Noble Conference Presentation January 30, 2018 Company Overview - - PowerPoint PPT Presentation

Noble Conference Presentation

January 30, 2018

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Company Overview

Scorpio Bulkers Inc. (“Scorpio” or the “Company”) owns 56(1) mid-size dry bulk ‘Eco’ vessels with an average age

• f 2.0 years and time charters in one vessel
• Scorpio’s strategy is to:

✓ Capture rising freight rates by employing vessels in the spot market through the Scorpio Ultramax and Scorpio Kamsarmax pools ✓ Operate vessels efficiently and minimize costs ✓ Maintain a strong balance sheet through conservative leverage ✓ Take advantage of market dislocation to

• pportunistically grow fleet
• The Company is headquartered in Monaco,

incorporated in the Marshall Islands, exempt from U.S. income tax, has NYSE-compliant governance and transparency for foreign private issuers and is listed under the ticker “SALT” Key Facts Fleet Profile Scorpio Average Age vs. Worldwide Fleet

2.1 1.8 8.2 8.6 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Handymax/Ultramax Panamax/Kamsarmax Scorpio Bulkers Active Fleet (1) Includes one kamsarmax newbuilding. 37 18 1 1 5 10 15 20 25 30 35 40 Ultramax Kamsarmax Owned TC/BB Chartered-In Newbuilding

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Market Cap ($m) (2) Trading Liquidity ($m/day) (2) Stock Price Performance (3)

Company Profile

Current Shareholders (1)

(1) BD Corporate (2) Fearnley Securities January 22nd, 2018 (3) Yahoo Finance

Shareholders Ownership Top 10 59.1% 11-20 9.7% 21-30 3.9% 31+ 27.3% Total 100.0%

# Holder Ownership 1 Scorpio Services Holding Limited 18.7% 2 Grm Investments 17.1% 3 Evermore Global Advisors 8.4% 4 Raging Capital Management 4.3% 5 BlackRock Fund Advisors 3.3% 6 Anchorage Capital Group 1.7% 7 Royce & Associates 1.5% 8 Warlander Asset Management 1.5% 9 Hourglass Capital 1.3% 10 Horseman Capital Management 1.3%

$4 $5 $6 $7 $8 $9 $10 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Golden Ocean Star Bulk Scorpio Bulkers Genco Diana Eagle Bulk Navios Partners Songa Bulk $0 $2 $4 $6 Star Bulk Scorpio Bulkers Diana Golden Ocean Navios Partners Eagle Bulk Genco Songa Bulk

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Metals & Minerals, 27.4% Coal, 19.2% Steel Products, 13.7% Grain, 13.7% Forest Products, 12.3% Iron Ore, 8.2% Argribulks, 4.1% Others, 1.4%

Cargo Carriage - 1H 2017

Kamsarmax Cargo Breakdown Ultramax Cargo Breakdown

Coal, 55.8% Grain, 18.2% Steel Products, 13.0% Metals & Minerals, 7.8% Iron Ore, 5.2%

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$3,462 $5,335 $7,083 $7,238 $8,230 $8,360 $8,949 $10,495 $3,331 $5,263 $6,349 $7,401 $9,164 $9,273 $9,211 $11,180 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17* Ultramax Kamsarmax

Quarterly Time Charter Rates

• Seven sequential increases in reported TCE earnings for Ultramax and Kamsarmax vessels

supports continued market recovery

February 10, 2016 BDI hits 40 year low

* Projections based on 53% and 52% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of October 20, 2017.

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Significant Operating Leverage

• Only taking into consideration the Company’s 56 owned vessels, a $1,000/day change in rates equates to $20.4 million

in annualized cash flow or $0.27/share

• Applying the historical one year time charter rates from 2003 to 2017 the company would generate $316.5 million in

revenue or $4.23/share

• This average excludes TC rates from 2007/2008 where supramax and panamax vessels averaged $50,000/day

The one year time charter rate “TC rate” is the rate paid per day to contract a vessel out for one year, and the time charter equivalent rate (“TCE”) which is the earnings per day for a vessel operating in the spot market. Source: Clarksons Research Services

Historical One Year TC Rates ($/day): 2003-2017 Implied Revenue from Historical TC Rates

Company Owned Fleet Avg TC Rates Annualized Revenue Class # of Vessels Days/Yr Total Days ($/day) (Millions $USD) Ultramax 37 365 13,505 14,930 $202 Kamsarmax 19 365 6,935 16,561 $115 56 20,440 Total Revenue $316.5 Class Min Avg Max Ultramax $6,495 $14,930 $29,448 Kamsarmax $6,740 $16,561 $34,323

$134 $316 $636 $0 $100 $200 $300 $400 $500 $600 $700 Min Avg Max

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Financial Snapshot

Operating Cash Flow EBIT Revenue EBITDA

Figures in $USD millions.

$10.2 $17.4 $23.9 $26.8 $34.7 $37.7 $38.6 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

• $28.8
• $19.2
• $16.2
• $14.1
• $8.5
• $4.7
• $2.6
• $35
• $30
• $25
• $20
• $15
• $10
• $5

$0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

• $17.0
• $5.8
• $1.3

$0.9 $7.0 $10.9 $12.5

• $30
• $25
• $20
• $15
• $10
• $5

$0 $5 $10 $15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

• $27.5
• $18.1
• $4.5
• $2.1
• $1.7

$2.5 $6.1

• $35
• $30
• $25
• $20
• $15
• $10
• $5

$0 $5 $10 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

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Financial Performance

Figures in $USD millions.

P&L FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Revenues 78.4 10.2 17.4 23.9 26.8 34.7 37.7 38.6 EBITDA (23.1) (17.0) (5.8) (1.3) 0.9 7.0 10.9 12.5 EBIT (78.3) (28.8) (19.2) (16.2) (14.1) (8.5) (4.7) (2.6) Net Loss (99.9) (33.4) (24.7) (21.3) (20.6) (16.4) (13.4) (10.7) Balance Sheet FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Total Assets 1,547.2 1,466.9 1,522.2 1,553.1 1,547.2 1,563.1 1,532.2 1,434.2 PP&E 1,414.1 1,183.3 1,244.8 1,318.3 1,414.1 1,363.5 1,352.5 1,340.3 Cash 101.7 230.2 241.7 200.9 101.7 126.6 149.3 62.4 Equity 956.6 941.5 989.0 972.7 956.6 926.0 916.2 908.5 Debt 579.5 510.0 523.4 570.8 579.5 628.2 606.3 529.6 Cash Flow FY 2016 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Cash from operations (52.2) (27.5) (18.1) (4.5) (2.1) (1.7) 2.5 6.1 Cash from investing (235.4) 22.6 (23.0) (128.5) (106.4) (22.4) (1.5) 21.1 Cash in financing 189.0 34.8 97.8 47.0 9.3 49.0 (23.1) (66.5)

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Market Update

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Industry Highlights

Asset Values Recover

✓

Ultramax and Kamsarmax resale values have increased 14.6% and 16.3% yoy and 37.5% and 23.9% since January 2016, respectively. TCE Rates Continue to Improve

✓

Seven sequential increases in reported TCE earnings for our Ultramax and Kamsarmax vessels and are still below historical average Favorable Supply/Demand Dynamics

✓

For the first time since 2014, dry bulk ton mile demand growth (5.3%)

• utpaced fleet supply growth (3.0%)

Low Orderbook & Limited Newbuild Orders

✓

Orderbook as % of the fleet is 9.30% and NB orders in 2017 were 40% below the 20 year avg Regulatory requirements

✓

SALT is fully compliant with upcoming regulatory requirements which also are likely to increase scrapping Positive Demand Outlook

✓

Dry bulk seaborne exports have increased at CAGR of 4.9% since 2009

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Asset Values

Figures in million US$, Source: Clarksons Research Services, January 2018

Historical Asset Values Newbuild & Resale Asset Values Five Year Old Asset Values

• In the last 12 months asset values have:

– Increased 14.6% and 16.3% for ultramax and kamsarmax resales, respectively. – Increased 36.8% and 23.3% for ultramax and panamax 5 year old vessels, respectively. – Increased 7.9% and 4.1% for ultramax and kamsarmax newbuildings, respectively.

• Resale values now exceed newbuilding values

supporting expectations for continued market recovery

$18 $20 $22 $24 $26 $28 $30 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Ultramax NB Kamsarmax NB Ultramax Resale Kamsarmax Resale $0 $10 $20 $30 $40 $50 $60 Ultramax NB Kamsarmax NB Panamax NB $0 $10 $20 $30 $40 $50 $60 Ultramax NB Kamsarmax NB Panamax NB

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Time Charter Rates have Increased Y-o-Y

1 yr TC Rates (Last 12 months) Historical 1 Yr TC Rates

Source: Clarksons Research Services, January 2018

Historical Data 2009-2018 Class Current Avg Max Min Ultramax $11,375 $11,775 $24,375 $4,875 Kamsarmax $13,563 $12,889 $29,625 $5,363 BDI 1,304 1,410 3,941 307

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 Kamsarmax (LHS) Ultramax (LHS) 400 600 800 1,000 1,200 1,400 1,600 1,800 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Kamsarmax (LHS) Ultramax (LHS) BDI (RHS)

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Dry Bulk Demand Outpaces Supply in 2017

Net fleet growth for 2018/2019 assumes scrapping amount as 2017 (14.5 million DWT) and newbuilding vessels deliver as scheduled. Source: Clarkson Research Services

• For the first time since 2014, dry bulk ton mile demand growth (5.3%) outpaced fleet supply growth (3.0%)
• Increasing ton mile demand and global growth coincided with a limited orderbook provides favorable

supply/demand dynamics

10.8% 5.8% 4.4% 2.4% 2.3% 3.0% 2.6% 1.9% 6.4% 4.9% 6.1% 0.9% 2.1% 5.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2012 2013 2014 2015 2016 2017 2018P 2019P Net Fleet Growth Ton Mile Demand

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Low Orderbook & Limited Newbuild Ordering

Source: Clarksons Research Services, January 2018

Historically Low Orderbook as % of Fleet Newbuilding Orders (DWT)

• Orderbook as % of the fleet is 9.30%
• Newbuilding orders in 2017 were 32.7m DWT, 40% below the 20 year avg of 45.8m DWT

9.30% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 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 Jan-18 12.2 15.3 9.6 22.4 15.1 8.9 22.3 36.6 33.1 29.5 76.4 159.3 101.5 37.0 102.2 41.7 24.4 103.2 63.9 24.8 14.0 32.7 20 40 60 80 100 120 140 160 180 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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25.2 25.4 44.5 81.4 99.9 100.4 63.0 48.4 49.2 47.2 38.4 33.4 29.7 14.9

• 20

40 60 80 100 120 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* Capesize Panamax Handymax Handysize

Favorable Supply Dynamics

(1)Does not assume slippage or scrapping (2) Assumes newbuildings deliver as scheduled, Source: Clarksons Research Services, January 2018

Fleet Development Before Scrapping (1)

DWT (Millions)

Newbuilding Deliveries Per Year (2)

324.9 340.4 356.0 363.9 365.9 203.0 210.6 217.0 220.3 220.7 195.2 201.6 204.4 205.3 205.3 96.1 100.0 101.2 101.8 101.8 819.2 852.6 878.7 891.3 893.8

• 100

200 300 400 500 600 700 800 900 1,000 Current 2018 2019 2020 2021 DWT (Millions) Capesize Panamax Handymax Handysize

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New Sulfur Emission Regulations in 2020

• Scrubbers can cost $3-$10 million to install depending on the size of the ship(1)
• Modern fuel efficient ships have a competitive advantage over older tonnage through lower fuel

consumption – ‘ECO Ships’ make a difference.

• Increase in scrapping expected as the cost to equip older tonnage with scrubbers is not viable

Historical FO & MGO Prices ($/MT) (1)

Source: Clarksons Research Services/Ocean Connect January 2018

$0 $200 $400 $600 $800 $1,000 $1,200 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Rotterdam Singapore Houston

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Ballast Water Treatment Regulations

BWTS Piping in Engine Room

• BWTS 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 to fit BWTS (see photos below that show how large BWTS are)

• Will be substantial ‘push factor’ encouraging scrapping of older vessels

All of SALT’s vessels are fitted with BWTS

BWTS Filtering Unit

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Scrapping Expected to Increase

Source: Clarksons Research Services, January 2018

Fleet Scrapping (Million DWT) Scrapping Avg Age Fleet Age Profile Scrap Price ($/ldt)

8.2 6.1 4.2 0.4 1.0 1.8 0.5 5.6 10.6 6.6 23.3 33.4 23.2 16.4 30.7 29.3 14.5 5 10 15 20 25 30 35 40 20 22 24 26 28 30 32 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Handymax Panamax 27% 30% 32% 23% 49% 36% 40% 43% 14% 15% 12% 11% 5% 12% 8% 9% 5% 6% 8% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Capesize Panamax Handymax Handysize 0-4 5-9 10-14 15-19 20+

$230 $445 200 250 300 350 400 450 500 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 ($/ldt)

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Dry Bulk Seaborne Demand

Source: Clarksons Research Services, January 2018

2009-2018 Iron Ore Coal Grains Minor Bulks Total Dry Bulk CAGR 6.2% 4.7% 5.6% 3.8% 4.9%

Million Tonnes 3,428 3,843 4,077 4,341 4,586 4,834 4,835 4,903 5,109 5,251

• 1,000

2,000 3,000 4,000 5,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f) Iron Ore Coal Grain Minor Bulk

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Chinese Coal Inventory at Lowest Since 2012 Indian Coal Inventory at Lowest Level since 2014

50.0 127.5 65.0

40 50 60 70 80 90 100 110 120 130 140 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17

8.0 38.9 13.2

• 5

10 15 20 25 30 35 40 45 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17

Reduction in Coal Inventories

Figures in Million Tonnes Source: Bloomberg

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Ton Mile Demand Continues to Grow

Total Dry Bulk Grain Minor Bulk Coal

Figures in Ton Miles (Billions), Source: Clarksons Research Services, January 2018 18,613 21,071 22,347 23,769 24,934 26,456 26,687 27,253 28,716 29,773

• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f) 3,446 4,052 4,322 4,844 5,048 5,240 4,977 4,968 5,229 5,315

• 1,000

2,000 3,000 4,000 5,000 6,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f) 2,221 2,460 2,398 2,600 2,793 3,001 3,301 3,400 3,705 3,836

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f) 7,586 8,705 9,312 9,624 10,172 10,617 10,761 10,958 11,441 11,938

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 (e) 2018 (f)

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Company Highlights

Youngest ECO dry bulk fleet

✓

High specification best-in-class fleet built at top tier yards with an average age of 2.0 years Industry leading balance sheet

✓

Low financial leverage secured by most modern assets Leading the recovery….first dry bulk company to reinstate full amortization

✓

Restriction on payments of dividends lifted, no unattractive legacy terms and conditions on financing, and full amortization restored Compliant with future regulatory requirements

✓

Fuel efficient vessels suitable for new low sulfur fuel regulation and all fitted with BWTS Favorable supply dynamics

✓

Historically low orderbook as a % of fleet combined with limited newbuilding orders & continued scrapping of older tonnage Positive demand outlook

✓

Dry bulk seaborne demand expected to grow 2.8% in 2018

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Appendix

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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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Fleet List

Owned Vessels # Name Year Yard Type # Name Year Yard Type 1 SBI Athena 2015 Chengxi Ultramax 29 SBI Aries 2015 Chengxi Ultramax 2 SBI Bravo 2015 Nacks Ultramax 30 SBI Gemini 2015 Chengxi Ultramax 3 SBI Antares 2015 Nacks Ultramax 31 SBI Taurus 2015 Chengxi Ultramax 4 SBI Leo 2015 Dacks Ultramax 32 SBI Pisces 2016 Chengxi Ultramax 5 SBI Echo 2015 Imabari Ultramax 33 SBI Virgo 2017 Chengxi Ultramax 6 SBI Lyra 2015 Dacks Ultramax 34 SBI Libra 2017 Chengxi Ultramax 7 SBI Subaru 2015 Dacks Ultramax 35 SBI Puma 2014 Chengxi Ultramax 8 SBI Tango 2015 Imabari Ultramax 36 SBI Jaguar 2014 Chengxi Ultramax 9 SBI Maia 2015 Nacks Ultramax 37 SBI Cougar 2015 Chengxi Ultramax 10 SBI Hydra 2015 Nacks Ultramax 38 SBI Samba 2015 Imabari Kamsarmax 11 SBI Pegasus 2015 Chengxi Ultramax 39 SBI Rumba 2015 Imabari Kamsarmax 12 SBI Ursa 2015 Dacks Ultramax 40 SBI Capoeira 2015 Hudong Kamsarmax 13 SBI Thalia 2015 Chengxi Ultramax 41 SBI Electra 2015 Yangzijiang Kamsarmax 14 SBI Cronos 2015 Imabari Ultramax 42 SBI Carioca 2015 Hudong Kamsarmax 15 SBI Orion 2015 Chengxi Ultramax 43 SBI Conga 2015 Hudong Kamsarmax 16 SBI Achilles 2016 Imabari Ultramax 44 SBI Flamenco 2015 Hudong Kamsarmax 17 SBI Hercules 2016 Chengxi Ultramax 45 SBI Bolero 2015 Hudong Kamsarmax 18 SBI Perseus 2016 Chengxi Ultramax 46 SBI Sousta 2016 Yangzijiang Kamsarmax 19 SBI Hermes 2016 Imabari Ultramax 47 SBI Rock 2016 Yangzijiang Kamsarmax 20 SBI Zeus 2016 Mitsui Ultramax 48 SBI Lambada 2016 Hudong Kamsarmax 21 SBI Hera 2016 Mitsui Ultramax 49 SBI Reggae 2016 Hudong Kamsarmax 22 SBI Hyperion 2016 Nacks Ultramax 50 SBI Zumba 2016 Hudong Kamsarmax 23 SBI Tethys 2016 Nacks Ultramax 51 SBI Macarena 2016 Hudong Kamsarmax 24 SBI Phoebe 2016 Chengxi Ultramax 52 SBI Parapara 2017 Hudong Kamsarmax 25 SBI Poseidon 2016 Mitsui Ultramax 53 SBI Mazurka 2017 Hudong Kamsarmax 26 SBI Apollo 2016 Mitsui Ultramax 54 SBI Swing 2017 Hudong Kamsarmax 27 SBI Samson 2017 Chengxi Ultramax 55 SBI Jive 2017 Hudong Kamsarmax 28 SBI Phoenix 2017 Chengxi Ultramax 56 TBN SBI Lynx 2018 Yangzijiang Kamsarmax