Scorpio Bulkers : Q4 2019 Supplemental Earnings Presentation

Scorpio Bulkers Q4 2019 Earnings

January 27, 2020

Disclaimer

This presentation includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Scorpio Bulkers Inc.'s ("Scorpio's") current views with respect to future events and financial performance. The words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in Scorpio's records and other data available from third parties. Although Scorpio believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond Scorpio's control, Scorpio cannot assure you that it will achieve or accomplish these expectations, beliefs, projections or future financial performance.

Risks and uncertainties include, but are not limited to, the failure of counterparties to fully perform their contracts with Scorpio, the strength of world economies and currencies, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the bulk carrier markets, changes in Scorpio's operating expenses, including bunker prices, drydocking and insurance costs, the fuel efficiency of our vessels, the market for Scorpio's vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental and environmental rules and regulations or actions taken by regulatory authorities including those that may limit the commercial useful lives of bulk carriers, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports Scorpio files with, or furnishes to, the Securities and Exchange Commission, or the Commission, and the New York Stock Exchange, or NYSE. Scorpio undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements are not guarantees of Scorpio's future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), earnings before interest and taxes ("EBIT"), adjusted net income and related per share amounts, as well as adjusted EBITDA, adjusted EBIT and TCE Revenue are non-GAAP performance measures that the Company believes provide investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance. These non-GAAP financial measures should not be considered in isolation from, as substitutes for, nor superior to financial measures prepared in accordance with GAAP.

Unless otherwise indicated, information contained in this presentation concerning Scorpio's industry and the market in which it operates, including its general expectations about its industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third party sources widely available to the public such as independent industry publications, government publications, reports by market research firms or other published independent sources. Internal data and estimates are based upon this information as well as information obtained from trade and business organizations and other contacts in the markets in which Scorpio operates and management's understanding of industry conditions. This information, data and estimates involve a number of assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed above. You are cautioned not to give undue weight to such information, data and estimates. While Scorpio believes the market and industry information included in this presentation to be generally reliable, it has not independently verified any third-party information or verified that more recent information is not available.

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Corporate & Financial Highlights

Q4-19 Financial	• GAAP Net Income of $15.1 million / Earnings per Share of $0.21
Results	• Includes gain and dividends totaling $46.7 million or $0.66 per share primarily related to STNG investment; a $25.2 million or $0.36
	per share write down of assets relating to the classification of four Ultramax vessels as held for sale and a $0.2 million write-off of
	deferred financing costs related the sale of SBI Cougar and SBI Puma
	• Adjusted Net Income of $40.6 million / Adjusted Earnings per Share of $0.57 excluding the $25.2 million write down of assets relating
	to the classification of four Ultramax vessels as held for sale and a $0.2 million write-off of deferred financing costs related the sale of
	SBI Cougar and SBI Puma
	• EBITDA of $41.5 million (Adjusted EBITDA of $66.7 million) and cash flow from operations of $11.2 million
TCE	• Average Ultramax TCE of $11,244 per day in Q4 2019
	• Average Ultramax TCE of $10,505 per day booked to date in Q1 2020
	• Average Kamsarmax TCE of $11,934 per day in Q4 2019
	• Average Kamsarmax TCE of $12,242 per day booked to date in Q1 2020
Liquidity	• As of January 24, 2020, the Company had $65.9 million in cash
Fleet Development
	• Four vessels were classified as held for sale during Q4 2019, resulting in a write-down of $25.2 million in the quarter
Dividend
	• The Company's Board of Directors declared a dividend of $0.02 per share on January 27, 2020

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Historical Rates

$16,000

$14,000

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

$0

Q1 16

Q2 16

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Q4 18

Q1 19

Q2 19

Q3 19

Q4 19

Q1 20 *

Kamsarmax

Ultramax

Projections based on 49% and 57% of the days for the Ultramax and Kamsarmax fleet, respectively as of January 22, 2020

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Financial Performance Summary

REVENUE

$80						$60.6	$62.5	$65.2		$63.2	$60.3
$60
				$51.1	$54.3			$50.4	$50.6
$40			$34.7	$37.7	$38.6
	$23.9	$26.8
$20		$17.4
$10.2

$0 Q1 16Q2 16Q3 16Q4 16Q1 17Q2 17Q3 17Q4 17Q1 18Q2 18Q3 18Q4 18Q1 19Q2 19Q3 19Q4 19

OPERATING CASH FLOW

$35													$13.5	$21.1	$18.6 $19.6	$18.9
													$11.1							$11.2
		$2.5	$5.3											$4.5
$0
	-$4.5 -$2.1-$1.7															-$0.7
		-$18.1
-$35		-$27.5
	Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

								ADJUSTED EBITDA
$80															$70.0		$66.7
	$60
	$40									$22.9	$20.4	$28.1	$28.8	$23.3	$32.8		$26.1
	$20
					$0.9	$7.3	$10.8	$12.4
	$0
			($1.3)
	-$20		$17.0) ($5.8)
(
	-$40		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
	16	16	16	16	17	17	17	17	18	18	18	18	19	19	19	19

ADJUSTED EBIT

$60																							$50.9	$49.8
$40																							$15.5
$20											$6.0	$10.6	$9.4			$8.7
										$3.5
											$2.9
$0
	-$16.2-$14.1-$9.9	-$6.2-$4.1
-$20
		-$19.2
-$40		-$28.8
		Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

Figures in USD millions	5

Scrubber CAPEX & Installation Schedule

	16						$120
			8 Scrubbers Installed and 6 Vessels
	14		in Shipyards as of January 24, 2020
							$100
	12
							$80
	10
(# of Vessels)	9
	10
8						$60
						($USDMillioms)
	6
				1			$40
	4
	5			5			$20
	2	4				4
							2
	0						$0
	Q1-20	Q2-20	Kamsarmax	Q3-20	Ultramax	Q4-20	Q1-21

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Appendix

Income Statement

($ in 000's)	2018	Q1-2019	Q2-2019	Q3-2019	Q4-2019	2019
TCE revenue	241,953	50,366	50,377	62,726	56,910	220,379
Vessel operating expenses	105,475	26,270	25,226	25,196	24,429	101,121
Cash G&A expense	24,572	5,658	6,156	5,546	5,993	23,354
Charterhire	4,176	1,102	2,180	7,488	6,454	17,224
Other loss (income) (1)	7,178	(15,503)	(53,143)	(1,582)	(46,697)	(116,925)
Subtotal	141,401	17,527	(19,581)	36,648	(9,821)	24,774
Adjusted EBITDA	100,552	32,839	69,958	26,078	66,731	195,605
Depreciation / amortization	(74,070)	(17,363)	(18,633)	(17,421)	(16,676)	(70,094)
Net Cash Interest Expense	(39,180)	(11,436)	(11,185)	(10,779)	(9,488)	(42,887)
Adjusted net (loss) income	(12,698)	4,040	40,140	(2,122)	40,567	82,624

1. Includes the change in the fair value and cash dividend income from the equity investment in Scorpio Tankers Inc.

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Balance Sheet

($ in 000's)	2018	2019
Cash and cash equivalents	$67,495	$42,530
Assets Held for Sale	--	77,536
Vessels	1,507,918	1,271,993
Equity method investment	92,281	173,298
Other assets	36,132	97,480
Total assets	$1,703,826	$1,662,837
Total debt	$828,565	$728,374
Other Liabilities	$14,457	$59,496
Total Liabilities	$843,022	$787,870
Shareholders Equity	$860,804	$874,967
Total Liabilities & Shareholders Equity	$1,703,826	$1,662,837

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Cash Flow

($ in 000's)	2018	Q1-2019	Q2-2019	Q3-2019	Q4-2019	2019

Adjusted EBITDA	$100,552	$32,839	$69,959	$26,078	$66,731	$195,605
Net Interest Expense	(39,180)	(11,436)	(11,185)	(10,779)	(9,488)	(42,887)

Cash earnings

Net cash inflow/(outflow) from other operating activities

Net cash (outflow)/inflow from investing activities

Net cash inflow/(outflow) from financing activities

(Decrease) increase in cash & cash equivalents

Cash & cash equivalents at beginning of period

61,372	21,403	58,774	15,299	57,243	152,718
9,074	(16,858)	(59,501)	3,563	(46,043)	(118,838)
(122,493) (1)	(3,784)	44,922	(10,391)	23,094	53,841
51,007	(17,435)	44,286	(67,639)	(71,898)	(112,686)
(1,040)	(16,674)	88,481	(59,168)	(37,604)	(24,965)
68,535	67,495	50,821	139,302	80,134	67,495

Cash & cash equivalents at end of period

$67,495

$50,821

$139,302

$80,134

$42,530

$42,530

(1) Includes $100 million equity investment in Scorpio Tankers Inc.

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