |
34,969 |
|
|
$ |
800 |
|
|
$ |
31,499 |
|
|
$ |
(4,971 |
) |
| |
|
|
|
|
|
|
|
|
| Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.52 |
|
|
$ |
0.01 |
|
|
$ |
0.46 |
|
|
$ |
(0.07 |
) |
| Diluted |
|
$ |
0.50 |
|
|
$ |
0.01 |
|
|
$ |
0.45 |
|
|
$ |
(0.07 |
) |
| |
|
|
|
|
|
|
|
|
| Basic weighted average number
of common shares outstanding |
|
67,730 |
|
|
72,494 |
|
|
67,597 |
|
|
72,598 |
|
| Diluted weighted average
number of common shares outstanding |
|
69,301 |
|
|
74,718 |
|
|
69,171 |
|
|
72,598 |
|
Scorpio Bulkers Inc. and
SubsidiariesConsolidated Balance
Sheets(Dollars in thousands)
| |
|
Unaudited |
|
|
| |
|
June 30, 2019 |
|
December 31, 2018 |
| Assets |
| Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
139,302 |
|
|
$ |
67,495 |
|
|
Accounts receivable |
|
9,936 |
|
|
10,290 |
|
|
Prepaid expenses and other current assets |
|
9,126 |
|
|
6,314 |
|
| Total current assets |
|
158,364 |
|
|
84,099 |
|
| Non-current assets |
|
|
|
|
|
Vessels, net |
|
1,391,479 |
|
|
1,507,918 |
|
|
Assets held for sale |
|
36,745 |
|
|
— |
|
|
Equity investments |
|
161,346 |
|
|
92,281 |
|
|
Deferred financing costs, net |
|
3,336 |
|
|
3,706 |
|
|
Other assets |
|
28,403 |
|
|
15,822 |
|
|
Total non-current assets |
|
1,621,309 |
|
|
1,619,727 |
|
| Total
assets |
|
$ |
1,779,673 |
|
|
$ |
1,703,826 |
|
| |
|
|
|
|
| Liabilities and shareholders’
equity |
|
|
|
|
| Current liabilities |
|
|
|
|
|
Bank loans, net |
|
$ |
39,114 |
|
|
$ |
60,310 |
|
|
Capital lease obligations |
|
24,033 |
|
|
4,594 |
|
|
Senior Notes, net |
|
73,514 |
|
|
73,253 |
|
|
Accounts payable and accrued expenses |
|
21,098 |
|
|
14,457 |
|
| Total current liabilities |
|
157,759 |
|
|
152,614 |
|
| Non-current liabilities |
|
|
|
|
|
Bank loans, net |
|
440,322 |
|
|
621,179 |
|
|
Capital lease obligations |
|
281,455 |
|
|
69,229 |
|
|
Other liabilities |
|
6,385 |
|
|
— |
|
| Total non-current
liabilities |
|
728,162 |
|
|
690,408 |
|
| Total liabilities |
|
885,921 |
|
|
843,022 |
|
| Shareholders’ equity |
|
|
|
|
|
Preferred shares, $0.01 par value per share; 50,000,000 shares
authorized; no shares issued or outstanding |
|
— |
|
|
— |
|
|
Common shares, $0.01 par value per share; authorized 212,500,000
shares as of June 30, 2019 and December 31, 2018; issued and
outstanding 71,397,258 shares and 71,217,258 shares as of June 30,
2019 and December 31, 2018, respectively |
|
798 |
|
|
796 |
|
|
Paid-in capital |
|
1,749,095 |
|
|
1,747,648 |
|
|
Common shares held in treasury, at cost; 8,567,846 shares at June
30, 2019 and December 31, 2018 |
|
(56,720 |
) |
|
(56,720 |
) |
|
Accumulated deficit |
|
(799,421 |
) |
|
(830,920 |
) |
| Total shareholders’
equity |
|
893,752 |
|
|
860,804 |
|
| Total liabilities and
shareholders’ equity |
|
$ |
1,779,673 |
|
|
$ |
1,703,826 |
|
Scorpio Bulkers Inc. and
Subsidiaries Consolidated Statements of Cash Flows
(unaudited)(Amounts in thousands)
| |
Six Months Ended June 30, |
| |
2019 |
|
2018 |
|
Operating activities |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
31,499 |
|
|
$ |
(4,971 |
) |
| Adjustment to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
Restricted share amortization |
|
4,297 |
|
|
4,064 |
|
|
Vessel depreciation |
|
27,270 |
|
|
27,895 |
|
|
Amortization of deferred financing costs |
|
4,429 |
|
|
2,965 |
|
|
Write-off of deferred financing costs |
|
446 |
|
|
— |
|
|
Loss / write-down on assets held for sale |
|
10,385 |
|
|
— |
|
|
Net unrealized gains on investments |
|
(67,565 |
) |
|
— |
|
|
Dividend income on equity investment |
|
(1,082 |
) |
|
— |
|
|
Drydocking expenditure |
|
(1,362 |
) |
|
— |
|
| Changes in operating
assets and liabilities: |
|
|
|
|
|
Decrease in accounts receivable |
|
353 |
|
|
951 |
|
|
Increase (decrease) in prepaid expenses and other assets |
|
(6,167 |
) |
|
97 |
|
|
Increase in accounts payable and accrued expenses |
|
1,315 |
|
|
1,212 |
|
| Net cash provided by
operating activities |
|
3,818 |
|
|
32,213 |
|
| Investing
activities |
|
|
|
|
|
Equity investment |
|
(1,500 |
) |
|
— |
|
|
Dividend income on equity investment |
|
1,082 |
|
|
— |
|
|
Proceeds from sale of assets held for sale |
|
47,302 |
|
|
— |
|
|
Scrubber payments |
|
(5,746 |
) |
|
— |
|
|
Payments for vessels and vessels under construction |
|
— |
|
|
(20,658 |
) |
| Net cash provided by
(used in) investing activities |
|
41,138 |
|
|
(20,658 |
) |
| Financing
activities |
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
242,260 |
|
|
12,750 |
|
|
Repayments of long-term debt |
|
(212,560 |
) |
|
(25,883 |
) |
|
Common shares repurchased |
|
— |
|
|
(8,645 |
) |
|
Dividends paid |
|
(2,849 |
) |
|
(3,062 |
) |
|
Debt issue costs paid |
|
— |
|
|
(474 |
) |
| Net cash provided by
(used in) financing activities |
|
26,851 |
|
|
(25,314 |
) |
| Increase (decrease) in cash
and cash equivalents |
|
71,807 |
|
|
(13,759 |
) |
| Cash and cash equivalents,
beginning of period |
|
67,495 |
|
|
68,535 |
|
| Cash and cash
equivalents, end of period |
|
$ |
139,302 |
|
|
$ |
54,776 |
|
Scorpio Bulkers Inc. and
SubsidiariesOther Operating Data
(unaudited)
| |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Time charter equivalent
revenue ($000’s) (1): |
|
|
|
|
|
|
|
|
Vessel revenue |
|
$ |
49,096 |
|
|
$ |
60,614 |
|
|
$ |
99,447 |
|
|
$ |
114,866 |
|
|
Voyage expenses |
|
(236 |
) |
|
(92 |
) |
|
(345 |
) |
|
(288 |
) |
|
Time charter equivalent revenue |
|
$ |
48,860 |
|
|
$ |
60,522 |
|
|
$ |
99,102 |
|
|
$ |
114,578 |
|
| Time charter equivalent
revenue attributable to: |
|
|
|
|
|
|
|
|
|
Kamsarmax |
|
$ |
18,302 |
|
|
$ |
20,851 |
|
|
$ |
37,324 |
|
|
$ |
41,706 |
|
|
Ultramax |
|
30,558 |
|
|
39,671 |
|
|
61,778 |
|
|
72,872 |
|
| |
|
$ |
48,860 |
|
|
$ |
60,522 |
|
|
$ |
99,102 |
|
|
$ |
114,578 |
|
| Revenue days: |
|
|
|
|
|
|
|
|
|
Kamsarmax |
|
1,690 |
|
|
1,626 |
|
|
3,393 |
|
|
3,426 |
|
|
Ultramax |
|
3,398 |
|
|
3,429 |
|
|
6,799 |
|
|
6,832 |
|
|
Combined |
|
5,088 |
|
|
5,055 |
|
|
10,192 |
|
|
10,258 |
|
| TCE per revenue day (1): |
|
|
|
|
|
|
|
|
|
Kamsarmax |
|
$ |
10,830 |
|
|
$ |
12,823 |
|
|
$ |
11,000 |
|
|
$ |
12,173 |
|
|
Ultramax |
|
$ |
8,993 |
|
|
$ |
11,569 |
|
|
$ |
9,086 |
|
|
$ |
10,666 |
|
|
Combined |
|
$ |
9,603 |
|
|
$ |
11,973 |
|
|
$ |
9,724 |
|
|
$ |
11,170 |
|
- The Company defines Time Charter
Equivalent (TCE) revenue as vessel revenues less voyage
expenses. Such TCE revenue, divided by the number of the
Company’s 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.The Company reports TCE revenue, a
non-GAAP financial measure, because (i) the Company believes
it provides additional meaningful information in conjunction with
vessel revenues and voyage expenses, the most directly comparable
U.S.-GAAP measure, (ii) it assists the Company’s management in
making decisions regarding the deployment and use of its 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) the Company believes that it presents useful information
to investors. See Non-GAAP Financial Measures below.
Fleet List as of July 19,
2019
|
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 Carioca |
|
2015 |
|
82,000 |
|
|
Kamsarmax |
| SBI Conga |
|
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 |
|
2018 |
|
82,000 |
|
|
Kamsarmax |
|
Total Kamsarmax |
|
|
|
1,398,000 |
|
|
|
| |
|
|
|
|
|
|
| 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 |
|
3,705,800 |
|
|
|
Time chartered-in vessels
The Company currently time
charters-in one Ultramax vessel and four Kamsarmax
vessels. The terms of the contracts 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) |
| Kamsarmax |
|
2019 |
|
81,100 |
|
|
China |
|
$ |
14,170 |
|
|
10-Mar-21 |
|
(2) |
| Kamsarmax |
|
2019 |
|
81,100 |
|
|
China |
|
Variable |
|
|
7-Apr-21 |
|
(3) |
| Kamsarmax |
|
2018 |
|
82,000 |
|
|
China |
|
$ |
12,000 |
|
|
25-June-21 |
|
(4) |
| Kamsarmax |
|
2018 |
|
81,100 |
|
|
China |
|
Variable |
|
|
TBD |
|
(5) |
|
Total TC DWT |
|
|
|
387,400 |
|
|
|
|
|
|
|
|
|
- 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.
- This vessel has been time
chartered-in for 24 to 27 months at the Company’s option at 118% of
the BPI. The daily base rate was converted to a fixed rate
effective July 2019. The vessel was delivered to the Company in
March 2019.
- This vessel has been time
chartered-in for 24 to 27 months at the Company’s option at 118% of
the BPI. The vessel was delivered to the Company in May 2019.
- This vessel is time chartered-in
for 24 months at $12,000 per day for the first twelve months and at
$12,500 per day for the second twelve months. The Company has
the option to extend this time charter for 12 months at $13,000 per
day and an additional 12 months at $14,500 per day. The
vessel was delivered to the Company in July 2019.
- This vessel has been time
chartered-in for 24 to 27 months at the Company’s option at 120% of
the BPI. The vessel is expected to be delivered to the Company in
July or August 2019.
Conference Call on Results:
A conference call to discuss the Company’s results will be held
today, July 22, 2019, at 9:00 AM Eastern Daylight Time / 3:00 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
4499443.
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/mmc/p/qyxtd6mp
About Scorpio Bulkers Inc.
Scorpio Bulkers Inc. is a provider of marine
transportation of dry bulk commodities. Upon the completion
of the sale of the two Ultramax vessels currently classified as
held for sale and the delivery of a time chartered-in Kamsarmax
vessel, Scorpio Bulkers Inc. will have an operating fleet of 57
vessels consisting of 52 wholly-owned or finance leased drybulk
vessels (including 17 Kamsarmax vessels and 35 Ultramax vessels),
and five time chartered-in vessels (including four
Kamsarmax vessels and one Ultramax vessel). The Company’s owned and
finance leased fleet will have a total carrying capacity of
approximately 3.6 million dwt and all of the Company’s owned
vessels will 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 the Company’s 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 U.S. Securities and Exchange Commission (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 the Company’s
financial condition and results of operations, and therefore a more
complete understanding of factors affecting its 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 income and related per
share amounts, as well as adjusted EBITDA and TCE Revenue are
non-GAAP financial 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. Please
see below for reconciliations of EBITDA, adjusted net income and
related per share amounts, and adjusted EBITDA. Please see
“Other Operating Data” for a reconciliation of TCE revenue.
EBITDA (unaudited)
| |
Three Months EndedJune 30, |
|
Six Months Ended June 30, |
| In thousands |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net income (loss) |
$ |
34,969 |
|
|
$ |
800 |
|
|
$ |
31,499 |
|
|
$ |
(4,971 |
) |
| Add Back: |
|
|
|
|
|
|
|
|
Net interest expense |
11,185 |
|
|
9,811 |
|
|
22,620 |
|
|
18,483 |
|
|
Depreciation and amortization (1) |
19,079 |
|
|
17,449 |
|
|
36,443 |
|
|
34,924 |
|
| EBITDA |
$ |
65,233 |
|
|
$ |
28,060 |
|
|
$ |
90,562 |
|
|
$ |
48,436 |
|
(1) Includes depreciation, amortization of deferred financing
costs and restricted share amortization.
Adjusted net income (unaudited)
| |
|
Three Months EndedJune 30, |
|
Six Months Ended June 30, |
| In thousands, except per share
data |
|
2019 |
|
2019 |
| |
|
Amount |
|
|
Per share |
|
Amount |
|
|
Per share |
|
Net income |
|
$ |
34,969 |
|
|
$ |
0.50 |
|
|
$ |
31,499 |
|
|
$ |
0.45 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
Loss / write-down on assets sold or held for sale |
|
4,726 |
|
|
0.07 |
|
|
12,235 |
|
|
0.18 |
|
|
Write-down of deferred financing cost |
|
446 |
|
|
0.01 |
|
|
446 |
|
|
0.01 |
|
| Total adjustments |
|
$ |
5,172 |
|
|
$ |
0.08 |
|
|
$ |
12,681 |
|
|
$ |
0.19 |
|
| Adjusted net
income |
|
$ |
40,141 |
|
|
$ |
0.58 |
|
|
$ |
44,180 |
|
|
$ |
0.64 |
|
Adjusted EBITDA (unaudited)
| |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| In thousands |
|
2019 |
|
2019 |
|
Net income |
|
$ |
34,969 |
|
|
$ |
31,499 |
|
| Impact of adjustments |
|
5,172 |
|
|
12,681 |
|
| Adjusted net
income |
|
40,141 |
|
|
44,180 |
|
| Add Back: |
|
|
|
|
|
Net interest expense |
|
11,185 |
|
|
22,620 |
|
|
Depreciation and amortization (1) |
|
18,633 |
|
|
35,997 |
|
| Adjusted
EBITDA |
|
$ |
69,959 |
|
|
$ |
102,797 |
|
(1) Includes depreciation, amortization of deferred financing
costs and restricted share 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, counterparty
performance, ability to obtain financing (including for capital
expenditures) and comply with covenants in such financing
arrangements, fluctuations in the value of our investments, 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
SEC 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)
Scorpio Bulkers (NYSE:SALT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Scorpio Bulkers (NYSE:SALT)
Historical Stock Chart
From Sep 2023 to Sep 2024
