Company Presentation February 2017 1 About Scorpio Bulkers - - PowerPoint PPT Presentation

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February 2017

Company Presentation

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• Scorpio Bulkers Inc. (“Scorpio” or the “Company”) is a NYSE-listed Marshall Islands

corporation, founded in March 2013 by the senior management team of the Scorpio Group

• Company currently owns 48 dry bulk ‘Eco’ vessels
• 28 Ultramax and 19 Kamsarmax delivered to date
• 1 Kamsarmax delivering in 2Q-2017
• Scorpio’s strategy is to:
• Own and operate the latest generation of fuel efficient drybulk vessels

purchased from quality shipyards

• Operate vessels in the spot market through the Scorpio Ultramax and Scorpio

Kamsarmax pools under short term or long term time charters

• Maintain a strong balance sheet in the current difficult operating environment
• Scorpio has access to Scorpio Group’s customer and supplier relationships as well as

technical, commercial and managerial expertise

About Scorpio Bulkers

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Experienced Management Team

Years in industry Prior experience Emanuele A. Lauro

Founder, Chairman, Director & Chief Executive Officer

Robert Bugbee

Founder, President and Director

Cameron Mackey

Chief Operating Officer

Hugh Baker

Chief Financial Officer 13 years 30 years 22 years 6 years  Member of the Lolli-Ghettifamily, involved in shipping since the 1950s  Joined Scorpio Group in 2003, part of senior management since 2004  Founder of several tanker pools including: Scorpio Aframax Tanker Pool, Panamax Tanker Pool and Handymax tanker pool  Degree in International Business from the European Business School in London 

• Mr. Bugbee, Co-Founder of Scorpio Bulkers, has served as President since July 2013, he also serves as

President and Director of Scorpio Tankers since its IPO in April 2010  Joined Scorpio Group in February 2009. Prior to joining Scorpio Group, Mr. Bugbee was a partner at Ospraie Management LLP, and held President, Executive Vice President, Chief Operating Officer positions in OMI Corporation  Holds an MBA from the Norwegian School of Economics (NHH) 

• Mr. Mackey has served as Chief Operating Officer of Scorpio Bulkers since July 2013, also serves as

Chief Operating Officer of Scorpio Tankers since its IPO in April 2010  Previous experience includes equity and commodity analyst at Ospraie Management LLC, Senior Vice President and in Business Development at OMI Corporation  M.B.A. from the Sloan School of Management at MIT, a B.S. from the Massachusetts Maritime Academy, B.A. from Princeton University and Master Mariner

Filippo A. Lauro

Vice President 24 years  Joined Scorpio in July 2012, initially focusing on business development in Scorpio Tankers before taking on role as CFO in Scorpio Bulkers in July 2013  Previous experience as Managing Director of EvercorePartners in New York, Head of Shipping at HSH Nordbank in New York and Managing Director of ING Bank in London 

• Mr. Baker has a BA from the London School of Economics and a MSc in Shipping, Trade & Finance

from Cass Business School 

• Mr. Baker is a Fellow of the Institute of Chartered Shipbrokers

 Member of the Lolli-Ghettifamily, involved in shipping since the 1950s  Joined Scorpio Group in 2010 as part of senior management  Founder of and held senior executive roles in several private companies both in his native Italy and abroad

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Higher Revenues as a result of Scorpio Pools Outperformance

• 95% of the Clarksons Average of the 6/TC Routes for Baltic

Supramax Index & 4/T/C Routes for Baltic Panamax Index

• Q1-17 earnings for Ultramax pool represent 73% of the days
• Q1-17 earnings for Kamsarmaxpool represent 75% of the days

$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Scorpio Kamsarmax Pool Performance Baltic Panamax Index* $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Scorpio Ultramax Pool Performance Baltic Supramax Index*

5 Dec-2014 Sold 1 Kamsarmax

NB for ~ $31m

2H 14

Nov-2014 $150m equity private placement

• ffering

Dec-2014 Modified 6 Capesize NBs for LR2 NBs. Agreed to sell 4 LR2 to Scorpio Tankers Inc for $204m Feb-2015 Modified 3 existing Capesize NB contracts for construction of 3 LR1 product tankers Apr-2015 Sold 1 Kamsarmax and 3 Capesize NBs as well as 3 LR1 NBs for ~$290m Apr-2015 Sold 2 Capesize NBs and 1 Ultramax NB for ~ $111m Sep-2014 Raised $65m 7.5%

• Sr. Unsecured

Notes due 2019 Oct-2014 UW option exercised, raised

• add. $8.6m 7.5% Sr.

Unsecured Notes Jun-2015 Sold 3 Capesize NBs and 2 LR2 product tankers for ~ $236m Jun-2015 $200m public offering

• f common shares +

$30m greenshoe exercise a week later

Capital raises Other Vessel sales

Company Timeline: Raise and Preserve Liquidity (1/2)

Sep-2015/Oct-2015 Interest Coverage Ratio covenant waived/amended through 4Q 2017 Nov-2015 Sold 2 Capesize and 4 Capesize NBs for ~$227m

1H 15 2H 15

Dec-2015 Sold 5 Capesize for ~$167m

Dec-2015 Executed a one-for- twelve reverse stock split to facilitate further equity issuance and ensure NYSE compliance

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Company Timeline: Raise and Preserve Liquidity (2/2)

Capital raises Other Vessel sales

2H 16

Feb-2016 Agreement reached to defer delivery of 8 newbuildings by

• ca. 6 months per

vessel Feb-2016 Termination of 4 TC-In contracts for $10 million Mar-2016 $63m public

• ffering of

common shares Apr-2016 Agreement to cancel a Kamsarmax newbuilding

1H 16

Feb-2016 Reached agreement with lenders to: (i) prepay $41.2m in exchange for deferment of principal payments of $67.9m and (ii) reduce minimum liquidity clause to >$25m and $700k per vessel May-2016 Reached agreement with lenders to: (i) amend the "interest coverage ratio" covenant under the relevant credit facilities, and (ii) reduce the "value-to-loan ratio" covenant under all of its credit facilities Jun-2016 $70m public

• ffering of

common shares Sep-Dec 2016 Reached agreements to: (i) receive a reduction in delivery price on 8 vessels by $18m in aggregate, (ii) defer delivery of 6 newbuildings by

• ca. 2-3 months per vessel, and (iii)

eliminate management fees payable upon any future vessel purchases/disposals and reduce notice period upon vessel disposal Oct-2016 Reached agreement with lenders to: (i) prepay $24.4m in exchange for deferment of principal payments of $48.8m and (ii) amend the "interest coverage ratio" covenant under the relevant credit facilities

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Recent Charter Employment During 2H-16 and Q1-17

Vessel Type Duration (Months) Daily Rate

SBI Bravo Ultramax 4 – 7 $7,500 SBI Zeus Ultramax 7 – 9 $7,300 MV Geneva Queen Kamsarmax 7 – 10 $6,500 SBI Bolero Kamsarmax 5 – 8 $8,000 SBI Electra Kamsarmax 5 – 8 $8,000 SBI Lyra Ultramax 5 – 8 $9,500 SBI Poseidon Ultramax 5 – 7 $8,750 SBI Antares Ultramax 5 – 7 $8,900 SBI Cronos Ultramax 5 $9,000 SBI Capoeira Kamsarmax 5 – 7 $9,350 SBI Thalia Ultramax 5 – 8 $7,350 SBI Reggae Kamsarmax 5 – 8 $9,500 SBI Athena Ultramax 4 – 6 $10,000 SBI Echo Ultramax 4 – 6 $10,000 SBI Zumba Kamsarmax 5 – 7 $10,500 SBI Leo Ultramax 5 – 7 $9,000 SBI Cakewalk Kamsarmax 5 – 8 $9,000 SBI Achilles Ultramax 6 – 8 $11,000 SBI Pegasus Ultramax 5 – 7 $10,250 SBI Hermes Ultramax 6 – 8 $8,500

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Owned Fleet List

Vessel size 60,200-64,000 DWT Vessel size 82,000-84,000 DWT Delivered Vessels Vessels to be delivered Ultramax Newbuildings # Name Year Yard 1 SBI Athena Q1-15 Chengxi 2 SBI Bravo Q1-15 Nacks 3 SBI Antares Q1-15 Nacks 4 SBI Leo Q1-15 Dacks 5 SBI Echo Q3-15 Imabari 6 SBI Lyra Q3-15 Dacks 7 SBI Subaru Q3-15 Dacks 8 SBI Tango Q3-15 Imabari 9 SBI Maia Q3-15 Nacks 10 SBI Hydra Q3-15 Nacks 11 SBI Pegasus Q3-15 Chengxi 12 SBI Ursa Q4-15 Dacks 13 SBI Thalia Q4-15 Chengxi 14 SBI Cronos Q4-15 Imabari 15 SBI Orion Q4-15 Chengxi 16 SBI Achilles Q1-16 Imabari 17 SBI Hercules Q1-16 Chengxi 18 SBI Perseus Q1-16 Chengxi 19 SBI Hermes Q1-16 Imabari 20 SBI Zeus Q2-16 Mitsui 21 SBI Hera Q2-16 Mitsui 22 SBI Hyperion Q2-16 Nacks 23 SBI Tethys Q3-16 Nacks 24 SBI Phoebe Q3-16 Chengxi 25 SBI Poseidon Q3-16 Mitsui 26 SBI Apollo Q4-16 Mitsui 27 SBI Samson Q1-17 Chengxi 28 SBI Phoenix Q1-17 Chengxi Kamsarmax Newbuildings # Name Year Yard 1 SBI Cakewalk Q3-14 SWS 2 SBI Charleston Q3-14 SWS 3 SBI Samba Q1-15 Imabari 4 SBI Rumba Q3-15 Imabari 5 SBI Capoeira Q3-15 Hudong 6 SBI Electra Q3-15 Yangzijiang

7 SBI Carioca Q4-15 Hudong 8 SBI Conga Q4-15 Hudong 9 SBI Flamenco Q4-15 Hudong 10 SBI Bolero Q4-15 Hudong 11 SBI Sousta Q1-16 Yangzijiang 12 SBI Rock Q1-16 Yangzijiang 13 SBI Lambada Q1-16 Hudong 14 SBI Reggae Q1-16 Hudong 15 SBI Zumba Q4-16 Hudong 16 SBI Macarena Q4-16 Hudong 17 SBI Parapara Q1-17 Hudong 18 SBI Mazurka Q1-17 Hudong 19 SBI Swing Q1-17 Hudong 20 SBI Jive Q2-17 Hudong

(1) As of January 31, 2017

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Overview of Lenders

Financial Institution Commitment (1) ($ in millions) CEXIM $158.5 SEB $117.8 Nordea $89.7 Deutsche Bank $60.1 Credit Suisse $40.5 Credit Agricole $38.4 BNPP $28.0 NIBC $20.1 ABN AMRO $19.4 Total Committed $572.5

SALT Current Lenders

• Our debt is held by the original lenders and remains priced between L+2.925% and L+3.00%

(1) As of February 3, 2017

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Remaining Capex & Delivery Obligations

• Agreed with the shipyard to reduce the price by approximately $2.5 million in Q4 2016

Dollars in millions

Vessel Type Country Built Delivery Date Q1-17 Q2-17 Total Installments Extra Costs* Total Remaining Capex SBI Jive Kamsarmax China Q2-17 1.4 17.2 18.6 0.1 18.7 * Equipment and other technical upgrades Installments 1.4 17.2 18.6 Extra Costs* 0.0 0.1 0.1 Total CapEx $1.4 $17.3 $18.7

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Projected Quarterly Principal Repayment Schedule 2017 – 2019

($ in millions)

$1.0 $2.7 $6.1 $6.1 $6.1 $6.1 $6.1 $6.3 $6.3 $6.3 $6.3 $6.3 $- $5.0 $10.0 $15.0 $20.0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

Year Principal Repayments 2017 $16.0m 2018 $24.7m 2019 $25.3m Total $66.0m

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In compliance with all Value-to-Loan covenants

Secured Credit Facilities # of delivered vessels VTL Compliance (1) VTL Ratio VTL Test Compliance 20 165% 140% PASS 15 182% 140% PASS 4 205% 115% PASS 3 182% 140% PASS 2 237% 140% PASS 2 191% 140% PASS 1 212% 140% PASS

Total

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(1) Includes the recent drawdowns for 3 vessels in January 2017 (with average vessel values from two brokers as of January 2017), and based on loans outstanding for the other 44 vessels as of December 31, 2016 (with average vessel values from two brokers as of December 31, 2016)

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Coal/iron ore Iron ore/coal Iron ore/coal Handysize 10,000 – 40,000 40,000 – 60,000 60,000 – 80,000 Steel/fertilizers/forest/grains/soybeans/ alumina/coal/other minor bulks Steel/fertilizers/forest/grains/soybeans/ alumina/coal/other minor bulks Coal/grains/soybeans/bauxite

Vessel type DWT Cargo carried

Handymax/Supramax Panamax/Kamsarmax Post-Panamax Capesize VLOC 80,000 – 110,000 110,000 – 200,000 Over 200,000

Overview of Dry Bulk Segments

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Overview of Dry Bulk Commodity Cargoes

• Iron ore: primary ingredient in the

production of steel, along with limestone & coking coal and is the largest single commodity shipped on dry bulk vessels.

• Coal: seaborne coal trade is comprised of

two different types of coal; steam coal (which is used for electricity generation and industrial uses), and coking coal (which is the key ingredient for steel making).

• Grains: consists primarily of wheat, coarse

grains (such as corn, barley, oats, and rye) and soya bean/meal.

• Minor bulks: include several other dry bulk

goods such as phosphate rock, fertilizers, bauxite, steel products, forest products, nickel, ore, sugar , salt, and others. Breakdown of Major Bulks Breakdown of Minor Bulks Breakdown of Major Bulks

Minor Bulks 38% Iron ore 29% Grains 10% Coal 23% Total Sugar 3% Total Agribulks 9% Fertiliser 8% Metals and Minerals 40% Manufactures 40%

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One Year Time Charter Rates

Source: Clarksons Research Services, February 2017

Time charter rates and BDI have recovered from record low in February 2016

Historical Data 2002-2017 Class/Index Current Avg Max Min Feb 16 to Jan 17 Ultramax $7,563 $18,865 $66,300 $4,875 36% Panamax/Kamsarmax $8,781 $21,318 $79,375 $5,363 39% Baltic Dry Index 907 2,657 10,844 307 66%

2,000 4,000 6,000 8,000 10,000 12,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Balticx Dry Index ($/Day)

Ultramax Panamax/Kamsarmax BDI

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Dry Bulk Asset Values

Q1-2002

Ultramax: $18.3 Kamsarmax: $20.5

Q3-2008

Ultramax: $48.0 Kamsarmax: $53.7

Jan-2017

Ultramax: $22.25 Kamsarmax: $24.5

Avg 2002-2017

Ultramax: $28.8 Kamsarmax: $32.4

Source: Clarksons Research Services, February 2017 $0 $10 $20 $30 $40 $50 $60 $70 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

($ Millions)

Panamax/Kamsarmax Ultramax

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Dry Bulk Seaborne Demand

Source: Clarksons Research Services, February 2017

2009-2017 Iron Ore Coal Grains Minor Bulks Total Dry Bulk CAGR 6.4% 4.3% 5.3% 3.8% 4.8%

3,428 3,854 4,101 4,340 4,584 4,819 4,820 4,884 4,979 1,000 2,000 3,000 4,000 5,000 2009 2010 2011 2012 2013 2014 2015 2016 2017(f)

Million Tonnes Iron Ore Coal Grain Minor Bulks

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Ton Mile Demand

Iron Ore Grain Total Dry Bulk

Ton Miles (Billions)

Coal

Ton Miles (Billions) Ton Miles (Billions) Source: Clarksons Research Services, February 2017 Ton Miles (Billions) 5,365 5,852 6,336 6,718 6,931 7,531 7,576 8,035 8,359 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (f) 3,440 4,047 4,315 4,833 5,033 5,223 4,934 4,903 4,910 1,000 2,000 3,000 4,000 5,000 6,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (f) 2,221 2,460 2,404 2,594 2,794 3,002 3,301 3,376 3,512 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (f) 18,611 21,098 22,435 23,768 24,933 26,314 26,557 27,133 27,735 5,000 10,000 15,000 20,000 25,000 30,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (f)

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Dry Bulk Fleet Growth Before Scrapping

. Assumes no slippage, cancellation or scrapping Includes VLOC Newbuildings on order Source: ClarksonsResearch Services, February 2017 111.2 123.2 135.6 141.9 205.4 211.3 211.9 211.9 198.3 208.5 211.1 211.4 191.0 204.7 207.0 207.5 94.7 101.2 103.0 103.7 800.5 849.0 868.6 876.3 200 400 600 800 1000 Current 2017 2018 2019

DWT (Millions)

VLOC Capesize Panamax Handymax Handysize

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Bulker Fleet Age Profile

Source: Clarksons Research Services, February 2017 36% 39% 38% 30% 41% 27% 33% 36% 12% 15% 13% 10% 5% 13% 9% 10% 6% 6% 7% 15% 0% 20% 40% 60% 80% 100% Capesize Panamax Handymax Handysize 0-4 yrs 5-9 yrs 10-14 yrs 15-19 yrs 20+ yrs

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Scrapping Increasing, Average Age Scrapped Decreasing

Source: Clarksons Research Services, February 2017 8.2 6.1 4.2 0.4 1.0 1.8 0.5 5.6 10.6 6.5 23.3 33.4 23.2 16.3 30.5 29.1 2.2 0.0 10.0 20.0 30.0 40.0 0.0 10.0 20.0 30.0 40.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD (Avg Scrap Age) DWT (Millions) Capesize Panamax Handymax Handysize Avg Scrap Age

Scrapped (mDWT) Avg Age 2014 16.3 27.3 2015 30.5 25.2 2016 28.9 23.3

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Ballast Water Treatment Systems

• The IMO’s Ballast Water Convention is due to enter force on

September 8, 2017.

• After September 2017, ship operators will need to install

type-approved ballast water treatment systems by the time the International Oil Pollution Prevention (IOPP) certificate falls due for renewal, typically at Special Survey.

• Ballast water is used to stabilize vessels and ensure structural
• integrity. It is typically pumped in while cargo is being

unloaded, and discharged while cargo is being loaded.

• Water taken on in one ecological zone and released into

another can result in the introduction and spread of aquatic invasive species, many of which can have serious ecological, economic and public health effects if transferred to regions where they are not native

• Ballast water treatment systems actively remove, kill and/or

inactivate organisms in the ballast water prior to discharge.

• Ballast water treatment systems are expected to cost

$500,000 to $1.5 million and depends on the type and size of vessel.

• Retrofits on older, existing ships, can be more challenging and

expensive as they were designed without the space in the engine room.

BWTS Filtering Unit BWTS Piping in Engine Room

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New Sulfur Emission Regulations

Source: Ocean Connect, February 2017

MARPOL Annex VI SOx Emission Timeline Historical FO & MGO Prices ($/MT)1

• On October 27, 2016 the International Maritime

Organization's (IMO) announced the results from a vote to ratify and formalize regulations mandating a reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020.

• Ship owners will have to decide between:

1. Installing a scrubber so the vessel can continue to burn HFSO; or 2. Paying the premium to consume MGO with a sulfur content < 0.5%

• The cost of the scrubber depends on the size and type of

ship but is estimated to cost $4-$10 million.

• Refineries that currently produce traditional fuel oil in areas

such as Russia, Mexico, Venezuela, Iraq, and Iran are unlikely to have enough capital to upgrade refineries, resulting in the need to more blended fuel.

• Increase in scrap rate as the cost to equip older tonnage

with scrubbers can exceed the scrap value of the vessel.

• Modern fuel efficient ships have a competitive advantage
• ver older tonnage through lower fuel consumption.

$0 $200 $400 $600 $800 $1,000 $1,200 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Rotterdam Singapore Houston

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Recent Growth in Industrial Production

Source: Commodore Research & Consultancy: January 2017

record electricity production; steel production strength manufacturing surge, steel production strength manufacturing surge, electricity production rebound steel production rebound steel production rebound

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January’s Estimated Change in Chartering Demand

Source: Commodore Research & Consultancy: January 2017

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Short Term Negative Global Headwinds

Source: Commodore Research & Consultancy: January 2017

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Seaborne Coal Trade through 2018

1190mt 1120mt 1110mt 1000mt 950mt 1190mt 1170mt

* Projection (high and low scenarios shown) Source: Commodore Research & Consultancy: January 2017

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Seaborne Grain Trade through 2018

510mt 535mt 545mt 535mt 520mt 575mt 595mt

* Projection (high and low scenarios shown) Source: Commodore Research & Consultancy: January 2017

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Chinese Coal Market Analysis

• Domestic coal output fell in 2016 by 8%; there still has yet to be a month since Dec 2014 that has

seen y-o-y growth in coal output

• Domestic coal is of inferior quality with lower energy content and creates more air pollution for less

benefit

• Accidents continue to limit mining due to stoppages / inspections

Recent Coal Mining Fatalities

Qitaihe mine (Nov 29, 2016) Baoma mine (Dec 3, 2016) Shuozhou mine (Jan 17, 2017) Xingyu mine (Jan 4, 2017) Xinja mine (Dec 5, 2016)

Source: Commodore Research & Consultancy: January 2017

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Chinese Electricity Production & Thermal Coal Demand

• The rebound in China’s electricity production is being driven by thermal coal-derived

electricity generation

Chinese Electricity Production 16’ Chinese Coal Derived Electricity Generation 16’

(Yr/Yr Growth) (Yr/Yr Growth)

Source: Commodore Research & Consultancy: January 2017

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South American Grain Cargoes

• South American spot grain cargo volume last month jumped by 120% from December’s

volume

• Compared to January 2016, last month’s volume rose by 100%

Weekly South American Spot Grain Cargoes

Source: Commodore Research & Consultancy: January 2017

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South American Grain Exports

2016/2017 Projections Source: Commodore Research & Consultancy: January 2017

• Brazilian soybean exports are expected to be particularly robust going forward
• 2016/17 exports are expected to total a record 72.5 million tons

Brazil Soybean Exports (Incl Soybean meal)