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Scorpio Bulkers announced financial results for the fourth quarter of 2020 and the sale of seven vessels

Emanuele A. Lauro, Chairman and CEO, Eneti

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

The Company also announced that on January 29, 2021 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.

Results for the Three and Twelve Months Ended December 31, 2020 and 2019

For the fourth quarter of 2020, the Company’s GAAP net loss was $465.6 million, or $40.90 per diluted share, including:

  • a write-down of assets of approximately $458.8 million, or $40.30 per diluted share, related to the Company’s previously announced plan to exit the dry bulk industry;
  • the write-off of $2.7 million, or $0.24 per diluted share, of deferred financing costs on repaid credit facilities related to vessels that have been sold; and
  • a non-cash gain of approximately $0.3 million and cash dividend income of $0.2 million, or $0.04 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.

For the same period in 2019, the Company’s GAAP net income was $15.1 million, or $2.15 per diluted share. These results include a non-cash gain of approximately $46.1 million and cash dividend income of $0.5 million, or $6.64 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a write-down of approximately $25.2 million, or $3.59 per diluted share, related to the classification of four Ultramax vessels as held for sale, and the write-off of deferred financing costs of approximately $0.2 million.

Total vessel revenues for the fourth quarter of 2020 were $50.1 million, compared to $60.3 million for the same period in 2019. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fourth quarter of 2020 was a loss of $445.1 million and EBITDA for the fourth quarter of 2019 was $41.5 million, respectively (see Non-GAAP Financial Measures below).

For the fourth quarter of 2020, the Company’s adjusted net loss was $4.1 million, or $0.36 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $458.8 million related to the Company’s previously announced plan to exit the dry bulk industry and the write-off of $2.7 million of deferred financing costs on repaid credit facilities related to vessels that have been sold. Adjusted EBITDA for the fourth quarter of 2020 was $13.7 million (see Non-GAAP Financial Measures below).

For the fourth quarter of 2019, the Company’s adjusted net income was $40.6 million, or $5.77 adjusted per diluted share, which excludes the write-down of approximately $25.2 million related to the classification of four Ultramax vessels as held for sale, and the write-off of deferred financing costs of approximately $0.2 million. Adjusted EBITDA for the fourth quarter of 2019 was $66.7 million (see Non-GAAP Financial Measures below).

For the twelve months of 2020, the Company’s GAAP net loss was $672.0 million, or $70.85 per diluted share, including:

  • a write-down on assets sold and classified as held for sale of approximately $495.4 million, or $52.24 per diluted share;
  • a loss of approximately $106.5 million and cash dividend income of $1.1 million, or $11.11 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.; and
  • a write-off of approximately $3.1 million, or $0.33 per diluted share, of deferred financing costs on the credit facilities related to repaid debt on vessels that have been sold.

For the twelve months of 2019, the Company’s GAAP net income was $44.7 million, or $6.42 per diluted share. These results include a non-cash gain of approximately $114.7 million and cash dividend income of $2.2 million, or $16.82 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a write-down of assets either sold or held for sale and write-off of related deferred financing costs totaling approximately $38.0 million, or $5.46 per diluted share, and the write-off of deferred financing costs of approximately $3.1 million, or $0.45 per diluted share.

Total vessel revenues for the twelve months of 2020 were $163.7 million, compared to $224.6 million for the same period in 2019.   EBITDA for the twelve months of 2020 was a loss of $579.7 million and EBITDA for the twelve months of 2019 was $158.3 million (see Non-GAAP Financial Measures below).

For the twelve months of 2020, the Company’s adjusted net loss was $173.5 million, or $18.28 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $495.4 million and the write-off of deferred financing costs on credit facilities related to sold vessels of approximately $3.1 million. Adjusted EBITDA for the twelve months of 2020 was a loss of $84.3 million (see Non-GAAP Financial Measures below).

For the twelve months of 2019, the Company’s adjusted net income was $82.6 million, or $11.88 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $37.3 million and the write-off of related deferred financing costs of approximately $0.7 million. Adjusted EBITDA for the twelve months of 2019 was $195.6 million (see Non-GAAP Financial Measures below).

TCE Revenue

TCE Revenue Earned during the Fourth 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 $10,303 TCE revenue per day.
  • Our Ultramax fleet (which includes both scrubber fitted and non-scrubber fitted vessels) earned an average of $10,637 TCE revenue per day.

Cash and Cash Equivalents

As of February 1, 2021, the Company had approximately $101.3 million in cash and cash equivalents.

Recent Significant Events

Dry Bulk Exit

During December 2020, the Company’s Board of Directors authorized the Company, as part of its transition to a sustainable future, to sell its remaining dry bulk vessels and exit the dry bulk sector during 2021. As a result of this decision, the Company recorded a write-down on its assets of $478.4 million during the third and fourth quarters of 2020 to bring the carrying value of the assets held for sale to their fair value less selling costs. The Company also wrote off $2.7 million of deferred financing costs during the fourth quarter of 2020 related to repaid debt on vessels sold and expects further write-offs in 2021 as debt is repaid.

Emanuele A. Lauro, Chairman and Chief Executive Officer, commented, “Since we announced our transition, we have concluded the sale of twelve vessels, and we have committed a further 25 vessels for sale within the first half of 2021. We expect to have committed all of our vessels for sale very shortly, allowing us to fully focus on our future in renewable energy.”

Sale of Seven Vessels

Today the Company announced that it has entered into an agreement with Star Bulk Carriers Corp. (“Star Bulk”) to sell SBI Pegasus, SBI Subaru and SBI Ursa, Ultramax bulk carriers built in 2015, SBI Capoeira and SBI Carioca, Kamsarmax bulk carriers built in 2015, and SBI Lambada and SBI Macarena, Kamsarmax bulk carriers built in 2016, for the aggregate consideration of three million common shares in Star Bulk which will be issued to the Company. As part of the transaction, which is expected to close within the first and second quarters of 2021, existing lease finance arrangements amounting to approximately $102.3 million would be assumed by Star Bulk. The sales are subject to approval from the existing financiers and the execution of definitive documentation.

The following table summarizes when the Company delivered or expects to deliver the vessels agreed to be sold to their respective buyers.

Ultramax Vessels Kamsarmax Vessels Total Vessels
Quarter # of Vessels Sales Price ($000’s) # of Vessels Sales Price ($000’s) # of Vessels Sales Price ($000’s)
Unsold Vessels at September 30, 2020 33 16 49
Q4 2020 5 $88,460 3 $54,865 8 $143,325
Q1 2021: Jan 1 – Feb 1 4 $72,652 0 $0 4 $72,652
Q1 2021: Feb 2 – Mar 31 13 $212,304 11 $204,627 24 $416,931 (1)(2)
Q2 2021 1 $15,000 0 $0 1 $15,000 (3)
Total 23 $388,416 14 $259,492 37 $647,908
Unsold Vessels at February 2, 2021 10 2 12

(1) Includes approximately $102.3 million of debt assumed by buyer
(2) Excludes 3.0 million shares of Star Bulk Carriers Corp. (SBLK) common stock
(3) Excludes a warrant for 212,315 shares of Eagle Bulk Shipping Inc. (EGLE) common stock

Quarterly Cash Dividend

In the fourth quarter of 2020, the Company’s Board of Directors declared and the Company paid a quarterly cash dividend of $0.05 per share totaling approximately $0.6 million.

On January 29, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on or about March 12, 2021, to all shareholders of record as of February 12, 2021. As of February 1, 2021, 11,269,473 shares were outstanding.

Share Repurchase Program

During the fourth quarter of 2020, the Company repurchased approximately 1.1 million shares of the Company’s common stock, at an average cost of $15.52 per share. The Company subsequently repurchased approximately 41,000 shares of the Company’s common stock at an average cost of $16.96 per share from January 1, 2021 through February 1, 2021. These repurchases, totaling $17.4 million, were made under the Board of Directors authorized share repurchase program and funded from available cash resources. As of February 1, 2021, the Company had $32.6 million authorized remaining available under the authorized share repurchase program.

COVID-19

Since the beginning of the calendar year 2020, the ongoing outbreak of the novel coronavirus (COVID-19) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in numerous actions taken by governments and governmental agencies in an attempt to 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 and commodities markets. With respect to our current drybulk operations, 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, including its planned transition towards marine-based renewable energy, will depend on future developments, which are highly uncertain and cannot be predicted.

Debt Overview

The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of December 31, 2020 and February 1, 2021, are as follows (dollars in thousands):

As of
December 31, 2020
As of February 1, 2021
Credit Facility Amount Outstanding
$85.5 Million Credit Facility $ 21,974 $ 10,988
$30.0 Million Credit Facility 24,881 24,881
$60.0 Million Credit Facility 23,746 23,746
$184.0 Million Credit Facility 49,641 36,968
$34.0 Million Credit Facility 30,536 30,536
$90.0 Million Credit Facility 22,340 22,340
$19.6 Million Lease Financing – SBI Rumba 15,614 15,506
$19.0 Million Lease Financing – SBI Tango 16,109 16,008
$19.0 Million Lease Financing – SBI Echo 16,259 16,163
$20.5 Million Lease Financing – SBI Hermes 17,763 17,654
$21.4 Million Lease Financing – SBI Samba 18,960 18,839
CMBFL Lease Financing 102,282 102,282
$45.0 Million Lease Financing – SBI Virgo & SBI Libra 39,375 39,035
AVIC Lease Financing 101,957 74,431
$67.3 Million Lease Financing 59,779 59,301
Total $ 561,216 $ 508,678

Financial Results for the Three Months Ended December 31, 2020 Compared to the Three Months Ended December 31, 2019

For the fourth quarter of 2020, the Company’s GAAP net loss was $465.6 million, or $40.90 per diluted share, compared to a GAAP net income of $15.1 million, or $2.15 per diluted share, for the same period in 2019. Results for the fourth quarter of 2020 include:

  • a write-down of assets of approximately $458.8 million, or $40.30 per diluted share, related to the Company’s previously announced plan to exit the dry bulk industry;
  • the write-off of $2.7 million, or $0.24 per diluted share, of deferred financing costs on repaid credit facilities related to vessels that have been sold; and
  • a non-cash gain of approximately $0.3 million and cash dividend income of $0.2 million, or $0.04 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.

EBITDA for the fourth quarters of 2020 and 2019 were a loss of $445.1 million and a gain of $41.5 million, respectively (see Non-GAAP Financial Measures below).

For the fourth quarter of 2020, the Company’s adjusted net loss was $4.1 million, or $0.36 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $458.8 million related to the Company’s previously announced plan to exit the dry bulk industry and the write-off of $2.7 million of deferred financing costs on repaid credit facilities related to vessels that have been sold. Adjusted EBITDA for the fourth quarter of 2020 was $13.7 million (see Non-GAAP Financial Measures below).

For the fourth quarter of 2019, the Company’s adjusted net income was $40.6 million, or $5.77 adjusted per diluted share, which excludes the write-down of approximately $25.2 million related to the classification of four Ultramax vessels as held for sale, and the write-off of deferred financing costs of approximately $0.2 million. Adjusted EBITDA for the fourth quarter of 2019 was $66.7 million (see Non-GAAP Financial Measures below).

The Company’s vessel revenues for the fourth quarter of 2020 were $50.1 million, compared to $60.3 million in the fourth quarter of 2019. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the fourth quarter of 2020 was $44.6 million, a decrease of $12.3 million from the prior year period.

Total operating expenses for the fourth quarter of 2020 were $506.6 million, including the write-down of assets of approximately $458.8 million, compared to total operating expenses of $80.9 million in the fourth quarter of 2019, which also included a write-down of assets of $25.2 million.

Ultramax Operations

Three Months Ended December 31,
Dollars in thousands 2020 2019 Change % Change
TCE Revenue:
Vessel revenue $ 29,941 $ 35,153 $ (5,212 ) (15 )
Voyage expenses 2,391 1,073 1,318 123
TCE Revenue $ 27,550 $ 34,080 $ (6,530 ) (19 )
Operating expenses:
Vessel operating costs 14,450 16,343 (1,893 ) (12 )
Charterhire expense 996 (996 ) (100 )
Vessel depreciation 6,504 8,824 (2,320 ) (26 )
General and administrative expense 915 1,021 (106 ) (10 )
Loss / write-down on assets held for sale 319,628 25,248 294,380 1,166
Total operating expenses $ 341,497 $ 52,432 $ 289,065 551
Operating loss $ (313,947 ) $ (18,352 ) $ (295,595 ) 1,611

Vessel revenue for the Company’s Ultramax Operations decreased to $29.9 million for the fourth quarter of 2020 from $35.2 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $27.6 million for the fourth quarter of 2020 compared to $34.1 million for the prior year period. The Company’s Ultramax fleet consisted of a day-weighted average of 31 vessels owned or finance leased during the fourth quarter of 2020 and 35 vessels owned or finance leased and one vessel time chartered-in during the fourth quarter of 2019. TCE revenue per day was $10,637 and $11,244 for the fourth quarters of 2020 and 2019, respectively.

Three Months Ended December 31,
Ultramax Operations: 2020 2019 Change % Change
TCE Revenue (in thousands) $ 27,550 $ 34,080 $ (6,530 ) (19 )
TCE Revenue / Day $ 10,637 $ 11,244 $ (607 ) (5 )
Revenue Days 2,590 3,031 (441 ) (15 )

The Company’s Ultramax Operations vessel operating costs were $14.5 million for the fourth quarter of 2020, including approximately $1.1 million of takeover costs and contingency expenses, compared with vessel operating costs of $16.3 million in the prior year period, relating to the 31 and 35 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses for the fourth quarter of 2020 decreased to $4,757 from $4,871 in the prior year period.

The Company did not time charter-in any Ultramax vessels during the fourth quarter of 2020. During the fourth quarter of 2019, one vessel was time chartered-in resulting in an expense of $1.0 million.

Ultramax Operations depreciation decreased from $8.8 million in the fourth quarter of 2019 to $6.5 million in the fourth quarter of 2020, when all of the Company’s remaining Ultramax vessels were classified as held for sale and depreciation of the assets ceased.

General and administrative expense for the Company’s Ultramax Operations, which consists primarily of administrative service fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions, was approximately $0.9 million for the fourth quarter of 2020 and $1.0 million in the prior year period.

During the fourth quarter of 2020, all Ultramax vessels remaining in the Company’s fleet were classified as held for sale as the Company announced its intention to exit the dry bulk industry resulting in a charge of $319.6 million.

Kamsarmax Operations

Three Months Ended December 31,
Dollars in thousands 2020 2019 Change % Change
TCE Revenue:
Vessel revenue $ 20,111 $ 25,111 $ (5,000 ) (20 )
Voyage expenses 3,100 2,281 819 36
TCE Revenue $ 17,011 $ 22,830 $ (5,819 ) (25 )
Operating expenses:
Vessel operating costs 6,933 8,086 (1,153 ) (14 )
Charterhire expense 5,559 5,458 101 2
Vessel depreciation 2,752 4,597 (1,845 ) (40 )
General and administrative expense 423 478 (55 ) (12 )
Loss / write-down on assets held for sale 139,178 139,178 NA
Total operating expenses $ 154,845 $ 18,619 $ 136,226 732
Operating (loss) income $ (137,834 ) $ 4,211 $ (142,045 ) 3,373

Vessel revenue for the Company’s Kamsarmax Operations decreased to $20.1 million in the fourth quarter of 2020 from $25.1 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $17.0 million for the fourth quarter of 2020 associated with a day-weighted average of 14 vessels owned or finance leased and five vessels time chartered-in, compared to $22.8 million for the prior year period associated with a day-weighted average of 17 vessels owned or finance leased and four vessels time chartered-in. TCE revenue per day was $10,303 and $11,934 for the fourth quarters of 2020 and 2019, respectively.

Three Months Ended December 31,
Kamsarmax Operations: 2020 2019 Change % Change
TCE Revenue (in thousands) $ 17,011 $ 22,830 $ (5,819 ) (25 )
TCE Revenue / Day $ 10,303 $ 11,934 $ (1,631 ) (14 )
Revenue Days 1,651 1,913 (262 ) (14 )

Kamsarmax Operations vessel operating costs were $6.9 million for the fourth quarter of 2020, including approximately $0.6 million of takeover costs and contingency expenses, compared with vessel operating costs of $8.1 million in the prior year period, relating to 14 and 17 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due primarily to the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses were $4,967 for the both the fourth quarters of 2020 and 2019.

Kamsarmax Operations charterhire expense was $5.6 million in the fourth quarter of 2020, compared to $5.5 million in the prior year period. Five vessels were time chartered-in during both periods, however four of them are chartered-in at index linked rates, causing the fluctuation from period to period.

Kamsarmax Operations depreciation decreased to $2.8 million in the fourth quarter of 2020 from $4.6 million in the fourth quarter of 2019, as all of the Company’s remaining Kamsarmax vessels were classified as held for sale and depreciation of the assets ceased during the fourth quarter of 2020.

General and administrative expense for the Company’s Kamsarmax Operations was $0.4 million and $0.5 million for the fourth quarters of 2020 and 2019, respectively. The expense consists primarily of administrative services fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions.

During the fourth quarter of 2020, all Kamsarmax vessels remaining in the Company’s fleet were classified as held for sale as the Company announced its intention to exit the dry bulk industry resulting in a charge of $139.2 million.

Corporate

Certain general and administrative expenses that the Company incurs, as well as all of its financial expenses and investment income or losses, are not attributable to a specific segment. Accordingly, these costs are not allocated to the Company’s segments. These general and administrative expenses, including compensation, audit, legal and other professional fees, as well as the costs of being a public company, such as director fees, were $4.7 million and $6.5 million in the fourth quarters of 2020 and 2019, respectively. The decrease from the prior year is due primarily to a reduction in compensation costs.

The Company recorded a non-cash gain of approximately $0.3 million for the fourth quarter of 2020 and received cash dividend income of $0.2 million from its equity investment in Scorpio Tankers Inc. During the fourth quarter of 2019, the Company recorded a non-cash gain of approximately $46.1 million as well as cash dividend income of $0.5 million also related to its equity investment in Scorpio Tankers Inc.

Financial expenses, net of interest income decreased to $9.4 million in the fourth quarter of 2020 from $10.9 million in the prior year period due to lower debt balances and LIBOR rates, despite writing off $2.7 million in deferred financing costs relating to repaid debt on vessels sold.

Financial Results for the Twelve Months Ended December 31, 2020 Compared to the Twelve Months Ended December 31, 2019

For the twelve months of 2020, the Company’s GAAP net loss was $672.0 million, or $70.85 per diluted share, including: a write-down on assets sold and classified as held for sale of approximately $495.4 million, or $52.24 per diluted share, a loss of approximately $106.5 million and cash dividend income of $1.1 million, or $11.11 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., and a write-off of approximately $3.1 million, or $0.33 per diluted share, of deferred financing costs on the credit facilities related to repaid debt on vessels that have been sold.

For the twelve months of 2019, the Company’s GAAP net income was $44.7 million, or $6.42 per diluted share. These results include a non-cash gain of approximately $114.7 million and cash dividend income of $2.2 million, or $16.82 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc., a write-down of assets either sold or held for sale and write-off of related deferred financing costs totaling approximately $38.0 million, or $5.46 per diluted share, and the write-off of deferred financing costs of approximately $3.1 million, or $0.45 per diluted share.

For the twelve months of 2020, the Company’s adjusted net loss was $173.5 million, or $18.28 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $495.4 million and the write-off of deferred financing costs on credit facilities related to sold vessels of approximately $3.1 million. Adjusted EBITDA for the twelve months of 2020 was a loss of $84.3 million (see Non-GAAP Financial Measures below).

For the twelve months of 2019, the Company’s adjusted net income was $82.6 million, or $11.88 adjusted per diluted share, which excludes the impact of the write-down of assets of approximately $37.3 million and the write-off of related deferred financing costs of approximately $0.7 million. Adjusted EBITDA for the twelve months of 2019 was $195.6 million (see Non-GAAP Financial Measures below).

The Company’s vessel revenues for the twelve months of 2020 were $163.7 million compared to $224.6 million in the twelve months of 2019. The Company’s TCE revenue (see Non-GAAP Financial Measures below) for the twelve months of 2020 was $153.7 million, a decrease of $66.7 million from the prior year period.

Total operating expenses for the twelve months of 2020 were $693.4 million, including the write-down of vessels of approximately $495.4 million, compared to $246.0 million in the twelve months of 2019, which included a charge related to the classification of vessels as sold or held for sale of approximately $37.3 million.

Ultramax Operations

Twelve Months Ended December 31,
Dollars in thousands 2020 2019 Change % Change
TCE Revenue:
Vessel revenue $ 96,685 $ 138,387 $ (41,702 ) (30 )
Voyage expenses 5,178 1,512 3,666 242
TCE Revenue $ 91,507 $ 136,875 $ (45,368 ) (33 )
Operating expenses:
Vessel operating costs 62,264 67,305 (5,041 ) (7 )
Charterhire expense 2,487 3,726 (1,239 ) (33 )
Vessel depreciation 32,003 35,932 (3,929 ) (11 )
General and administrative expense 3,908 4,152 (244 ) (6 )
Loss / write-down on assets held for sale 327,242 29,936 297,306 993
Total operating expenses $ 427,904 $ 141,051 $ 286,853 203
Operating loss $ (336,397 ) $ (4,176 ) $ (332,221 ) 7,955

Vessel revenue for the Company’s Ultramax Operations decreased to $96.7 million for the twelve months of 2020 from $138.4 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures below) for the Company’s Ultramax Operations was $91.5 million for the twelve months of 2020 compared to $136.9 million for the prior year period. The Company’s Ultramax fleet consisted of a day-weighted average of 33 vessels owned or finance leased and one vessel time chartered-in during the twelve months of 2020 and 37 vessels owned or finance leased and one vessel time chartered-in during the twelve months of 2019. TCE revenue per day was $10,879 and $10,291 for the twelve months of 2020 and 2019, respectively.

Twelve Months Ended December 31,
Ultramax Operations: 2020 2019 Change % Change
TCE Revenue (in thousands) $ 91,507 $ 136,875 $ (45,368 ) (33 )
TCE Revenue / Day $ 10,879 $ 10,291 $ 588 6
Revenue Days 8,411 13,300 (4,889 ) (37 )

The Company’s Ultramax Operations vessel operating costs were $62.3 million for the twelve months of 2020, including approximately $3.7 million of takeover costs and contingency expenses, compared with vessel operating costs of $67.3 million in the prior year period, relating to the 33 and 37 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to primarily to the reduction in fleet size and the outbreak of COVID-19, which for most of the year reduced crew travel and the purchase of stores and spares and the performance of repairs. Daily operating costs excluding takeover costs and contingency expenses for the twelve months of 2020 remained relatively flat at $4,858 compared to $4,873 in the prior year period.

Charterhire expense for the Company’s Ultramax Operations was approximately $2.5 million and $3.7 million for the twelve months of 2020 and 2019, respectively, and relates to the vessel that the Company time chartered-in until August 2020 when the vessel was redelivered to its owner.

Ultramax Operations depreciation decreased from $35.9 million to $32.0 million for the twelve months of 2019 and 2020, respectively due to the decrease in fleet size as a result of vessel sales and the classification of all of the Company’s remaining Ultramax vessels as held for sale (upon which depreciation ceases) as the Company intends to exit the dry bulk industry.

General and administrative expense for the Company’s Ultramax Operations, which consists primarily of administrative service fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions, was approximately $3.9 million for the twelve months of 2020 and $4.2 million in the prior year period.

During the twelve months of 2020, the Company recorded a write-down on assets of $327.2 million related to the sale of or classification of the Company’s Ultramax vessels as held for sale, as the Company announced its intention to exit the dry bulk industry.

Kamsarmax Operations

Twelve Months Ended December 31,
Dollars in thousands 2020 2019 Change % Change
TCE Revenue:
Vessel revenue $ 67,047 $ 86,192 $ (19,145 ) (22 )
Voyage expenses 4,831 2,688 2,143 80
TCE Revenue $ 62,216 $ 83,504 $ (21,288 ) (25 )
Operating expenses:
Vessel operating costs 30,542 33,816 (3,274 ) (10 )
Charterhire expense 18,620 13,498 5,122 38
Vessel depreciation 16,366 18,292 (1,926 ) (11 )
General and administrative expense 1,891 2,083 (192 ) (9 )
Loss / write-down on assets held for sale 168,171 7,353 160,818 2,187
Total operating expenses $ 235,590 $ 75,042 $ 160,548 214
Operating (loss) income $ (173,374 ) $ 8,462 $ (181,836 ) 2,149

Vessel revenue for the Company’s Kamsarmax Operations decreased to $67.0 million in the twelve months of 2020 from $86.2 million in the prior year period.

TCE revenue (see Non-GAAP Financial Measures) for the Company’s Kamsarmax Operations was $62.2 million for the twelve months of 2020 associated with a day-weighted average of 16 vessels owned or finance leased and five vessels time chartered-in, compared to $83.5 million for the prior year period associated with a day-weighted average of 18 vessels owned or finance leased and three vessels time chartered-in. TCE revenue per day was $11,891 and $11,671 for the twelve months of 2020 and 2019, respectively.

Twelve Months Ended December 31,
Kamsarmax Operations: 2020 2019 Change % Change
TCE Revenue (in thousands) $ 62,216 $ 83,504 $ (21,288 ) (25 )
TCE Revenue / Day $ 11,891 $ 11,671 $ 220  2
Revenue Days 5,232 7,155 (1,923 ) (27 )

Kamsarmax Operations vessel operating costs were $30.5 million for the twelve months of 2020, including approximately $1.9 million of takeover costs and contingency expenses, compared with vessel operating costs of $33.8 million in the prior year period, relating to 16 and 18 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due primarily to the reduction in fleet size and the outbreak of COVID-19, which for most of the year reduced crew travel and the purchase of stores and spares and the performance of repairs. Daily operating costs excluding takeover costs and contingency expenses for the twelve months of 2020 decreased to $4,937 from $4,986 in the prior year period.

Kamsarmax Operations charterhire expense was $18.6 million in the twelve months of 2020, relating to five vessels the Company began time chartering-in during 2019. The year over year increase reflects the full year impact of the cost in 2020.

Kamsarmax Operations depreciation was $16.4 million and $18.3 million in the twelve months of 2020 and 2019, respectively, due to the decrease in fleet size as a result of vessel sales and the classification of all of the Company’s remaining Kamsarmax vessels as held for sale (upon which depreciation ceases) as the Company intends to exit the dry bulk industry.

General and administrative expense for the Company’s Kamsarmax Operations was $1.9 million for the twelve months of 2020 and $2.1 million in the twelve months of 2019. The expense consists primarily of administrative services fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions.

During the twelve months of 2020, the Company recorded a write down on assets held for sale of $168.2 million related to the sale of or classification of the Company’s Kamsarmax vessels as held for sale, as the Company announced its intention to exit the dry bulk industry.

Corporate

Certain general and administrative expenses the Company incurs, as well as all of its financial expenses and investment income or losses, are not attributable to a specific segment. Accordingly, these costs are not allocated to the Company’s segments. These general and administrative expenses, including compensation, audit, legal and other professional fees, as well as the costs of being a public company, such as director fees, were $19.8 million and $25.7 million in the twelve months of 2020 and 2019, respectively. The decrease from the prior year is due primarily to a reduction in compensation costs.

The Company recorded a loss of approximately $106.5 million for the twelve months of 2020 and received cash dividend income of $1.1 million from its equity investment in Scorpio Tankers Inc. During the twelve months of 2019, the Company recorded a non-cash gain of approximately $114.7 million as well as cash dividend income of $2.2 million also related to its equity investment in Scorpio Tankers Inc.

Financial expenses, net of interest income decreased to $36.6 million in the twelve months of 2020 from $50.7 million in the prior year period due to lower LIBOR rates, as well as lower debt levels resulting from the sale of vessels and the redemption of the Company’s 7.50% Senior Unsecured Notes in August 2019.

Unaudited
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
Revenue:
Vessel revenue $ 50,052 $ 60,264 $ 163,732 $ 224,579
Operating expenses:
Voyage expenses 5,491 3,354 10,009 4,200
Vessel operating costs 21,383 24,429 92,806 101,121
Charterhire expense 5,559 6,454 21,107 17,224
Vessel depreciation 9,256 13,421 48,369 54,224
General and administrative expenses 6,081 7,973 25,671 31,973
Loss / write-down on assets sold or held for sale 458,806 25,248 495,413 37,289
Total operating expenses 506,576 80,879 693,375 246,031
Operating loss (456,524 ) (20,615 ) (529,643 ) (21,452 )
Other income (expense):
Interest income 20 224 210 1,450
Income (loss) from equity investments 474 46,697 (105,384 ) 116,925
Foreign exchange (loss) income (105 ) (81 ) (348 ) (115 )
Financial expense, net (9,466 ) (11,141 ) (36,818 ) (52,154 )
Total other (expense) income (9,077 ) 35,699 (142,340 ) 66,106
Net (loss) income $ (465,601 ) $ 15,084 $ (671,983 ) $ 44,654
(Loss) earnings per share:
Basic $ (40.90 ) $ 2.20 $ (70.85 ) $ 6.56
Diluted $ (40.90 ) $ 2.15 $ (70.85 ) $ 6.42
Basic weighted average number of common shares outstanding 11,385 6,868 9,484 6,809
Diluted weighted average number of common shares outstanding 11,385 7,030 9,484 6,953

 

Unaudited
December 31, 2020 December 31, 2019
Assets
Current assets
Cash and cash equivalents $ 84,002 $ 42,530
Accounts receivable 21,086 13,209
Prepaid expenses and other current assets 12,716 9,547
Total current assets 117,804 65,286
Non-current assets
Vessels, net 1,271,993
Assets held for sale 708,097 77,536
Equity investments 24,116 173,298
Deferred financing costs, net 1,143 2,982
Other assets 17,035 74,464
Total non-current assets 750,391 1,600,273
Total assets $ 868,195 $ 1,665,559
Liabilities and shareholders’ equity
Current liabilities
Bank loans, net $ 13,226 $ 44,956
Capital lease obligations 32,677 29,159
Accounts payable and accrued expenses 41,113 49,718
Total current liabilities 87,016 123,833
Non-current liabilities
Bank loans, net 157,511 332,613
Capital lease obligations 351,070 321,646
Other liabilities 12,500
Total non-current liabilities 508,581 666,759
Total liabilities 595,597 790,592
Shareholders’ equity
Preferred shares, $0.01 par value per share; 50,000,000 shares authorized; no shares issued or outstanding
Common shares, $0.01 par value per share; authorized 31,875,000 and 21,250,000 shares as of December 31, 2020 and December 31, 2019; outstanding 11,310,073 shares as of December 31, 2020 and 7,248,180 as of December 31, 2019 859 809
Paid-in capital 1,803,431 1,717,144
Common shares held in treasury, at cost; 1,934,092 shares and 856,785 shares at December 31, 2020 and December 31, 2019, respectively (73,444 ) (56,720 )
Accumulated deficit (1,458,248 ) (786,266 )
Total shareholders’ equity 272,598 874,967
Total liabilities and shareholders’ equity $ 868,195 $ 1,665,559

 

Year Ended December 31,
2020 2019
Operating activities
Net (loss) income $ (671,983 ) $ 44,654
Adjustment to reconcile net (loss) income to net cash provided by
operating activities:
Restricted share amortization 7,317 8,956
Vessel depreciation 48,369 54,224
Amortization of deferred financing costs 3,667 6,915
Write-off of deferred financing costs 3,088 681
Loss / write-down on assets held for sale 428,833 33,389
Net unrealized losses (gains) on investments 106,471 (114,762 )
Dividend income on equity investment (1,087 ) (2,163 )
Drydocking expenditure (22,597 ) (5,352 )
Changes in operating assets and liabilities:
Increase in accounts receivable (7,877 ) (197 )
Decrease (increase) in prepaid expenses and other assets 37,872 10,564
(Decrease) increase in accounts payable and accrued expenses 29,093 (3,029 )
Net cash (used in) provided by operating activities (38,834 ) 33,880
Investing activities
Equity investment (1,500 )
Sale of equity investment 42,711 1,547
Dividend income on equity investment 1,087 2,163
Proceeds from sale of assets held for sale 194,066 84,241
Scrubber payments (42,359 ) (32,610 )
Net cash provided by investing activities 195,505 53,841
Financing activities
Proceeds from issuance of common stock 82,254
Proceeds from issuance of long-term debt 186,671 306,710
Repayments of long-term debt (364,165 ) (409,002 )
Common shares repurchased (16,724 )
Dividends paid (3,235 ) (5,748 )
Debt issue costs paid (4,646 )
Net cash used in financing activities (115,199 ) (112,686 )
Increase (decrease) in cash and cash equivalents 41,472 (24,965 )
Cash and cash equivalents, beginning of period 42,530 67,495
Cash and cash equivalents, end of period $ 84,002 $ 42,530

 

Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
Time charter equivalent revenue ($000’s) (1):
Vessel revenue $ 50,052 $ 60,264 $ 163,732 $ 224,579
Voyage expenses (5,491 ) (3,354 ) (10,009 ) (4,200 )
Time charter equivalent revenue $ 44,561 $ 56,910 $ 153,723 $ 220,379
Time charter equivalent revenue attributable to:
Kamsarmax $ 17,011 $ 22,830 $ 62,216 $ 83,504
Ultramax 27,550 34,080 91,507 136,875
$ 44,561 $ 56,910 $ 153,723 $ 220,379
Revenue days:
Kamsarmax 1,651 1,913 5,232 7,155
Ultramax 2,590 3,031 8,411 13,300
Combined 4,241 4,944 13,643 20,455
TCE per revenue day (1):
Kamsarmax $ 10,303 $ 11,934 $ 11,891 $ 11,671
Ultramax $ 10,637 $ 11,244 $ 10,879 $ 10,291
Combined $ 10,507 $ 11,511 $ 11,268 $ 10,774

(1)   The Company defines Time Charter Equivalent (TCE) revenue as vessel revenues less voyage expenses. Such TCE revenue, divided by the number of the Company’s available days during the period, or revenue days, is TCE per revenue day, which is consistent with industry standards. TCE per revenue day is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per-day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts.

The Company reports TCE revenue, a non-GAAP financial measure, because (i) the Company believes it provides additional meaningful information in conjunction with vessel revenues and voyage expenses, the most directly comparable U.S. GAAP measures, (ii) it assists the Company’s management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance, (iii) it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) the Company believes that it presents useful information to investors. See Non-GAAP Financial Measures below.

Fleet List as of February 1, 2021

Vessel Name Year Built DWT Vessel Type Scrubber Installed ?
SBI Samba 2015 84,000 Kamsarmax Yes
SBI Rumba 2015 84,000 Kamsarmax Yes
SBI Capoeira * 2015 82,000 Kamsarmax No
SBI Carioca * 2015 82,000 Kamsarmax Yes
SBI Lambada * 2016 82,000 Kamsarmax No
SBI Reggae * 2016 82,000 Kamsarmax No
SBI Zumba * 2016 82,000 Kamsarmax Yes
SBI Macarena * 2016 82,000 Kamsarmax Yes
SBI Parapara * 2017 82,000 Kamsarmax Yes
SBI Mazurka * 2017 82,000 Kamsarmax Yes
SBI Swing * 2017 82,000 Kamsarmax Yes
SBI Jive * 2017 82,000 Kamsarmax Yes
SBI Lynx * 2018 82,000 Kamsarmax Yes
    Total Kamsarmax 1,070,000 
SBI Antares * 2015 61,000 Ultramax Yes
SBI Athena 2015 64,000 Ultramax Yes
SBI Bravo * 2015 61,000 Ultramax Yes
SBI Leo * 2015 61,000 Ultramax Yes
SBI Echo 2015 61,000 Ultramax Yes
SBI Lyra * 2015 61,000 Ultramax Yes
SBI Tango 2015 61,000 Ultramax No
SBI Maia * 2015 61,000 Ultramax Yes
SBI Hydra * 2015 61,000 Ultramax Yes
SBI Subaru * 2015 61,000 Ultramax Yes
SBI Pegasus * 2015 64,000 Ultramax No
SBI Ursa * 2015 61,000 Ultramax No
SBI Thalia 2015 64,000 Ultramax No
SBI Cronos 2015 61,000 Ultramax No
SBI Orion * 2015 64,000 Ultramax No
SBI Achilles 2016 61,000 Ultramax No
SBI Hercules 2016 64,000 Ultramax No
SBI Perseus 2016 64,000 Ultramax Yes
SBI Hermes 2016 61,000 Ultramax No
SBI Tethys * 2016 61,000 Ultramax Yes
SBI Phoebe * 2016 64,000 Ultramax Yes
SBI Libra * 2017 64,000 Ultramax Yes
SBI Aries * 2015 64,000 Ultramax Yes
SBI Pisces 2016 64,000 Ultramax No
SBI Virgo * 2017 64,000 Ultramax Yes
     Total Ultramax 1,558,000 
Total Owned or Finance Leased Vessels DWT 2,628,000 
*Agreed to be sold.

Time chartered-in vessels

The Company currently time charters-in five Kamsarmax vessels. The terms of the contracts are summarized as follows:

Vessel Type Year Built DWT Country of Build Daily Base Rate Earliest Expiry
Kamsarmax 2019 81,100 China Variable 10-Mar-21 (1 )
Kamsarmax 2019 81,100 China Variable 7-Apr-21 (2 )
Kamsarmax 2018 82,000 China $ 12,500 25-June-21 (3 )
Kamsarmax 2018 81,100 China Variable 13-Jul-21 (4 )
Kamsarmax 2015 81,100 China Variable 22-Jul-21 (5 )
Total TC DWT 406,400 

(1)   This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the Baltic Exchange’s 74,000 DWT Panamax Index, or the BPI. The vessel was delivered to the Company in March 2019.

(2)   This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the BPI. The vessel was delivered to the Company in May 2019.

(3)   This vessel has been time chartered-in for 24 months at $12,000 per day for the first 12 months and at $12,500 per day for the second 12 months. The Company has the option to extend this time charter for 12 months at $13,000 per day and an additional 12 months at $14,500 per day. The vessel was delivered to the Company in July 2019.

(4)   This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the BPI. The vessel was delivered to the Company in July 2019.

(5)   This vessel has been time chartered-in for 24 to 27 months at the Company’s option at 118% of the BPI. The vessel was delivered to the Company in August 2019.

Source: Scorpio Bulkers