was RESULTS Q1-2018 May 30, 2018
FORWARD-LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are including this cautionary statement in connection with this safe harbor legislation. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "will," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Golden Ocean Group Limited with the U.S. Securities and Exchange Commission. Certain third-party shipping, steel and global industry information, statistics and charts contained herein have been derived from several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean Group Limited has not undertaken any independent investigation to confirm the accuracy or completeness of such information 2
COMPANY UPDATE
HIGHLIGHTS The Company reports net income of $16.7 million and earnings per share of $0.12 for the first quarter of 2018, compared with net income of $27.1 million and earnings per share of $0.19 for the fourth quarter of 2017 Adjusted EBITDA in the first quarter was $53.3 million, compared with $65.3 million in the fourth quarter of 2017 and $17.5 million in the first quarter 2017 Completed the newbuilding program by taking delivery of the remaining five Capesize newbuildings. Took delivery of the Golden Monterrey, a Capesize vessel acquired in October 2017 Agreed a $120 million loan facility to refinance 10 vessels at favorable terms Agreed to sell the Golden Eminence, a Panamax vessel, for $14.7 million to an unrelated third party Announces a cash dividend of $0.10 per share for the first quarter 4
PROFIT & LOSS (in thousands of $) Q1 2018 Q4 2017 Quarterly Variance Operating revenues 147,888 150,712 (2,824) Voyage expenses (30,841) (28,949) (1,893 Net revenues 117,047 121,763 (4,717) Ship operating expenses (37,279) (36,383) (896) Administrative expenses (3,668) (3,279) (389) Charter hire expenses (27,642) (20,382) (7,260) Depreciation / impairment (22,113) (20,873) (1,239) Other gains (losses) 65 (505) 570 Net operating expenses (90,637) (81,423) (9,214) Net operating income (loss) 26,409 40,340 (13,931) Net financial expenses (15,903) (15,619) 284 Derivatives and other financial income (loss) 6,190 2,386 (3,804) Net income before taxation (loss) 16,696 27,107 (10,411) Income Tax expense 13 (16) 23 Net income (loss) 16,683 27,124 (17,878) Earnings (loss) per share: basic and diluted $0.12 $0.19 Adjusted EBITDA 53,273 65,325 (12,053) TCE per day 15,593 16,444 (851) 5
CASH FLOW DURING THE QUARTER Q1 2018 150.0 28.5 372.0 (144.6) (24.8) (14.4) (7.5) (0.8) (358.4) Cash at beginning of period (1) Cash from operations New debt Final installments for NBs Repayment of debt Dividends paid Vessel acquisition costs Other Cash at end of period (1) (1) INCLUDES RESTRICTED CASH 6
BALANCE SHEET (in thousands of $) Q1 2018 Q4 2017 Quarterly Variance ASSETS Short term Cash and cash equivalents (incl. restricted cash) 306,192 317,139 (10,947) Other current assets 144,019 127,361 16,658 Long term Restricted cash 52,193 54,845 (2,652) Vessels (incl. newbuildings and held-for-sale) 2,489,836 2,320,730 169,106 Other long term assets 44,988 49,983 (4,995) Total assets 3,037,228 2,870,058 167,170 LIABILITIES AND EQUITY Short term Current portion of long term debt and capital lease 306,636 114,910 191,726 Other current liabilities 71,284 66,817 4,467 Long term Long term debt and capital lease 1,143,060 1,186,223 (43,163) Other long term liabilities 7,944 8,059 (115) Equity 1,508,304 1,494,049 14,255 Total liabilities and equity 3,037,228 2,870,058 167,170 7
# of vessels Expected cost by year ($ millions) MODERN, EFFICIENT FLEET Fully-burdened Opex includes dry docking and management fees One vessel dry docked in the first quarter of 2018, and five more to be docked later this year Average fleet age of ~5 years and majority of the fleet designed with fuel-efficient engines and ballast water treatment systems OPERATING EXPENSES (Q1 2018) BWTS INSTALLATION SCHEDULE 6 000 45 45 5 000 205 40 40 35 35 4 000 30 30 3 000 25 25 5 100 5 200 5 200 20 20 2 000 15 15 1 000 10 5 $4 $9 $8 $6 $7 $7 10 5 - Supramax Panamax Capesize - - OPEX Drydock & Surveys # of vessels Expected cost 8
Supramax Panamax Capesize FLEET DEPLOYMENT Fleet heavily skewed towards spot exposure to capture market upside CHARTERING PROFILE 2018 2019 2020 2021 12 vessels at $17,960 12 fixed 34 vessels trading spot 6 vessels at $20,750 6 fixed 4 fixed 23* vessels trading spot 3 vessels trading spot NOTE: CHARTERING PROFILE AS OF FEBRUARY 2018; GROSS RATES SHOWN ARE FOR 2018; FOUR PANAMAX CHARTERS EXPIRE BETWEEN JANUARY 2020 AND DECEMBER 2021 * GOLDEN EMINENCE TO BE DELIVERED TO THE NEW OWNER LATER THIS YEAR 9
USD (thousands) CREDIT FACILITIES CREDIT FACILITY SUMMARY (1) RECOURSE DEBT 1 600 1 400 1 200 1 000 974 200 120 191 181 311 245 311 1,165 245 1,201 Selected covenants Resumed ordinary amortization of 16.5 million per quarter No further cash sweep or outstanding deferred debt 125-135% MVC Convertible Bond matures in January 2019 NON-RECOURSE DEBT Selected covenants through July 1, 2019 No amortization payments Cash sweep mechanism 105% MVC 800 600 Selected covenants post July 1, 2019 Amortization payments resume 125-135% MVC 400 200 0 900 Recourse debt New loan Convertible loan Non-recourse debt Recourse Non-recourse Total 358 Cash RECENT DEVELOPMENTS New $120 million loan facility to refinance $58.3 million due under two loan facilities maturing in 2018 and seller credit loans of $65.5 million 20-year amortization profile with seven year tenor and interest of L + 2.25% (1) BASED ON MARCH 31, 2018 FIGURES, ADJUSTED FOR NEW LOAN FACILITY SIGNED IN MAY 2018 TO BE DRAWN BY END OF Q2-18 10
DRY BULK MARKET UPDATE
Tonne miles (billions) Fleet utilization DRY BULK SUPPLY / DEMAND & UTILIZATION Utilization decreased in the first quarter following increased capacity due to easing of port delays SUPPLY, DEMAND AND UTILIZATION RATE - DRY BULK SHIPS 10,000 DWT + 90 000 100% 80 000 95% 70 000 60 000 50 000 40 000 30 000 20 000 90% 85% 80% 75% 70% 10 000 65% 0 60% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Demand Supply Utilization Rate SOURCE: MARITIME ANALYTICS 12
Metric tonnes (millions) Metric tonnes (billions) GROWTH IN SEABORNE TRADE CONTINUES First quarter import increased due to discharge after port delayed and overall increases in year-over-year imports SEABORNE TRADE OF DRY BULK COMMODITIES (MAJOR IMPORTERS) 400 1 200 350 1 100 300 250 1 000 200 900 150 100 800 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Iron Ore Coal Other Bulks Agribulks 700 SOURCE: MARITIME ANALYTICS 13
jan.12 mar.12 mai.12 jul.12 sep.12 nov.12 jan.13 mar.13 mai.13 jul.13 sep.13 nov.13 jan.14 mar.14 mai.14 jul.14 sep.14 nov.14 jan.15 mar.15 mai.15 jul.15 sep.15 nov.15 jan.16 mar.16 mai.16 jul.16 sep.16 nov.16 jan.17 mar.17 mai.17 jul.17 sep.17 nov.17 jan.18 mar.18 WORLD STEEL PRODUCTION TRENDS INTACT Synchronised growth both in Chinese and Rest of World production ANNUAL CHANGE IN STEEL PRODUCTION 20% 15% 10% 5% 0% -5% -10% China Rest of World SOURCE: MARITIME ANALYTICS 14
Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 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 Feb-18 Mar-18 Apr-18 $/t STEEL MARGINS AND IRON ORE PRICE DIFFERENTIALS SUPPORTIVE GROSS PROFIT (STEEL PRICE MINUS COST OF COKING COAL AND IRON ORE; ALL PRICES SPOT) 350 300 250 200 150 100 50 0-502016 2017 2018-100 Gross profit using Au coking coal, Au iron ore price and Tangshan steel billett price Gross profit using Cn coking coal price, Au iron ore price and Tangshan steel billett price IRON ORE PRICE DIFFERENTIALS 120 100 80 60 40 20 0 TSI 62% FE content Qingdao TSI 58% SOURCE: SSY, STORMGEO, NENA ANALYTICS 15
AUSTRALIA AND BRAZIL REMAIN MAJOR IRON ORE EXPORTERS QUARTERLY EXPORTED IRON ORE VOLUMES PER COUNTRY 180 160 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Australia Brazil South Africa India Other SOURCE: MARITIME ANALYTICS, STORMGEO, NENA ANALYTICS; DISPLAYS VOLUMES BY QUARTER 16
Metric tonnes (millions) COAL IMPORTS REMAINS HEALTHY, AND INVENTORIES REMAIN AT LOW LEVELS AHEAD OF COOLING SEASON COAL IMPORTS BY MAJOR IMPORTERS 90 CHINA AND INDIA COAL INVENTORIES 120 80 70 60 50 100 80 11,0 16,2 13,8 30,6 21,0 13,2 15,9 40 60 30 20 40 81,1 81,6 94,5 73,6 65,5 65,0 62,7 10 20 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 China Japan S. Korea India Europe 0 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 End April China India SOURCE: MARITIME ANALYTICS, COMMODORE RESEARCH 17
jan.10 mar.10 mai.10 jul.10 sep.10 nov.10 jan.11 mar.11 mai.11 jul.11 sep.11 nov.11 jan.12 mar.12 mai.12 jul.12 sep.12 nov.12 jan.13 mar.13 mai.13 jul.13 sep.13 nov.13 jan.14 mar.14 mai.14 jul.14 sep.14 nov.14 jan.15 mar.15 mai.15 jul.15 sep.15 nov.15 jan.16 mar.16 mai.16 jul.16 sep.16 nov.16 jan.17 mar.17 mai.17 jul.17 sep.17 nov.17 jan.18 mar.18 jan.10 apr.10 jul.10 okt.10 jan.11 apr.11 jul.11 okt.11 jan.12 apr.12 jul.12 okt.12 jan.13 apr.13 jul.13 okt.13 jan.14 apr.14 jul.14 okt.14 jan.15 apr.15 jul.15 okt.15 jan.16 apr.16 jul.16 okt.16 jan.17 apr.17 jul.17 okt.17 jan.18 apr.18 Kilowatt hours (billions) SEASONALLY STRONG ELECTRICITY CONSUMPTION SUPPORTS COAL DEMAND CHINESE ELECTRICITY OUTPUT 650 600 550 500 450 400 350 300 CHINESE ELECTRICITY OUTPUT BY SOURCE 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Coal-derived electricity output Hydropower output Other output sources SOURCE: COMMODORE RESEARCH / NARIONAL BUREAU OF STATISTICS OF CHINA 18
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 U.S. GRAIN EXPORTS SURGED AHEAD OF THREATENED TARIFFS GRAIN EXPORTS BY SOURCE 12 10 8 6 4 2 0 SOYBEAN AND SOYBEAN MEAL EXPORTS BY SOURCE 20 18 16 14 12 10 8 6 4 2 0 USA Aust. Wheat Only Argentina EU to 3rd c. Canada USA Brazil Argentina SOURCE: FEARNRESEARCH 19
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Mill dwt Mill dwt Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Mill dwt Mill dwt DELIVERIES WERE DOWN COMPARED TO THE FIRST QUARTER OF 2017 DESPITE LOW SCRAPPING YTD CAPESIZE 12,0 10,0 8,0 6,0 4,0 2,0 0,0-2,0-4,0 LTM Delivered: 11.5m dwt LTM Scrapped: 4.3m dwt PANAMAX / POST-PANAMAX 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0-1,0-2,0 LTM Delivered: 5.8m dwt LTM Scrapped: 2.5m dwt HANDYMAX / SUPRAMAX HANDYSIZE 6,0 LTM Delivered: 8.1m dwt LTM Scrapped: 2.2m dwt 2,5 LTM Delivered: 2.6m dwt LTM Scrapped: 1.0m dwt 5,0 2,0 4,0 3,0 2,0 1,5 1,0 1,0 0,5 0,0 0,0-0,5 SOURCE: CLARKSONS PLATOU 20
% of Orderbook DOWNSIDE CASE FOR SUPPLY GROWTH Continued slippage is expected as ~22% of vessels scheduled for delivery in 2018 have not even commenced construction STATUS OF ORDERBOOK 100% 90% 80% 70% 60% 50% 35% (3.6m dwt) 8% (0.8m dwt) 7% (1.1m dwt) 24% (5.6m dwt) (5.2m dwt) 40% (14.3m dwt) 41% (33.7m dwt) 67% (9.6m dwt) 40% 30% 20% 10% 0% 46% 76% (4.7m dwt) (16.0m dwt) 58% 52% (20.1m dwt) (42.0m dwt) 24% 18% (3.5m dwt) (1.9m dwt) Q2 2018 H2 2018 2019 2020-> Total Not commenced (%) Under construction (%) Launched (%) SOURCE: VIAMAR, IHS SEAWEB 21
Fleet (MdWT) Annual fleet growth PROJECTED FLEET GROWTH STILL MODERATE Forecasted fleet growth is still moderate, despite new ordering observed; any additional capacity from now expected to be placed in 2020 or later FLEET GROWTH (ASSUMES NO SCRAPPING OR NEW ORDERING) 1 000 30% 900 800 25% 700 20% 600 500 15% 400 300 10% 200 100 4% 5% 2% 5% 0 1% 0% Fleet size Deliveries Scheduled deliveries Fleet growth SOURCE: SSY 22
1 yr-tc (USD/day) Asset values (mm USD) 1 yr-tc (USD/day) Asset values (mm USD) S&P PRICES STABLE, YET STILL LOW CAPESIZE VALUES AND EARNINGS 50 000 40 000 30 000 20 000 10 000-70 60 50 40 30 20 10 - PANAMAX VALUES AND EARNINGS 1 yr-tc 5 yr SH Capesize 10 yr SH Capesize 35 000 30 000 25 000 20 000 15 000 10 000 5 000-45 40 35 30 25 20 15 10 5 - SOURCE: CLARKSONS PLATOU 1 yr-tc 5 yr SH Panamax 10 yr SH Panamax 23
OUTLOOK AND STRATEGY
EXPECTATION FOR CONTINUED IMPROVEMENT WITH INHERENT SEASONALITY AND VOLATILITY UPSIDE POTENTIAL DOWNSIDE RISKS Increased tonne-miles if additional iron ore capacity comes from Brazil Coal demand grows due to increased consumption, restocking and arbitrage opportunities More tonne-miles due to longer sailing distances on continued demand increase in Asia replacing European demand Supply constraints, including port congestion and slow steaming on higher bunker prices Lower steel margins impact import / export volumes Draw down of iron ore inventories in China Economic activity decreases in China, leading to lower consumption of steel and energy Trade tensions reduce global trade New ordering increases fleet growth expectations for 2020+ Removal of older vessels ahead of BWTS and sulphur emissions regulations 25
COMPETITIVE CASH COSTS DRIVE EARNINGS Fully-burdened Opex includes dry docking and management fees G&A net of management fees are estimated to be approximately $400 per day in 2018 on a fully delivered fleet Average margin above LIBOR on bank financing is competitive at ~2.3% Majority of bank debt has 20 year profile (adjusted for year of age) CASH BREAKEVEN LEVELS VS. INDEXES (1) 35 000 30 000 25 000 20 000 15 000 10 000 $14,200 $9,900 5 000 - Capesize Panamax Jan 1 3 2017 5 7 9 11131517192123252729313335373941434547495153555759616365676971 OPEX G&A Interest Leases Repayment Weekly Capesize Rates Weekly Panamax Rates (1) ESTIMATED CASH BREAKEVEN LEVELS AT TODAYS INTEREST LEVEL, INCLUDING FULL CASH-SWEEP FOR NON-RECOURSE DEBT AND EXCLUDING PROFITABLE CHARTERS WHICH WILL REDUCE THE CASH BREAKEVEN FROM THESE LEVELS SOURCE: CLARKSONS 26
QUESTIONS & ANSWERS
THANK YOU FOR YOUR ATTENTION!