SALT Company Presentation April 29, 2019 Company Highlights Owns - - PowerPoint PPT Presentation

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SALT Company Presentation April 29, 2019 Company Highlights Owns - - PowerPoint PPT Presentation

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SALT Company Presentation April 29, 2019 Company Highlights Owns 54 mid-size dry bulk fuel-efficient 1 Eco vessels with an average age of 3.2 years Marshall Islands incorporated and HQ in 2 Monaco, and NYSE-listed under the ticker

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SALT Company Presentation

April 29, 2019

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Company Highlights

Owns 54 mid-size dry bulk fuel-efficient ‘Eco’ vessels with an average age of 3.2 years Marshall Islands incorporated and HQ in Monaco, and NYSE-listed under the ticker “SALT” Trades vessel on the spot market through the Scorpio Ultramax and Scorpio Kamsarmax pools Meeting IMO 2020 regulations by installing scrubbers throughout its fleet (80% expected to be installed by June 2020) Invested $100 million in 2018 on purchase

  • f 5.4 million shares in Scorpio Tankers, Inc

(NYSE: STNG)

1 2 3 4 5

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Investment Highlights

Youngest Eco fleet Investment in STNG Scrubber- fitted for IMO 2020 Insider

  • wnership

and liquidity A leading position in mid-size segment Significant

  • perating

leverage

8.9 7.1 9.5 8.5 8.9 10.2 7.4 3.2 28 29 30 39 46 47 71 54 20 40 60 80

Genco Golden Ocean Diana Safe Bulkers Eagle Bulk Navios MH Star Bulk Scorpio Bulkers

# of Owned Handymax/Panamax Vessels Average Age

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Q1-2019 Corporate and Financial Highlights

Q1-2019 Financial Results

  • GAAP Net Loss of $3.5 million / Loss per Share of $0.05
  • includes gain and dividends totalling $15.5 million or $0.23 per share on the STNG investment and a write-down of assets held for

sale of $7.5 million or $0.11 per share

  • Adjusted Net Income $4.0 million / Adjusted Earnings per Share of $0.06 excluding the write-down of assets held for sale
  • EBITDA of $25.3 million (Adjusted EBITDA of $32.8 million) and cash flow from operations of $4.5 million

TCE

  • Ultramax TCE of $9,177 per day in Q1 2019
  • Ultramax TCE of $9,488 per day booked to date in Q2 2019
  • Kamsarmax TCE of $11,176 per day in Q1 2019
  • Kamsarmax TCE of $10,487 per day booked to date in Q2 2019

Liquidity

  • Liquidity position as of April 26, 2019 is $57.9 million in cash

Fleet Development

  • Sale of two 2015 built Kamsarmax vessels for $48.0 million
  • Capital expenditure of $3.7 million incurred in Q1-19 for exhaust gas cleaning systems (“Scrubbers”). Total capital expenditures to date
  • n scrubbers is $6.4 million

Financing

  • Sale and lease back of three Ultramax vessels and four Kamsarmax vessels, which will increase liquidity by $57.2 million including

scrubber financing

  • Sale and lease back of one Kamsarmax vessel, which increased liquidity by $6.9 million
  • Sale and lease back of six Ultramax vessels, which will increase liquidity by $62.4 million including scrubber financing
  • Sale and lease back of two Ultramax vessels, which will increase liquidity by $17.0 million including scrubber financing

Dividend & Stock Buyback Program

  • The Company’s Board of Directors declared a dividend of $0.02 per share on April 26, 2019
  • No stock has been purchased to date in 2019. As of April 26, 2019, $50.0 million remains available under the program
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  • $17.0
  • $5.8
  • $1.3

$0.9 $7.3 $10.8 $12.4 $22.9 $20.4 $28.1 $28.8 $23.3 $32.8

  • $30
  • $20
  • $10

$0 $10 $20 $30 $40 $10.2 $17.4 $23.9 $26.8 $34.7 $37.7 $38.6 $51.1 $54.3 $60.6 $62.5 $65.2 $50.4 $0 $10 $20 $30 $40 $50 $60 $70 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

Financial Performance Summary

Adjusted EBITDA Blended TCE ($/day) Revenue

Figures in $USD millions except Blended TCE and Balance Sheet.

$3,404 $5,303 $6,791 $7,303 $8,608 $8,733 $9,053 $11,527 $10,764 $11,973 $12,087 $12,523 $9,844 $- $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 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19

Balance Sheet

($ in 000's) 31-Mar-19 Cash and equivalents 50,821 Vessels, net 1,443,674 Investment in STNG 107,243 Other assets/assets held for sale 87,185 Total assets 1,688,923 Total debt 813,639 Other Liabilities 17,198 Total Liabilities 830,837 Shareholders Equity 858,086 Total Liabilities & Shareholders Equity 1,688,923

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Historical Rates

February 10, 2016 BDI hits 40 year low * Projections based on 48% and 42% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of April 24, 2019.

$9,488 $10,487 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 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* Ultramax Kamsarmax

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Anticipated Rate Recovery

Source: Clarksons Research Services, April 2019 Baltic Supramax Avg of 10 T/C Routes; Baltic Panamax Avg of 4 T/C Routes FFA market based on assessment on April 24, 2019

FFA Market Baltic Indices

$/day

4,000 6,000 8,000 10,000 12,000 14,000 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 Q2-19 Q3-19 Q4-19 Baltic Panamax Earnings Baltic Supramax Earnings FFA - Panamax FFA - Supramax

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$35 $75 $114 $173 $272 $0 $50 $100 $150 $200 $250 $300 $8,000 $10,000 $12,000 $15,000 $20,000

Millions ($ USD) TC Rate ($/day)

EBITDA EBITDA/Share

  • f $3.83

Significant Operating Leverage

An increase in rates from $8,000 to $12,000 (50%) translates to a 220% increase in EBITDA

Historical One Year Time Charter Rates: 2009-2019 Mar-19 Min Avg Max Ultramax $10,750 $4,875 $11,849 $24,375 Kamsarmax $12,135 $5,363 $13,009 $29,625

1) Based on 54 owned vessels; OPEX and Cash G&A based on 2019 Q1 press release Source: Clarksons Research Services

EBITDA Generation in Different Operating Environments (1)

EBITDA/Share

  • f $0.50

EBITDA/Share

  • f $1.06

EBITDA/Share

  • f $1.61

EBITDA/Share

  • f $2.44
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IMO 2020 Regulations & Company Strategy

  • The International Maritime

Organization (IMO) will require shipowners to reduce sulfur emissions in 2020

  • To comply, shipowners will have to

decide between:

  • Installing a scrubber to enable

the vessel to burn HSFO;

  • Paying the premium to

consume compliant fuels with a sulfur content <0.5% (MGO and LSFO)

  • LNG as bunker fuel
  • The Company expects to install

scrubbers on all of its owned and finance leased Kamsarmax and Ultramax vessels between Q2-2019 and Q4-2020

  • The majority of scrubber installations will

be coordinated with scheduled dry docks, reducing the amount of off hire

  • The Scrubbers and their installation will

cost around $2.5 million per vessel, and the Company anticipates that all of these costs will be financed

What is IMO 2020? How Scorpio will Comply

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Scrubber Fuel Savings

1) Based on average Scorpio ECO vessel consumption in 2018

Consumption figures below assume that:

  • Scrubbers do not operate during any port activities
  • Each voyage has a load and discharge port in an ECA, i.e. scrubber does not operate in ECA waters

Scrubber Fuel Savings Annual ECO Vessel Fuel Consumption (MT/year) (1)

$847,200 $1,002,000 $1,059,000 $1,252,500 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Ultramax Kamsarmax MGO-HSFO Spread $200 MGO-HSFO Spread $250

Sailing (Ballast & Laden) Ultramax Kamsarmax Non ECA 4,032 4,830 Waiting/Idle Non ECA 462 450 Less Additional Consumption for Scrubber

  • 258
  • 270

Total Non ECA Consumption (MT) 4236 5010 MGO-HSFO Spread ($/MT) $200 $200 Annual Scrubber Savings $847,200 $1,002,000 Scrubber TCE Savings ($/day) $2,321 $2,745 Every $100 change in fuel spread equates to TCE savings of ($/day) $1,161 $1,373

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$1,017 $287 $642 $144 $375 $143 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400

$/MT

MGO Rotterdam (S/MT) HSFO Rotterdam (S/MT) RotterdamMGO-HSFO Spread ($/MT)

Historical MGO & HSFO Spread

Source: Clarksons Research Services April 2019

Feb 2016 Brent Crude Price: $32/bbl Apr 2011 Brent Crude Price: $123/bbl

Rotterdam Historical Bunker Prices MGO Rotterdam HSFO Rotterdam Rotterdam MGO-HSFO Spread Brent Crude Oil Price (bbl) Apr-2011 $1,017 $642 $375 $123 Feb-2016 $287 $144 $143 $32

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Forward Curve Supports Scrubber Installation

Source: Bloomberg, April 15, 2019

Pre-2020 Average of $247/mt 2020-2022 Average of $274/mt

Spread Between Rotterdam 3.5% HSFO vs 0.1% Low Sulfur Gasoil

150 170 190 210 230 250 270 290 310 330 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22

($/mt)

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Scrubber CAPEX & Installation Schedule

9 1 11 9 4 3 3 1 4 1 4 4 3 10 5 12 13 8 3 $- $20 $40 $60 $80 $100 $120 $140 5 10 15 20 25 30 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2019 2020 2021 Accumulated Scrubber CAPEX ( in Millions USD)

Count of Vessels

Ultramax Kamsarmax Accumulated CAPEX (in millions USD)

Estimated Payments by Year 2018 $1.2 million 2019 $54.0 million 2020 $70.4 million 2021 $1.4 million Total $127.0 million

Source: Company Scrubber Program April, 2019

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Market Update

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Number Owned Vessel Type DWT

Handysize/Handymax

< 50,000

37 Supramax/Ultramax

50,000-64,000

17 Panamax/Kamsarmax

65,000-100,000

Capesize/VLOC

>100,000

Fleet Focused on Mid Size Asset Classes

Major Bulks: Iron ore, coal, grain Minor Bulks: Bauxite, steel, scrap, cement, salt, forest products, potash/fertilizer, coke, nickel ore, sugar. Coal, 58% Grain, 16% Minerals, 6% Ore, 13% Steel, 1% Other, 6% Coal, 34% Grain, 15% Minerals, 16% Ore, 6% Steel, 10% Fertiliser, 6% Salt, 4% Logs, 1% Cement, 5% Other, 3%

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Asset Values Remain Stable

Figures in US$ millions, Source: Clarksons Research Services, April 2019 Resale defined as to be delivered before year end and less than one year old.

$15 $20 $25 $30 $35 $40 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Ultramax NB Kamsarmax NB Ultramax Resale Kamsarmax Resale

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Dry Bulk Market Continues to Grow

Source: Clarksons Research Services, April 2019 (e) = estimate; (f) = forecast

Million Tonnes

2009-2018 Iron Ore Coal Grains Minor Bulks Total Dry Bulk CAGR 5.7% 5.1% 5.4% 4.1% 4.9%

3,402 3,825 4,076 4,317 4,581 4,830 4,828 4,900 5,098 5,213 5,347

  • 1,000

2,000 3,000 4,000 5,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (e) 2019 (f) Iron Ore Coal Grain Minor Bulk

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Key Indicators Still Supportive: Coal

Source: Bloomberg, April 2019

India Electricity Production China Electricity Production China Thermal Coal Total Inventory at Ports India Coal Stocks

  • 5

10 15 20 25 30 35 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

(Million Tons)

200 300 400 500 600 700

(TWh)

80 90 100 110 120 130 140 150 160 170 180

(TWh)

5 10 15 20 25 30 35 40 45 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

(Million Tons)

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Key Indicators Still Supportive: Steel

Global crude steel production excluding China was ~861.5 million tons in 2018, a 2.5% increase from 2017 Global Crude Steel Production Outside of China China Crude Steel Production Chinese crude steel production was ~ 927.5 million tons in 2018, a 7.3% increase from 2017

60 65 70 75 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19

(Million Tons)

55 60 65 70 75 80 85 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19

(Million Tons)

Source: Bloomberg, April 2019

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Key Indicators Still Supportive: Grain

Wheat, 181.2 Wheat, 178.7 Coarse Grain, 183.0 Coarse Grain, 201.0 Soybean, 153.0 Soybean, 154.4 Soymeal, 64.5 Soymeal, 66.8

100 200 300 400 500 600 700 2017/18 (est) 2018/19 (proj)

(Million Tonnes)

Global Agricultural Product Trade Forecast (1) China Soybean Imports by Country

(1) USDA Outlook, February 2019

  • USDA predicts a 3% increase in the global agricultural product trade in 2018/2019
  • China agreed to purchase an additional 10 million tons of US soybean cargoes due to

the positive development in the US-China trade negotiation

1 2 3 4 5 6 7 8 9 10 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Millions Tonnes From the US From Brazil From other countries

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Limited Current Orderbook for Mid-Sized Vessels

Source: Clarksons Research Services, April 2019

46 101 155 112 120 280 567 361 136 455 213 111 505 278 145

24

101 109

28

91 148 99 101 170 358 238 81 473 152 81 204 152 90 7 144 127 23 74 192 303 211 221 450 925 599 217 928 365 192 709 430 235 31 245 236 100 200 300 400 500 600 700 800 900 1,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

# of Vessels

Newbuilding Orders Per Year: 2001-2019

Handymax/Ultramax Panamax/Kamsarmax

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Scrapping Expected to Increase Due to Bulker Fleet Age Profile

Bulker Fleet Age Profile

23% 22% 26% 19% 53% 43% 43% 43% 14% 17% 14% 15% 6% 11% 9% 8% 4% 8% 9% 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cape Panamax Handymax Handysize 0-4 5-9 10-14 15-19 20+

Source: Clarksons Research Services, April 2019

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Limited Net Fleet Growth in Mid Size Segments

Source: Clarksons Research Services, April, 2019 & Company Estimates Ultramax scrapping assumption in 2019-2021: 10-year average of 2.7m dwt; Kamsarmax scrapping assumption in 2019-2021: 10-year average of 4.6m dwt Assuming slippage rate of 20% in 2019-2021

2.3% 2.3% 0.2%

  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

  • 15
  • 10
  • 5

5 10 15 20 25 30 35 40 45 50 (million tonnes) Demolition Delivery Net Fleet Growth

Forecast Actual