Scorpio Bulkers Inc. reports first quarter net loss of $124.7m

Scorpio Bulkers Inc., reported its results for the three months ended March 31, 2020.

 

The Company also announced that on May 11, 2020, its Board of Directors declared a quarterly cash dividend of $0.05 per share on the Company’s common shares.

 

Share and per share results included herein have been retroactively adjusted to reflect the one-for-ten reverse stock split of the Company’s common shares, which took effect on April 7, 2020.

 

For the first quarter of 2020, the Company’s GAAP net loss was $124.7 million, or $18.12 per diluted share, including:

 

a non-cash loss of approximately $89.1 million and cash dividend income of $0.4 million, or $12.88 loss per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.; and

 

a write-down of assets held for sale of approximately $17.0 million, or $2.47 per diluted share, related to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale.

 

Emanuele A. Lauro, Chairman and Chief Executive Officer, commented “Our first priority is to ensure the safety of our seafarers and shore staff during the COVID-19 pandemic. Beyond that, we have strengthened our balance sheet by vessel sales and sale leasebacks, we have reduced our capital expenditures by adjusting our scrubber installation schedule, we have reduced our quarterly cash dividend, and we have sold a portion of our shareholding in Scorpio Tankers for net proceeds amounting to $42.7 million. At present, we do not expect to sell any more vessels beyond those assets previously announced as held for sale. We expect to retain our remaining holding of 2.16 million shares in Scorpio Tankers. While the dry bulk market is weak at present, we are confident that rates will strengthen over the remainder of the year and have not hedged or time chartered any of our forward days. We are optimistic about the future of our Company.”

 

For the same period in 2019, the Company’s GAAP net loss was $3.5 million, or $0.51 per diluted share. These results include a non-cash gain of approximately $15.0 million and cash dividend income of $0.5 million, or $2.30 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc. and a write-down of assets held for sale of approximately $7.5 million, or $1.11 per diluted share.

 

Total vessel revenues for the first quarter of 2020 were $40.8 million, compared to $50.4 million for the same period in 2019. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first quarter of 2020 was a loss of $100.1 million and EBITDA for the first quarter of 2019 was $25.3 million, respectively (see Non-GAAP Financial Measures below).

 

For the first quarter of 2020, the Company’s adjusted net loss was $107.7 million, or $15.65 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $17.0 million relating to the classification of two Ultramax vessels and one Kamsarmax vessel as held for sale. Adjusted EBITDA for the first quarter of 2020 was a loss of $83.1 million (see Non-GAAP Financial Measures below).

 

For the first quarter of 2019, the Company’s adjusted net income was $4.0 million, or $0.60 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of $7.5 million. Adjusted EBITDA for the first quarter of 2019 was $32.8 million (see Non-GAAP Financial Measures below).

 

TCE Revenue Earned during the First Quarter of 2020 (see Non-GAAP Financial Measures)

 

Our Kamsarmax fleet (which includes both scrubber fitted and non-scrubber fitted vessels) earned an average of $9,316 revenue per day.

 

Our Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels) earned an average of $8,713 revenue per day.

 

Voyages Fixed thus far for the Second Quarter of 2020, as of the date hereof

 

Kamsarmax fleet (which includes both scrubber fitted and non-scrubber fitted vessels): approximately $7,149 revenue per day on average for 64% of the days.

 

Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels): approximately $4,076 revenue per day on average for 69% of the days.

 

As of May 8, 2020, the Company had approximately $100.8 million in cash and cash equivalents, excluding proceeds from the sale of 0.5 million shares of Scorpio Tankers Inc. for which the trades are expected to settle on May 12, 2020.

 

 

The outbreak of the novel COVID-19 virus (“coronavirus”) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in the implementation of numerous actions taken by governments and governmental agencies in an attempt to control or mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. A significant reduction in manufacturing and other economic activities has and is expected to continue to have a materially adverse impact on the global demand for raw materials, coal and other bulk cargoes that our customers transport on our vessels. This significant decline in the demand for dry bulk tonnage may materially and adversely impact our ability to profitably charter our vessels. When these measures and the resulting economic impact will end and what the long-term impact of such measures on the global economy will be are not known at this time. As a result, the extent to which Covid-19 will impact the Company’s results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

 

In the first quarter of 2020, the Company’s Board of Directors declared and the Company paid a quarterly cash dividend of $0.20 per share totaling approximately $1.5 million.

 

On May 11, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on or about June 30, 2020, to all shareholders of record as of June 15, 2020. As of May 11, 2020, 7,247,580 shares were outstanding.

 

In April 2020, the Company effected a one-for-ten reverse stock split of the Company’s common shares, par value $0.01 per share, reducing the number of outstanding common shares from approximately 72.5 million shares to approximately 7.2 million shares. The Company’s authorized common shares was approximately 31.9 million as of April 7, 2020.

 

In April 2020, the Company reached an agreement with its counterparties to postpone the delivery of exhaust gas cleaning systems, or scrubbers, on thirteen of its vessels until at least 2021 at no additional cost to the Company. This is expected to delay the payment of between $20.0 million and $25.0 million of expenditures until 2021 at the earliest. Please see the revised estimated installation and payment schedules below.

 

In May 2020, the Company sold 2.25 million shares of Scorpio Tankers Inc. (NYSE: STNG) for aggregate net proceeds of approximately $42.7 million, of which the trades of 0.5 million shares are expected to settle on May 12, 2020. Following the completion of these sales, the Company will continue to own in aggregate approximately 2.16 million common shares of Scorpio Tankers Inc.

 

In March 2020, the Company entered into agreements with unaffiliated third parties to sell the SBI Jaguar and SBI Taurus, 2014 and 2015 built Ultramax vessels, respectively, and the SBI Bolero, a 2015 built Kamsarmax vessel, for approximately $53.5 million in aggregate. Delivery of the SBI Jaguar and SBI Taurus to their buyers took place in April 2020, while the delivery of the SBI Bolero is expected to take place in May 2020.

 

It is estimated that the Company’s liquidity will increase by approximately $18.3 million upon the completion of all three sales and after the repayment of associated outstanding debt. The Company recorded a loss of approximately $17.0 million in the first quarter of 2020 related to the sales and expects to write-off $0.3 million of deferred finance charges upon the repayment of the related debt in the second quarter of 2020.

 

During March 2020 and April 2020, the Company closed the transactions to sell and leaseback two Ultramax vessels (SBI Cronos and SBI Achilles) and one Kamsarmax vessel (SBI Lynx) to Ocean Yield ASA. As part of the transaction the Company agreed to bareboat charter-in the SBI Cronos for a period of nine years, the SBI Achilles for a period of ten years and the SBI Lynx for a period of 12 years. The Company has several purchase options during the charter period of each agreement, as well as a purchase option for each vessel upon the expiration of the relevant agreement.

 

This credit facility was repaid in full and terminated upon the closing of the sale and leaseback transaction concerning the SBI Cronos under the $67.3 Million Lease Financing in March 2020.

 

This credit facility was repaid in full and terminated upon the closing of the sale and leaseback transaction concerning the SBI Achilles under $67.3 Million Lease Financing in March 2020.

 

This credit facility was repaid in full and terminated upon the closing of the sale and leaseback transaction concerning the SBI Lynx under $67.3 Million Lease Financing in April 2020.

 

This credit facility was repaid in full and terminated in April 2020 due to the sale of the SBI Jaguar.

 

The Company repaid approximately $11.1 million of this credit facility in April 2020 due to the sale of the SBI Taurus.

 

 

Source: Scorpio Bulkers Inc.